ForexLive Americas FX news wrap: Fed angst reverses in big risk rally
Forex news for New York trade on June 21, 2021:
- Fed's Williams: The economy has not improved enough to pare stimulus
- Fed's Kaplan: We've seen more vaccines and fiscal spending than we had anticipated
- Bullard: Fed will have 'no problem' seeing substantial further progress in jobs market
- Lagarde: Recovery is gathering pace, we need to ensure support well into recovery
- White House: Biden wants to grow EV industry that's why he opposes related tax
- Chicago Fed May national activity index +0.29 vs +0.70 expected
- UK PM Johnson: 'Gov't committed to triple lock on pensions'
- CFTC Commitment of Traders: EUR longs see another bump higher
- Gold up $19 to $1782
- US 10-year yields up 5 bps to 1.49%
- S&P 500 up 58 points to 4224
- WTI crude oil up $1.90 to $73.54
- GBP leads, JPY lags
The turn in sentiment didn't come all-at-once on Monday throughout markets but it started in FX. The earliest clues in Asia were that the Australian dollar was higher despite the rout in the NIkkei.
Into European trade it was a stalemate but as New York began to ramp up the bulls got the upper hand and then ran with it. The squeeze lower in long-end Treasury yields ended with a spectacular crescendo followed by a big reversal. The dollar gave much of Friday's gains back, though not all.
GBP/USD rose 120 pips on the day and finished near the highs. It skidded around 1.38 at the open but that was the late-April low and it held. There's still much work to be done to recoup last week's losses but the bleeding has stopped.
The euro completely erased Friday's losses in a rally from 1.1860 at the start of European trading up to 1.1920. It's founds some resistance at 1.1920/30 though and has chopped sideways there for a few hours.
USD/JPY continues to be caught in the push-and-pull of the risk trade and the rates trade and posted a narrow loss after erasing a decent-sized early drop.
The commodity currencies were all impressive with USD/CAD falling 100 pips in North American trading as it got some help from oil. Time spreads in crude may be signaling imminent physical tightness coming out of Cushing and headlines around that have prompted some large crude moves. Canadian differentials have also narrowed and with the pair near 1.24, it's looking interesting.