Forex news for North American trade on August 23, 2021:
- Markit August prelim US services PMI 55.2 vs 59.5 expected
- FDA has granted full approval to Pfizer covid vaccine
- Eurozone August prelim consumer confidence -5.3 vs -5.0 expected
- US July existing home sales 5.99m vs 5.81m expected
- Bank of Israel leaves rates unchanged, highlights covid uncertainty
- US Chicago Fed July national activity index +0.53 vs +0.09 prior
- Pemex says 421K bpd of oil production cut due to offshore platform
- Bank of America follows Goldman Sachs in slashing Q3 US GDP estimate
Markets:
- Gold up $23 to $1804
- US 10-year yields down 0.7 bps to 1.253%
- WTI crude oil up $3.29 to $65.44
- S&P 500 rises 43 points to record 4480
- CAD leads, JPY lags
The market is increasingly optimistic that the wave of covid in the United States and several other countries is cresting and hopes are growing that more vaccination mean this will be the last bad wave -- at least in major economies.
There's also growing speculation that the Fed won't rush a taper to September, in part due to Kaplan's comments on Friday that he would consider delaying his push to trim purchases. That weighed on the US dollar in New York trade. Economic data added to the argument as both Markit surveys fell short of expectations.
USD/JPY had already been falling before that data but continued lower afterwards, showing it wasn't a straight-forward risk trade as much as a dollar-selling frenzy. Some of that -- no doubt -- was an unwind of the huge USD buys last week.
USD/CAD continues to show remarkable sensitivity to the moves as it traced out a 200-pip range day and erased all the gains dating back to Thursday's open. Clearly, the big rebound in oil added fuel to the move but what's driving oil is better covid data.
Cable notched a strong day, climbing just over 100 pips and finishing near the highs of the day. There was no let up in the bid starting early in European trading and through the London close. That suggests it was a bit more flow-driven than fundamentals but it halts four days of selling.
