Forex news for North America trade on July 28, 2021:
- Federal Reserve leaves rates and QE pace unchanged. Cites progress towards goals
- Powell opening statement: The labor market has a ways to go
- Powell Q&A: We still have 'some ground to cover' on labor market before taper goal reached
- The full statement from the July 2021 FOMC meeting
- US advance goods trade balance for June -91.2B vs -88.0B estimate
- Canada June CPI +3.1% vs +3.2% y/y expected
- Arizona's Sen. Sinema: Does not support Democrats $3.5 trillion bill
- Pfizer vaccine efficacy slips about 3% per month - report
- US Sen Portman: There is a bipartisan agreement on infrastructure on major issues
- US EIA weekly crude oil inventories -4089K vs -2928K exp
- US wholesale inventory is for June 0.8% versus 1.2% estimate
Markets:
- Gold up $7.75 to $1806
- US 10-year yields down 0.5 bps to 1.2393%
- WTI crude oil up 60-cents to $72.24
- S&P 500 up 2 points to 4400
- CAD and CHF lead, JPY lags
On July 14, Powell said the FOMC was 'still a ways off' from the substantial further progress needed to taper QE. Today that shifted to still 'some ground to cover' in a tip-toe towards easing asset buys, namely in the labor market.
In addition, the statement said that progress had been made towards goals in a surprise shift. The initial reaction was USD buying and a rise in yields but that quickly turned around as the market decided that Powell wasn't as hawkish as feared.
USD/JPY rose to 110.30 on the kneejerk and then fell back to 109.90. EUR/USD fell to 1.1770 before jumping to 1.1845.
Those are decent sized moves and were typical of the overall price action. I'm not entirely sure I fall in line with that -- I would have expected a more dovish Powell -- but that's the price action for now.
Earlier, USD/CAD rose after Canadian inflation trailed estimates. The dip in y/y inflation to 3.1% from 3.6% highlights fading base effects as things like the gasoline pop fade.
