Forex news for North American trade on May 28, 2021:
- US April core PCE +3.1% y/y vs +2.9% expected
- US advance goods trade balance for April $-85.2 billion versus $-92.0 billion estimate
- US wholesale inventories for April 0.8% versus 0.7% estimate
- Canada April-March budget deficit hits $314B vs $21.77B a year ago
- US May final UMich consumer sentiment 82.9 vs 83.0 expected
- Biden budget forecasts 10-year deficit of $14.531 trillion
- Baker Hughes US oil rig count 359 vs 356 prior
- April Dallas Fed trimmed mean +2.4% annualized vs +2.2% prior
- Malaysia announces two week national lockdown
- Weekly CFTC Commitments of Traders data: Cable gets a bit of love
- Gold up $8 to $1904
- WTI crude oil down 21-cents to $66.64
- US 10-year yields down 1.1 bps to 1.59%
- S&P 500 up 0.1%
- USD leads, NZD lags
Month end took the FX market for a bit of a ride again. There was heavy dollar buying right at the start of US trade with the thinking that there were either bets on a strong PCE report or more of the dollar flows that have boosted USD at times in the latter half of the week.
It was a large move with the euro dropping to 1.2130 from 1.2190 on a more-or-less one-way ticket. The moves were smaller elsewhere but in the same direction.
The data came out and inflation was a touch high but nothing in the realm of the CPI surprise we saw two weeks ago. It's fair to say that markets were priced for a larger surprise and that slowed -- but didn't stop -- the dollar bid. After London began to wind down though the dollar move began to reverse. Eventually, the euro climbed all the way up to 1.2200 and slightly higher on the day before finishing flat.
Surveying the broader scene, the dollar managed to finish slightly higher but was essentially unchanged aside from AUD and NZD. China clamped down on commodity speculation today and that may have weighed on AUD. I'm also starting to hear about worries regarding covid in Australia. It's ducked the pandemic so far but vaccine hesitancy there is high and Melborne is in a new lockdown (enjoy the weekend Eamonn!).
Gold slumped hard early and hit $1882 but rebounded just as quickly after PCE, underscoring how closely markets are watching inflation. It finished just above $1900. Bonds were along the same lines with yields rising only to finish lower.
The US has a long weekend coming up so it will be a sluggish start on Monday before we kick it into higher gear on Tuesday with a busy week capped off with non-farm payrolls.
Looking at the ticker here tells the story: Good ranges but small changes.