Forex news for New York trade on July 8, 2021:
- US weekly initial jobless claims 373K vs 350K expected
- US May consumer credit outstanding +$35.28B vs +$18.4B exp
- ECB's Lagarde: New "more narrative based" statement will replace introductory statement at ECB press conference
- ECB sources: Policymakers failed to resolve differences over policy guidance
- Fed banking supervision vice-chair Quarles won't keep that role
- US weekly EIA oil inventories -6866K vs -4033K expected
Markets:
- Gold down $1 to $1802
- US 10-year yields down 0.3 bps to 1.29%
- WTI crude oil up 94-cemts to $73.14
- S&P 500 down 37 points to 4320
- CHF leads, NZD lags
Explanations for market moves continue to be an exercise in creativity, with most pointing to the Fed or the delta variant for a sudden risk-off turn in Asia and Europe. The mood improved in North America part way through the session, in part because yields bounced from intraday lows and the US 10-year held the 200-day moving average.
USD/JPY finally succumbed to the fall in yields earlier in the day in a sharp drop but it found buyers at 109.50 and bounced late to 109.75 to limit the decline to 88 pips on the day.
The euro also traded like a low yielder as it rallied on risk aversion. The ECB strategy review didn't trick anyone into changing their timeline for when eurozone rates will move, despite Lagarde's efforts at spin. Perhaps some expectations of a more-dovish shift were built in and the only concrete change we got was adding house prices to CPI, which is ultimately hawkish.
USD/CAD busted through 1.25 and soared to 1.2590 in Europe but cooled off from there. It was helped along from oil, which turned around today after two days of heavy selling. Tighter US inventories part of the catalyst but the trade looked like it had run out of steam earlier.
NZD/USD didn't get as much help and finished on the lows at 0.6944. After yesterday's spirited comeback, it was a bit of a short-term capitulation for the kiwi bulls and that as reflected in its laggard status. The June low of 0.6923 is support now.
