Forex news for New York trade on November 9, 2021:
- US October PPI final demand 8.6% y/y vs 8.7% expected
- Powell: Fed is attentive to labor market disparities rather that just headline numbers
- Fed's Kashkari: Prices have been elevated longer than I expected
- Fed's Daly: Inflation is all about whether it persists beyond Covid disruptions
- Daly: The thing to do when you are uncertain is to stay steady and be vigilant
- SNB's Maechler: CHF value has been driven more by views on monetary policy
- ECB's Schnabel: Central banks must pay more attention to house prices
- Apple CEO Tim Cook says he owns cryptocurrencies
- ECB's Knot: Conditions for a rate hike very unlikely to be met in 2022
- U.S. Treasury auctioned off $39 billion of 10 year notes at a high yield of 1.444%
Markets:
- Gold up $8 to $1832
- WTI crude oil up $2.42 to $84.35
- US 10-year yields down 5.8 bps to 1.439%
- S&P 500 down 16 points to 4685
- JPY leads, AUD lags
The over-arching theme in FX continues to be pricing out rate hikes next year and putting more weight on the possibility that inflation is transitory. That's best seen in the bond market where yields continued to fall. The auction of US 10s tailed today but that was after a large intraday drop in yield.
The FX market responding to a lower rate hike path and compressed yield differentials by bidding up the yen. That's particularly true against the commodity currencies. Notably though, both oil and copper were higher today so there's somewhat of a disconnect there.
In any case, AUD/JPY fell to a four week low $3.13 while AUD/USD held Friday's low before bouncing.
In equity markets, the Nasdaq had risen in 16 of 18 days coming into the session but fell in large part due to a 12% decline in Tesla shares. The bulls battled hard yesterday when Elon Musk said he might sell shares but cratered today.
USD/CAD was an interesting one as it hit a four-week high at 1.2485 before giving it all back and finishing flat at 1.2439. A big part of that was a turn in oil after the STEO failed to give cover to Biden to release US strategic reserves.
USD/JPY fell in Asia but steadied in Europe and the US while EUR/USD chopped in a 40 pip range from 1.1570 to 1.1610 with both sides of that showing a firm hand.
Cable failed to keep yesterday's bounce going as it battled to an unchanged day.
Keep an eye on gold as it threatens a series of highs up to $1833. A break above would be the best level since June 15.
