Markets:
- WTI crude oil down 22-cents to $69.29
- US 10-year yields down 6.4 bps to 3.73%
- Gold up $6 to $1919
- Bitcoin up $2.4% to $30,850
- S&P 500 down 0.8%
- USD leads, AUD lags
The US dollar was in demand once again, despite falling Treasury yields. Some of that might have been a result of relative values as bund yields fell much further than Treasuries.
In any case, it was a classic risk-off day with the exception that the yen couldn’t sustain a bid. That’s a red flag because there was some initial JPY-buying after the hot Japan core CPI print earlier. Some of that extended early in US trade with USD/JPY falling to a session low of 142.77 but it was a quick turn and 100 pip rally from there to a new 9-month high.
More broadly, the peak of the US dollar strength was early in North American trade as the commodity currencies sagged and cable hit 1.2688 alongside heavy equity selling. The moves ebbed from there as buyers waded into some stocks and oil bounced more than $2. USD/CAD hit a 9-month low yesterday but 80 pips today before recovering about half the move.
AUD/USD struggled but the damage was mostly done early in the day and it sagged to the finish line. A week ago, it looked like AUD/USD could be breakout out to the upside but the lack of meaningful fiscal stimulus from China rapidly turned the tide and the pair is right back into the middle of the four-month range. Today was particularly bruising with a 75 pip loss.
Notably, today is also the seven-year anniversary of Brexit and it remains down about 20 big figures against the dollar since. Cable softened in Asia but treaded water afterwards.
Have a wonderful weekend.
