If you were to glance at stock markets today, you would get the impression it was a ‘risk off’ day and that was true to a large extent early in the day but it’s unwound in both forex and bonds in US trading.
The US dollar is generally lower today overall with losses against the pound and euro while gaining some ground against the loonie and yen.
On the news front, there hasn’t been much to digest. The Fed’s Barkin downplayed the recent CPI and retail sales numbers as potentially skewed by seasonals while Bowman expressed some angst and uncertainty about inflation. The economic calendar was bare.
Two things stand out as drivers of today’s divergence:
- It’s a long weekend in the US and that might have triggered a bid for safety in stocks
- It’s monthly options expiration day in stocks
Overall, there’s some kind of flows at work here that are skewing the picture.
This article was originally published by Forexlive.com. Read the original article here.