Markets:
- Gold down $19 to $2501
- WTI crude oil down $2.47 to $73.44
- US 10-year yields up 4.3 bps to 3.81%
- S&P 500 up 0.6%
- USD leads, JPY lags.
It was tough to tie the fundamentals to the market moves today, as is often the case at month end. Tokyo CPI was hot earlier and US PCE was a tad cool and normally that’s the recipe for a USD/JPY decline but it was just the opposite as the pair climbed 116 pips in a steady rally that started in Europe and never eased.
That was part of broad bids in the US dollar that were supported somewhat by rising Treasury yields. However the 30 pip decline in the Australian dollar certainly went against the rip in equities.
The Canadian dollar was particularly volatile and rallied initially on a strong GDP number. However the details of that report showed no growth in June and July plus the vast majority of the growth in the quarter was driven by government spending. That led to a rethink, particularly following the drop in oil prices. All told, there were four 30-pip straight line moves in USD/CAD trading to round out a lively month. That will give North Americans plenty to digest over the long weekend.
The euro finishes the month above 1.10, which is a nice victory but a cent-and-a-half from Monday’s high of 1.1201. It declined in four of the five days this week in a setback after three weeks of strong gains.
Similarly, cable fell for the third consecutive day and showed few signs of life in month end trade.
On net, the US dollar rebound balances the market heading into what’s going to be a lively September. Have a great weekend.
Justin and Eamonn will be back next week.