Markets:
- Gold reaches 1 dollar to 1989 dollars
- WTI Crude Oil rose $1.95 to $76.71
- US 10-year yields fell 9 basis points, to 3.43%.
- Standard & Poor’s 500, up 0.9%
- Sterling is leading, the yen is lagging behind
The big story today was the Bank of Japan left its policy unchanged and the yen took a beating. It fell overall but arguably the biggest move technically was in EUR/JPY as the pair broke out of the 2014 high and the 150.00 level, both for the first time since 2008.
Other yen crosses also made significant moves and this may indicate a new round of divergence. The Bank of Japan’s survival also helped ease the bid in bonds.
The PCE headlines were tight but my sense is the market smelled it based on the details in the GDP report. This was also another reminder that the market has outgrown inflation fears and is more worried that the Fed will halt growth. It looks certain that the PCE inflation figures will drop below 4% in no time and that could come as soon as next month.
Banking concerns still trickle in but they are isolated around the First Republic as the regional bank ETF rose 1.7% on the day.
The British Pound was strong in early North American trading in a move that foreshadowed the positive sentiment in stocks that emerged later. Perhaps this was a coincidence and due to the flows at the end of the month, but it was a strong move for the pound, perhaps with higher bids for GBP/JPY.
One of the biggest turns of the day was in USD/CAD as the pair reversed in Oil and Sentiment. USD/CAD rose to a high of 1.3667 before retreating to 1.3550 late on.
I wish you a nice weekend.