Markets:
- Gold falls $19 to $2,501
- West Texas Intermediate crude oil fell $2.47 to $73.44 a barrel.
- US 10-year Treasury yields rise 4.3 basis points to 3.81%
- S&P 500 rises 0.6%
- The US dollar advances, the yen lags.
It was hard to relate fundamentals to market movements today, as is usually the case at the end of the month. Tokyo CPI was up earlier and US PCE was a bit muted, usually a recipe for a USD/JPY decline, but it was quite the opposite as the pair rose 116 pips in a steady upwards rally that started in Europe and never came back down.
This was part of a broad-based bid in the US dollar that was supported to some extent by higher Treasury yields. However, the 30 basis point drop in the Australian dollar was certainly against the decline in stocks.
The Canadian dollar was particularly volatile and initially rose on the back of strong GDP numbers. However, the details of that report showed no growth in June and July and the vast majority of growth in the quarter was driven by government spending. This has prompted a rethink, especially after the oil price plunge. In total, there were four 30-pip straight-line moves in USD/CAD to complete a lively month. This will give North Americans plenty to digest over the long weekend.
The euro ended the month above 1.10, a good win but two-and-a-half cents below Monday’s high of 1.1201. It has fallen on four of the five days this week in a setback after three weeks of strong gains.
Similarly, cable fell for the third day in a row and showed little sign of life in month-end trading.
In the end, the US dollar recovery is balancing the market ahead of what will be a very active September. Have a great weekend.
Justin and Eamonn will be back next week.