Markets:
- WTI fell 22 cents to $69.29
- US 10-year yields fell 6.4 basis points to 3.73%
- Gold rises from $6 to $1919
- Bitcoin rose 2.4% to $30,850
- The Standard & Poor’s 500 fell 0.8%.
- The US dollar leads, the Australian dollar lags
The demand for the US dollar is back again, despite the drop in Treasury yields. Some of this may be due to relative values where bond yields have fallen much more than Treasury bonds.
Anyway, it was a classic risk-off day except that the yen couldn’t afford a bid. This is a red flag because there was some initial buying of the Japanese Yen after the Japanese Core CPI was printed earlier. Some of that spilled over into early US trade as USD/JPY fell to a session low of 142.77, but it was a quick turnaround and rose 100 pips from there to a new 9-month high.
More broadly, USD strength peaked early in North American trading as commodity currencies slipped and Cable reached 1.2688 along with heavy stock selling. The moves eased from there as buyers waded into some stocks and oil rebounded more than $2.00. USD/CAD hit a 9-month low yesterday but 80 pips today before recovering half the move.
AUD/USD struggled but the damage was done mostly early in the day and it fell to the finish line. A week ago it looked like AUD/USD might break to the upside, but the lack of meaningful fiscal stimulus from China quickly sent the pair into the middle of its four-month range. The day was particularly painful with a loss of 75 points.
Notably, today also marks the seven-year anniversary of Brexit and is still down around big 20-digits against the dollar since then. Cables loosened in Asia but then water was penetrating.
May your weekend be wonderful.