Markets:
- Gold flat at $1978
- WTI crude down $0.44 to $75.26
- US 10-year yield down 4.7 bps to 3.74%
- S&P 500 up 0.25%
- USD and CAD lead, GBP lags
The pound was down big before US traders arrived, following a soft UK CPI report. It continued to fall into the London fix and hit 1.2869 on a broad wave of USD buying early in North America.
There wasn’t an identifiable catalyst for the early USD strength as yields had been lower and the dollar late lost steam as they rose at the front end. The US data was second tied but was also on the soft side.
In any case, the dollar bids helped USD/JPY to a test of 140.00. It was the second run at the big figure after a failure in Europe trading. Alas, the second try met the same fate as the first with a high of 139.99 as the barrier held intact. That was the cue for broader US dollar selling, which was moderate but was the theme of the latter half of the US trading day. USD/JPY gave back 50 pips while cable climbed to 1.2937 from a low of 1.2869.
The euro was caught in the US dollar buying early, pushing it down to 1.1175 before a bounce back to the figure. It was playing a supporting role with the larger moves focused on JPY and GBP.
The New Zealand dollar was soft after the initial spike on higher domestic CPI. It found bids at 0.6225 repeatedly though and after three tries the bears gave up and the pair rebounded to 0.6261.
AUD/USD continued its slump but buyers emerged at 0.6750 for a 20 pip bounce. The China stimulus headlines aren’t offering much support for the Aussie or Chinese stocks, which is a way of the market saying that it’s not enough.
CAD was able to hang with the US dollar despite the USD bid. All things North American are in style at the moment, though the loonie gave some back after oil turned a $1 gain in to a $0.50 loss midway through the day.