Forex news for North American trading on August 11, 2021:
- Gold up $22 to $1751
- US 10-year yields down 1.5 bps to 1.327%
- WTI crude oil up $1.00 to $69.29
- S&P 500 up 8 points to 4444
- NZD leads, JPY lags
The CPI report was the main event and it was telling. The numbers were close to expectations all around but because inflation has stopped rising and the core m/m number slowed to 0.3% from 0.9%, the market quickly took the view that inflation has crested.
The response was a sharp selloff in the dollar that caught many by surprise. It fell 20 pips across the board initially and then added another 10-20 in the following 15 minutes.
You can see the battle playing out in the market on the inflation front and it’s such a critical battle and I don’t get the sense that anyone is married to either side of the debate, including at the FOMC.
The dollar steadied there for a time but was cut further down on the 10-year auction. The stop through was the largest in at least a year. The dollar fell another 15-20 pips on that but talk afterwards blamed foreign bidders and some decided that could have been a one-off so the dollar eventually recouped that leg of declines.
Looking around, the dollar moves were very consistent but there was some extra buying in the antipodeans. That might reflect commodities prices but CAD didn’t get much help from oil, so I’d look elsewhere. There’s a close eye on delta at the moment and some minor encouraging signs in the US so that could be it.
Speaking of oil, the White House put out a statement saying it was pressure OPEC to pump more and that sent it to $66.67 but later in the day they said it was more of a long-term effort. That reverse the losses despite a moderately bearish inventory report.
Gold has been left for dead this week but continues to rebound from $1680 and put in a decent day alongside crypto.