Powell was clear to detach tapering from the rate liftoff, or raising interest rates

  The dollar is nursing losses today and kept near multi-week lows

 Federal Reserve Chair Jerome Powell laid out a slower-than-expected path to rate hikes

 Traders latched on to the wiggle-room in the rates outlook and sold dollars

 The Australian and New Zealand dollars also hung on to sizeable Friday gains

The dollar slid on Friday after Federal Reserve Chair Jerome Powell indicated in a highly anticipated speech that the U.S central bank could start tapering its massive support to the economy could start by year's end, which was not as fast as many in the market had assumed. Powell said there had been clear progress toward maximum employment and he believed that if the U.S. economy improved as anticipated, "it could be appropriate to start reducing the pace of asset purchases this year." But Powell told the Fed's annual Jackson Hole symposium the timing and pace of tapering should not be construed as a signal for when interest rates will begin to rise. The speech showed Powell has not adopted the hawkish stance of some Fed officials. It's pretty clear that if you were worried about the timeline, that we announce in September that we're going to taper starting Oct. 1, that's not there in this speech. It's not as bad as feared based on the most extreme of the hawks. 

The dollar index, which measures the greenback's performance against a basket of six major currencies, fell 0.39% to 92.6760. 

The euro rose 0.37% to $1.1794, while the yen fell 0.24% at $109.8200. After minutes of the Fed's policy-setting meeting in July was released last week, the dollar advanced because most market participants anticipated tapering to begin this year. 

Powell was clear to detach tapering from the rate liftoff, or raising interest rates. 

The dollar fell as market participants sharply lowered expectations for the Fed’s long-term tightening trajectory. The dollar began to retreat about 15 minutes before Powell spoke, after James Bullard, president of the St. Louis Fed, reiterated his hawkish view that tapering should begin soon and end by next year's first quarter. Benchmark 10-year Treasury yields fell 3.4 basis points to trade at 1.3104%. On Thursday yields jumped to 1.375%, the highest since Aug. 12. 

The Canadian dollar rose 0.56% to 1.2612 versus the U.S dollar.

Brent futures, the international benchmark for crude, rose $1.63 to settle at $72.70 a barrel and gained 11.5% for the week. 

The Canadian currency generally takes its cues from oil, the risk with the S&P 500 as a proxy, and interest rate differentials. 

The Canadian dollar's strength on Friday was a reflection not so much of Canada, but what's happening in the U.S and the market takeaway from Powell's speech. 

Britain's pound jumped half a percent to the dollar to more than a week's high on Friday and was set for a 1% weekly gain as the greenback fell after U.S Federal Reserve chair Jerome Powell stopped short of signaling the timing for a policy shift.

Euro

The single currency gained on Friday as the dollar fell as market participants sharply lowered expectations for the Fed’s long-term tightening trajectory. The dollar began to retreat about 15 minutes before Powell spoke, after James Bullard, president of the St. Louis Fed, reiterated his hawkish view that tapering should begin soon. Overall, the EUR/USD traded with a low of 1.1744 and a high of 1.1777 before closing the day around 1.1750 in the New York session.

Yen

The Japanese Yen traded higher in Friday’s trading session as the dollar nursed losses and kept near multi-week lows after Federal Reserve Chair Jerome Powell laid out a slower-than-expected path to rate hikes, while a storm lashing oilfields in the Gulf of Mexico lifted oil-exposed currencies. Powell was vague on the timing of tapering. Overall, the USD/JPY traded with a low of 109.90 and a high of 110.21 before closing the day around 110.06 in the U.S session.

British Pound

The British Pound jumped half a percent to more than a week's high on Friday and had a 1% weekly gain as the greenback fell after U.S Federal Reserve chair Jerome Powell stopped short of signaling the timing for a policy shift. The lack of a concrete signal about the potential tapering of the central bank's stimulus program knocked the dollar lower. Overall, the GBP/USD traded with a low of 1.3687 and a high of 1.3766 before closing the day at 1.3698 in the New York session.

Canadian Dollar

The Canadian Dollar gained on Friday after the greenback dropped broadly after Powell managed to flag an exit from emergency monetary policy settings that did not spook markets or suggest a rush to raise interest rates. Traders latched on to the wiggle-room in the rates outlook and sold dollars, while Treasury yields fell. Overall, USD/CAD traded with a low of 1.2582 and a high of 1.2693 before closing the day at 1.2683 in the New York session.

Australian Dollar

The Australian Dollar is edging higher versus the US Dollar in today’s Asia-Pacific session. The Greenback is unchanged against most of its peers. Traders may be digesting Fed Chair Jerome Powell’s comments from Friday’s Jackson Hole Economic Symposium. Mr. Powell’s message hinted that tapering QE asset purchases will likely commence this year but failed to give a clear timeline. Overall, AUD/USD traded with a low of 0.7331 and a high of 0.7379 before closing the day at 0.7368 in the New York session.

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Hurricane Ida life-threatening

Hurricane Ida is one of the strongest storms to ever hit Louisiana.

Ida is weakening to a tropical storm, which will turn to life-threatening floods.

Today we might see Hurricane Ida turning in flash flooding, damaging winds, and tornadoes threatening thousands of lives. 

Some areas are already left without electricity and phone lines and more power outages are expected. 

More than 1 million people are without power. The first death is already reposted in Lousiana. President Joe Biden requests a major disaster and recovery plan.

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Cooling inflation pressures

The dollar held near a one-week low versus major peers today as slumping U.S consumer confidence hurt bets for an early Federal Reserve tightening while disappointing Chinese economic data weakened the yuan and the Australian currency. 

The dollar index, which measures the greenback against six rivals, was little changed at 92.561, having fallen 0.50% at the end of last week. It dipped as far as 109.335 yen for the first time since Aug. 4 on Monday, before trading 0.16% weaker at 109.42, as benchmark 10-year Treasury yields slid in the Asian session. Against the euro, the dollar was mostly flat at $1.1789, close to the one-week low of $1.18045 reached Friday. 

A University of Michigan survey released at the end of last week showed consumer sentiment slid to the lowest level since 2011 amid an acceleration in COVID-19 infections. 

U.S. retail sales data due Tuesday will be closely watched for further clues on consumer behavior. The dollar has oscillated with the flow of economic data, with momentum from a jobs market recovery pushing it to a four-month peak last week, only to see it knocked back by cooling inflation pressures. Net dollar long positions rose to their highest level since early March last year in the week ended Aug. 10. 

Traders continue to look toward the Fed's central banking conference in Jackson Hole, Wyoming, toward the end of this month, for clues to its next move. Ahead of that, Fed Chair Jerome Powell holds a virtual town hall with educators and students on Tuesday. On Wednesday, the Fed releases minutes of its July policy meeting. Commonwealth Bank of Australia strategist Kim Mundy warns against making too much of the dip in consumer confidence and still predicts an announcement for a tapering of stimulus next month. One month's data does not make a trend but it bears watching.

USD can lift this week if the FOMC minutes suggest committee members are considering tapering asset purchases as soon as next month. In Asia, the Australian dollar fell 0.54% to $0.7336 after economic data from its biggest trading partner, China, was disappointed, and as COVID- 19 lockdowns were tightened at home. China's factory output and retail sales growth slowed sharply in July, as new COVID-19 outbreaks and floods disrupted business operations, adding to signs the economic recovery is losing momentum.

Euro - EUR

The single currency traded higher on Friday as European Union exports to Britain rose in June after a volatile start to the country's first year outside the single market, while the bloc's exports to the rest of the world dropped slightly in the same month. Seasonally adjusted exports to Britain increased by 4.7% in June of the month. Overall, the EUR/USD traded with a low of 1.1722 and a high of 1.1747 before closing the day around 1.1728 in the New York session.

Yen - JPY

The Japanese Yen gained as slumping U.S consumer confidence hurt bets for an early Federal Reserve tightening while disappointing Chinese economic data weakened the yuan and the Australian currency. A University of Michigan survey released at the end of last week showed consumer sentiment slid to the lowest level since 2011. Overall, the USD/JPY traded with a low of 110.29 and a high of 110.2 before closing the day around 110.39 in the U.S session.

British Pound - GBP

The British Pound steadied against the dollar on Friday as the greenback weakened following a weak reading of consumer sentiment, but the British currency was still on track for the second week of declines. As of Aug 12, the pound was the third best-performing G10 currency, trailing the Canadian dollar and the U.S dollar. Overall, the GBP/USD traded with a low of 1.3793 and a high of 1.3876 before closing the day at 1.3806 in the New York session.

Canadian Dollar - CAD

The Canadian Dollar was little changed against its broadly weaker U.S counterpart on Friday, with news that Canadian Prime Minister Justin Trudeau is planning to call a snap election for Sept. 20 having little impact on the currency. With some 63% of its population fully vaccinated against COVID-19, Canada tops a ranking of major countries fighting the Pandemic. Overall, USD/CAD traded with a low of 1.2497 and a high of 1.2531 before closing the day at 1.2523 in the New York session.

Australian Dollar - AUD

The Australian Dollar fell as risk sentiment soured following disappointing Chinese economic data while fast-growing outbreaks of COVID-19 threaten Australia’s largest cities with longer lockdowns. Officials said the country’s second-most populous city of Melbourne would be put under curfew and Sydney reported record locally transmitted infections of the Delta variant of the virus. Overall, AUD/USD traded with a low of 0.7331 and a high of 0.7379 before closing the day at 0.7368 in the New York session.

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All information has been prepared by TraderFactor or partners. The information does not contain a record of TraderFactor or partners prices or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of futures performance.

Inflation pressures remain strong

The U.S dollar advanced against a basket of currencies yesterday after data showed producer prices posted their largest annual increase in more than a decade in the 12 months through July, suggesting inflation pressures remain strong.

The dollar index, which measures the greenback against a basket of six rivals, was 0.1% higher at 93.019. U.S. producer prices increased more than expected in July, a Labor Department report showed on Thursday, suggesting inflation could remain high as strong demand fueled by the recovery continues to hurt supply chains.

The producer price index (PPI) for final demand increased 1.0% last month after rising 1.0% in June. In the 12 months through July, the PPI jumped 7.8%, a record high since the measure was introduced just over a decade ago. Separately, data showed the number of Americans filing claims for unemployment benefits fell again last week as the economic recovery from the COVID-19 pandemic continued.

Investors remain vigilant for any signs of inflation running too hot since it could potentially spur the Federal Reserve to pull forward its the timing on tapering of asset purchases as well as interest rate hikes. 

The U.S dollar held near the top of a tight overnight range as fresh data renewed pressure on the Fed to shift away from low rate policy. The greenback has broadly strengthened since mid-June - hitting its highest since April 1 at 93.195 prior to Wednesday's data - when the U.S Federal Reserve flagged that it was gearing up for earlier-than-expected rate hikes and amid evidence that the release of pent-up demand in a rebounding economy was fueling price rises. Yesterday's data helped the greenback shake off some of the weakness from the prior session when data showed U.S consumer price increases slowed in July, easing concerns thе the Federal Reserve will imminently signal a scaling back of bond purchases. 

Yesterday's huge upside PPI surprise follows solid but moderating CPI gains, leaving a mix that will keep inflation concerns alive even as economists will continue to expect a slowing in monthly price gains into year-end. Sterling fell 0.5% on the day against the broadly stronger U.S dollar as analysts expected the Bank of England to make no moves in its monetary policy after official data showed Britain's economy grew in line with expectations in the second quarter.

The eurozone posted a large surge in its trade surplus with the rest of the world in June from May, data released by the EU statistics office showed.

Euro - EUR

The single currency gained as the eurozone posted a large surge in its trade surplus with the rest of the world in June from May, data released on Friday by the European Union statistics office showed, as exports grew faster than imports on the month. Eurostat said that the 19-country bloc recorded in June a surplus of 18.1 billion euros. Overall, the EUR/USD traded with a low of 1.1722 and a high of 1.1747 before closing the day around 1.1728 in the New York session.

Yen - JPY

The Japanese Yen traded lower after U.S data showed producer prices posted their largest annual increase in more than a decade in the 12 months through July, suggesting inflation pressures remain strong. The producer price index (PPI) for final demand increased 1.0% last month after rising 1.0% in June. Overall, the USD/JPY traded with a low of 110.29 and a high of 110.2 before closing the day around 110.39 in the U.S session.

British Pound - GBP

The British Pound was little changed yesterday as analysts expected the Bank of England to make no moves in its monetary policy after official data showed Britain’s economy grew in line with expectations in the second quarter. The Office for National Statistics said the economy grew by 4.8% in the second quarter. Overall, the GBP/USD traded with a low of 1.3793 and a high of 1.3876 before closing the day at 1.3806 in the New York session.

Canadian Dollar - CAD

The Canadian Dollar edged lower against its U.S counterpart as data suggesting U.S inflation pressures remain strong raised pressure on the Federal Reserve to reduce economic stimulus and investors braced for a Canadian federal election. Adding to pressure on the loonie, the price of oil, one of Canada's major exports, settled 0.2% lower. Overall, USD/CAD traded with a low of 1.2497 and a high of 1.2531 before closing the day at 1.2523 in the New York session.

Australian Dollar - AUD

The Australian Dollar fell against most of its major peers in today’s Asia-Pacific trading session. Investors started to hit the sell button on the Aussie Dollar yesterday after Australia’s capital city, Canberra, started a snap lockdown. Weakness accelerated overnight as US traders digested the news. The new lockdown will affect nearly 400,000 people. Overall, AUD/USD traded with a low of 0.7326 and a high of 0.7362 before closing the day at 0.7331 in the New York session.

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All information has been prepared by TraderFactor or partners. The information does not contain a record of TraderFactor or partners prices or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of futures performance.

Market participants now turn their focus to U.S consumer inflation

 ​There are just over 2 weeks to go before the Federal Reserve’s Jackson Hole Symposium and investors are buying U.S dollars on the premise that the Fed will set the stage for tapering in September. The U.S economy came roaring back this summer as vaccinations increased. 

Last week’s strong non-farm payrolls report sealed the deal for bets on monetary tightening.

Consumer prices are due for release today and a good number would reinforce expectations for taper in the fall, driving the dollar higher. USD/JPY, which rose to its highest level in 3 weeks could extend its gains towards 111 while EUR/USD, which dropped to its lowest level since April could continue to slide towards 1.16. With that said, traders need to beware of a possible US CPI miss. Last month, consumer prices rose at their fastest pace in nearly 13 years and after such a rapid increase, a slowdown is likely. Lumber prices which hit a record high of $1515 in late May have fallen 69%. 

Used car prices also fell -2.6% month over month in July according to the Manheim Used Vehicle Index which analyzes more than 5 million used vehicle transactions annually.

CPI is still expected to increase as firms pass on higher costs to willing price takers but on a year over year and even month to month basis, the pace of growth should slow ever so slightly.

EUR/USD sank to a 4 month low on the back of the German ZEW survey. Although the current conditions index improved to 29.3 from 21.9, the expectations component fell for the third month in a row. The decline from 63.3 to 40.4 was much greater than expected. Investors are worried that the Delta variant could cause a fall slowdown in Germany. 

The best performing currency was the Australian dollar which shrugged off a sharp decrease in business confidence and more restrictions in Australia. The government expanded the COVID lockdown to rural areas outside of Sydney on concerns that the virus has spread beyond city limits. 

The Canadian dollar strengthened against the greenback yesterday as oil clawed back some recent losses and the U.S Senate passed a $1 trillion infrastructure package, with the currency recovering from its weakest level in nearly two weeks. 

U.S stock markets rose to record highs after the Senate passed a bipartisan package that could provide the nation's biggest investment in decades in roads, bridges, airports and waterways.

Euro - EUR

The single currency fell yesterday as Germany's ZEW survey found investor sentiment deteriorated for the third month in a row in August due to fears that rising COVID- 19 infections could hold back the recovery in Europe's largest economy. Market participants now turn their focus to U.S consumer inflation data. Overall, the EUR/USD traded with a low of 1.1733 and a high of 1.1767 before closing the day around 1.1735 in the New York session.

Yen - JPY

The Japanese Yen fell after upbeat U.S jobs data bolstered expectations that the Federal Reserve could soon start tapering its massive bond-buying program. U.S job openings, a measure of labor demand, hit a record high in June while hiring also increased, the Labor Department said in a monthly survey on Monday. Overall, the USD/JPY traded with a low of 110.00 and a high of 110.33 before closing the day around 110.26 in the U.S session.

British Pound - GBP

The British Pound rose to an 18-month high against the euro yesterday as signs of economic recovery and falling COVID-19 rates spur expectations of a far earlier interest rate lift-off compared to the eurozone. Against the dollar, the pound hovered near two-week highs. Sterling has performed well in recent weeks as a fall in COVID-19 cases. Overall, the GBP/USD traded with a low of 1.3839 and a high of 1.3892 before closing the day at 1.3844 in the New York session.

Canadian Dollar - CAD

The Canadian Dollar strengthened against the greenback as oil clawed back some recent losses and the U.S Senate passed a $1 trillion infrastructure package, with the currency recovering from its weakest level in nearly two weeks. Canada sends about 75% of its exports to the United States, including oil, which has been pressured in recent weeks. Overall, USD/CAD traded with a low of 1.2528 and a high of 1.2585 before closing the day at 1.2573 in the New York session.

Australian Dollar - AUD

The Australian Dollar continued to play second fiddle to the U.S dollar today, though a sharp divergence in the fortunes of their domestic economies was favoring the kiwi for now. In Australia, the economic recovery has been upended by the Delta variant with Melbourne today forced to extend its lockdown by another week and Sydney no nearer to opening. Overall, AUD/USD traded with a low of 0.7326 and a high of 0.7362 before closing the day at 0.7331 in the New York session.

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Investors are worried about inflation and the highly contagious Delta variant

The economic calendar may not be as a jammed pack this week compared to last but if today’s moves in commodities are a sign, this could be a very active week in the financial markets. 

Gold prices ended the day down 2% after dropping more than 4% at the start of the Asia trade. 

Oil prices settled the day down about the same amount after bouncing off lows.

The U.S dollar was mixed at the start of the NY session but with Treasury yields turning positive, the greenback ending higher against all of the major currencies. These wild intraday swings can be explained by looking at 3 main factors affecting investor appetite and more specifically the outlook for the U.S dollar this month. They are monetary tightening, inflation, and the coronavirus Delta variant. The U.S dollar is strong and commodity prices are weak because Friday’s non-farm payrolls report set the stage for taper talk later this month. 

Members of the Federal Reserve gather in Jackson hole at the end of August for their annual symposium and it is widely believed that they will announce their plans to slow asset purchases in the near future. 

Gold prices crashed for this very reason but recovered because stocks remained under pressure throughout the NY session. Strong job growth drove stocks to record highs on Friday but equities were unable to extend their gains. Investors are worried about inflation and the highly contagious Delta variant. U.S. consumer and producer prices are due for release and while price pressures are expected to rise, the pace of growth could slow. Not only have policymakers said repeatedly that higher inflation is transitory but last month’s increase was the largest in 13 years so deceleration is likely. Lumber prices, which had been trending higher throughout the first 6 months of the year, plummeted in July and are now at their lowest level since 2018. 

Used car prices are also down 2.6% from the previous month according to wholesaler Manheim. Will weaker price growth affect the Fed’s taper plans? Probably not but it could be the excuse for profit-taking in the dollar. 

The greatest worry because it could derail everyone’s plans is the Delta variant. The U.S is averaging more than 100,000 cases a day, the highest since February. Restrictions and masks mandates are returning across the globe with many businesses delaying office reopening plans. Investors are worried that if case growth fails to slow, travel and other social activities will. The sell-off in oil, intraday recovery in gold and decline in stocks is a reflection of the growing anxiety in the markets. We are worried that the markets are underestimating Delta’s ability to crunch demand and cause risk aversion to returning.

Euro

The single currency traded lower as investor morale in the eurozone fell to a three-month low on a sharp drop in expectations due to concerns that new lockdown restrictions could loom in the autumn and beyond. Sentix’s index for the eurozone fell to 22.2 points in August from 29.8 in July. A Reuters poll had pointed to an August reading of 29.0. Overall, the EUR/USD traded with a low of 1.1733 and a high of 1.1767 before closing the day around 1.1735 in the New York session.

Yen

The Japanese Yen fell against the U.S Dollar as a run of strong U.S job figures solidified expectations the U.S Federal Reserve could soon start tapering its massive coronavirus-driven stimulus. The prospect of the Fed's reduced bond-buying pushed down U.S bond prices, lifting their yields and hitting other safe-haven assets. Overall, the USD/JPY traded with a low of 110.00 and a high of 110.33 before closing the day around 110.26 in the U.S session.

British Pound

The British Pound weakened against the dollar though was close to its strongest versus the euro since February 2020, as investors focused on the potential pace of stimulus tapering after the Bank of England meeting and strong U.S jobs data. In recent weeks, sterling has outperformed as COVID-19 cases have fallen and high vaccination rates. Overall, the GBP/USD traded with a low of 1.3839 and a high of 1.3892 before closing the day at 1.3844 in the New York session.

Canadian Dollar

The Canadian Dollar edged higher as the US Senate came close strongest to passing a $1 trillion infrastructure package, but gains were capped by additional pressure on oil prices. Canada sends about 75% of its exports to the United States, including oil. US crude prices were down 3.8% at $65.71 a barrel, extending last week's steep losses. Overall, USD/CAD traded with a low of 1.2528 and a high of 1.2585 before closing the day at 1.2573 in the New York session.

Australian Dollar

The Australian Dollar eased today, weighed down by lower commodity prices, while signs the U.S. Federal Reserve could start tapering bond purchases sooner weighed on risk-sensitive currencies. The Australian dollar dropped as business confidence data also showed recent coronavirus curbs are taking a toll on the economy. Overall, AUD/USD traded with a low of 0.7326 and a high of 0.7362 before closing the day at 0.7331 in the New York session.

Euro-Yen

EUR/JPY is trading below 14, 50 and 100 days moving average. Fast stochastic is giving a bearish tone and MACD is also issuing a bearish stance. The Relative Strength Index is above 43 and lies below the neutral zone. In general, the pair has lost 0.17%.

Sterling-Yen

Currently, GBP/JPY is trading above 14, 50 and 100 days moving average. Fast stochastic is issuing a bearish tone and MACD is also indicating a bearish stance. The Relative Strength Index is above 54 reading and lies below the neutral zone. On the whole, the pair has lost 0.16%.

Aussie-Yen

Currently, the cross is trading below 14, 50 and 100 days moving average. Fast stochastic is giving a bearish tone and MACD is also indicating a bearish stance. The Relative Strength Index is above 43 reading and lies below the neutral region. In general, the pair has lost 0.22%.

Euro-Sterling

This cross is currently trading below 14, 50 and 100 days moving average. Fast stochastic is indicating a bearish one and MACD is issuing a bullish signal. The Relative Strength Index is above 35 and lies below the neutral region. Overall, the pair has lost 0.01%.

Sterling-Swiss

This cross is trading above 14 and below 50, 100 days moving average. Fast stochastic is issuing a bullish stance and MACD is also indicating a bullish tone. The Relative Strength Index is above 60 and lies below the neutral region. In general, the pair has gained 0.34%.

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All information has been prepared by TraderFactor or partners. The information does not contain a record of TraderFactor or partners prices or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of futures performance.

U.S payrolls were a game-changer

The dollar climbed against major peers today, reaching a four-month high versus the euro, as traders positioned for an earlier tapering of Federal Reserve stimulus. The greenback strengthened as far as $1.1742 to the single currency, extending a 0.6% pop from Friday when a strong U.S jobs report stoked bets that a reduction in asset purchases could start this year and higher interest rates could follow as soon as 2022. 

The dollar index, which tracks the U.S currency against six rivals, rose to a two-week top 92.915. The dollar also hit an almost two-week high of 110.37 yen. U.S payrolls were a game-changer. The dollar index is eyeing a close above 93, while the currency could head for $1.1704 per euro, Weston wrote, adding that it could climb further versus the yen too should U.S yields continue to tick higher. The benchmark 10-year Treasury yield jumped 8 basis points on Friday to a two-week high of 1.3053%.

There was no trading in Tokyo today with Japan shut for a national holiday. Singapore markets were also closed. Friday's non-farm payroll report showed jobs increased by 943,000 in July compared with the 870,000 forecast by economists in a Reuters poll. Numbers for May and June were also revised up. The Fed has made the labor market recovery a condition of tighter monetary policy, and most officials back the view that a jump in inflation will prove transitory, though there is debate over how prolonged it could be. 

Traders will be keenly watching a U.S consumer price report on Wednesday. Last week, Fed vice-Chair Richard Clarida suggested that conditions for hiking interest rates might be met as soon as late 2022. 

The Australian dollar eased slightly against a broadly stronger greenback on Monday, as lower commodity prices and continued lockdowns in the country hurt sentiment, while the Kiwi also came under selling pressure but had recovered by midday. Lower prices for iron ore, one of Australia’s main exports, prices and the strength of its American counterpart following strong U.S. jobs data combined to get the Aussie off to a weaker start. Australia’s most populous state of New South Wales expanded its COVID-19 lockdown to another rural town today due to concerns the virus may be spreading from Sydney into the countryside. 

Meanwhile, iron ore futures slumped more than 5%, pressured by prospects of improved supply and weakening Chinese demand, and oil prices eased further amid worries coronavirus travel restrictions would threaten bullish expectations for demand. Over the weekend we had yet more evidence that Chinese demand for iron ore really is waning with July imports being the lowest in 14 months and on seasonally adjusted basis imports hit 16-month lows.

Euro

The single currency fell on Friday as fears around the coronavirus Delta variant, concern that economic recovery is peaking, investors reversing bets against safe-haven bonds, and an accommodative tone among central banks all pushed yields sharply lower across the world in July. The ECB adopted a symmetric 2% inflation target in July. Overall, the EUR/USD traded with a low of 1.1852 and a high of 1.1892 before closing the day around 1.1862 in the New York session.

Yen

The Japanese Yen steadied as traders positioned for an earlier tapering of Federal Reserve stimulus. The greenback strengthened, extending a 0.6% pop from Friday when a strong U.S jobs report stoked bets that a reduction in asset purchases could start this year and higher interest rates could follow as soon as 2022. Overall, the USD/JPY traded with a low of 108.85 and a high of 109.32 before closing the day around 109.02 in the U.S session. 

British Pound

The British Pound was steady on Friday, holding close to the four-month high. The British currency has been a strong performer in recent weeks as COVID-19 cases - while still high - have fallen and high vaccination rates have allowed the British government to lift most social distancing rules. Currency markets were generally quiet ahead of U.S employment data. Overall, the GBP/USD traded with a low of 1.3878 and a high of 1.3936 before closing the day at 1.3914 in the New York session.

Canadian Dollar

The Canadian Dollar weakened against its U.S counterpart on Friday as oil prices fell and investors were more impressed by jobs data in the United States than in Canada, with the loonie adding to this week's decline. Canada added 94,000 jobs in July, far fewer than expected, though most of the gains were in full-time work. Overall, USD/CAD traded with a low of 1.2486 and a high of 1.2573 before closing the day at 1.2535 in the New York session. 

Australian Dollar

The Australian Dollar eased slightly against a broadly stronger greenback today, as lower commodity prices and continued lockdowns in the country hurt sentiment, while the Kiwi also came under selling pressure but had recovered by midday. Lower prices for iron ore and the

strength of its American counterpart following strong U.S jobs data combined to get the Aussie off to a weaker start Overall, AUD/USD traded with a low of 0.7408 and a high of 0.7485 before closing the day at 0.7421 in the New York session.

Euro-Yen

EUR/JPY is trading below 14, 50 and 100 days moving average. Fast stochastic is giving a bearish tone and MACD is also issuing a bearish stance. The Relative Strength Index is above 48 and lies below the neutral zone. In general, the pair has lost 0.29%.

Sterling-Yen

Currently, GBP/JPY is trading above 14, 50 and 100 days moving average. Fast stochastic is issuing a bearish tone and MACD is also indicating a bearish stance. The Relative Strength Index is above 52 reading and lies below the neutral zone. On the whole, the pair has lost 0.02%.

Aussie-Yen

Currently, the cross is trading below 14, 50 and 100 days moving average. Fast stochastic is giving a bearish tone and MACD is also indicating a bearish stance. The Relative Strength Index is above 40 reading and lies below the neutral region. In general, the pair has gained 0.20%.

Euro-Sterling

This cross is currently trading below 14, 50 and 100 days moving average. Fast stochastic is indicating a bearish tone and MACD is issuing a bullish signal. The Relative Strength Index is above 44 and lies below the neutral region. Overall, the pair has lost 0.27%.

Sterling-Swiss

This cross is trading above 14 and below 50, 100 days moving average. Fast stochastic is issuing a bullish stance and MACD is also indicating a bullish tone. The Relative Strength Index is above 50 and lies below the neutral region. In general, the pair has gained 0.08%.

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All information has been prepared by TraderFactor or partners. The information does not contain a record of TraderFactor or partners prices or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of futures performance.

Fewer Americans filed for unemployment benefits last week

U.S stock indexes rose yesterday after data showed fewer Americans filed for unemployment benefits last week, while a decline in shares of health insurer Cigna dragged healthcare stocks lower. 

Initial claims for state unemployment benefits fell by 14,000 to 385,000 in the week ended July 31, while layoffs dropped to their lowest level in more than 21 years last month as companies held on to their workers amid a labor shortage, the Labor Department's report showed. Investors are appreciating the fact that it is unlikely for the U.S to go into another shutdown and with economic growth in full steam and interest rates at such lows interest towards equities seems intact. Focus now shifts to the jobs report today.

Analysts say a disappointing number might raise questions about an economic recovery, but it could also lead the Federal Reserve to remain accommodative. Concerns about the pace of economic growth and higher inflation have pressured the S&P 500 index, but stellar corporate earnings so far have put it on track to end the week higher.

Dow Jones Industrial Average 

The Dow Jones Industrial Average rose 0.78%. The biggest gainers of the session on the Dow Jones Industrial Average were Salesforce.com Inc., which rose 2.64% or 6.44 points to trade at 250.61 at the close. Amgen Inc. added 2.49% or 5.68 points to end at 233.99 and Walt Disney Company was up 2.40% or 4.15 points to 176.73 in late trade. The biggest losers included UnitedHealth Group Incorporated, which lost 2.44% or 10.28 points to trade at 411.26 in late trade. Verizon Communications Inc. declined 0.13% or 0.07 points to end at 55.30 and Dow Inc. shed 0.02% or 0.01 points to 60.98.

NASDAQ 100

The NASDAQ index gained 0.78%. The top performers on the NASDAQ Composite were Score Media and Gaming Inc. which rose 79.69% to 32.59, Zymergen Inc. which was up 75.88% to settle at 14.51 and Sitime Corporation which gained 30.95% to close at 184.63. The worst performers were Robinhood Markets Inc. which was down 27.55% to 51.00 in late trade, Inogen Inc. which lost 26.77% to settle at 60.24 and Itron Inc. which was down 26.50% to 71.78 at the close.

Oil

Oil prices rose more than 1% yesterday on increasing Middle East tensions, but gains were capped as fresh restrictions to counter a surge in COVID-19 cases threatened the global energy demand recovery. U.S West Texas Intermediate (WTI) crude futures rose 94 cents, or 1.4%, to settle at $69.09 a barrel. Israeli jets struck what its military said were rocket launch sites in Lebanon early yesterday in response to two rockets fired towards Israel from Lebanese territory, in an escalation of cross-border hostilities amid heightened tensions with Iran. 

The exchange came after an attack on a tanker off the coast of Oman last Thursday, which Israel blamed on Iran. Two crew members, a Briton and a Romanian were killed. Iran denied any involvement. The growing tensions come as nuclear talks between Iran and Western powers that would ease sanctions on Tehran's oil exports appear to have stalled. Offsetting the geopolitical tensions, concerns over the recovery of global oil demand grew amid a surge in coronavirus cases.

Precious and Base Metals

Gold edged down today, lingering near the key level of $1,800 an ounce, pressured by a stronger dollar as investors eyed a U.S. jobs report for cues on the Federal Reserve’s future policy stance. Spot gold fell 0.3% to $1,799.46 per ounce, set for its worst weekly performance since mid-June. If we get a combination of really solid payroll numbers coming on the back of hawkish rhetoric by the Fed, it’ll spook any interest-rate-sensitive markets like gold. 

However, a complete meltdown in gold is highly unlikely and support of $1,790 should hold. Jitters around tapering set in after Fed Vice Chair Richard Clarida said conditions for a rate hike could be met in late 2022, and the central bank could start scaling back on its asset purchase program this year. Fed Governor Christopher Waller also saw the possibility of reducing accommodative policy sooner than some expected, given the progress in economic recovery and improving the labor market. 

Higher interest rates raise the opportunity cost of holding non-interest-bearing gold. The dollar index was up 0.1%, making gold less appealing for holders of other currencies. The U.S non-farm payrolls report is due later today. Indicative of sentiment, holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell to 1,027.61 tonnes on Thursday.

Silver was steady at $25.12 per ounce and was down about 1.4% for the week. Platinum fell 0.4% to $1,001.66 and was on track for its biggest weekly fall since June. Palladium rose 0.2% to $2,652.93. Copper fell for a fifth consecutive day yesterday as concerns over the demand outlook from top consumer China pulled prices further from an all-time peak reached earlier this year. Copper is used in power and construction and many analysts expect demand to grow and supply to run short as the world swaps fossil fuels for electrification.

Traditional Agricultures

Corn and soybeans climbed yesterday on stronger export sales, though gains were capped by rainfall across parts of the U.S Midwest. Wheat traded near even before ending slightly lower, supported by firmer grains complex and distressed crops across North America. Soybeans were also supported by a daily sales notification of 300,000 tonnes of soybeans.

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All information has been prepared by TraderFactor or partners. The information does not contain a record of TraderFactor or partners prices or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of futures performance.

The whisper number for Friday’s non-farm payrolls report is a million jobs

The U.S dollar ended the day sharply higher against all of the major currencies but not before wild swings that took USD/JPY below 109.00 and then back above 109.50. EUR/USD soared to 1.1900 at the start of the NY open but plunged towards an intraday low of 1.1836 before the London close. We haven’t seen big intraday reversals like this in a while and the culprit was non-farm payrolls confusion. Private payroll provider ADP reported significantly slower job growth in the month of July that sent the dollar tumbling lower but when non-manufacturing ISM was released, investors were relieved to see service-sector job growth.

After contracting the previous month, the employment component of non-manufacturing ISM rose to 53.8 from 49.3. The PMI index rose to 64 from 60.1, a new record high that sent the dollar soaring higher. The whisper number for Friday’s non-farm payrolls report is a million jobs. The market had a violent reaction to both reports because the outcome will have a significant impact on how the U.S. dollar trades for the next few weeks leading into the Federal Reserve’s Jackson Hole summit. If the data is good, the dollar will soar on the prospect of a taper announcement later this month. 

However, if payroll disappoints, the dollar will slide as investors push their expectations for the taper to September or later. Fed President Clarida said that he can certainly see the Fed announcing a taper this year if conditions for substantial progress are met. The impact of FX policy divergences on currencies is growing. Calls by local banks for a series of interest rate hikes in New Zealand drove the New Zealand dollar to its strongest level in nearly a month before U.S. dollar strength stripped away the gains.

Still, NZD was the only major currency to end the day higher versus the USD. The European Central Bank’s dovishness sent the euro tumbling against most of the major currencies. Of course, it didn’t help that Eurozone retail sales rose less than expected and the Composite and Services PMI indices were revised lower. Looking ahead, the main focus today will be the Bank of England’s monetary policy announcement. Like the Fed, U.K policymakers believe that inflation increases are transitory.

Euro

The single currency traded higher as Eurozone business activity roared in July, expanding at its fastest pace in 15 years, as the lifting of more coronavirus restrictions and an accelerated vaccine drive injected life into the bloc's dominant service industry, a survey showed. IHS Markit's final composite Purchasing Managers' Index (PMI) climbed to 60.2 last month. Overall, the EUR/USD traded with a low of 1.1852 and a high of 1.1892 before closing the day around 1.1862 in the New York session.

Yen

The Japanese Yen steadied as the dollar recovered quickly from a fall when comments from a top U.S Federal Reserve official appeared to suggest that the central bank may reduce support for the improving economy more quickly than widely thought. The official's bullish comments on the U.S economy triggered a rebound in U.S Treasury yields. Overall, the USD/JPY traded with a low of 108.85 and a high of 109.32 before closing the day around 109.02 in the U.S session.

British Pound

The British Pound steadied around $1.39 against the dollar yesterday, buoyed by risk sentiment in markets, optimism over the outlook for COVID-19 in Britain and some anticipation of a hawkish turn from the Bank of England when it meets on Thursday. Britain’s pound has rebounded after most lockdown measures in England were dropped on July 19. Overall, the GBP/USD traded with a low of 1.3878 and a high of 1.3936 before closing the day at 1.3914 in the New York session.

Canadian Dollar

The Canadian Dollar edged lower against its U.S counterpart yesterday along with a two-week low for oil prices, but the currency stuck to a narrow range ahead of key economic data through the rest of the week. The price of oil, one of Canada's major exports, settled 3.4% lower at $68.15 a barrel, pressured by a surprise build in U.S stocks. Overall, USD/CAD traded with a low of 1.2486 and a high of 1.2573 before closing the day at 1.2535 in the New York session.

Australian Dollar

The Australian Dollar initially rallied during the trading session as we continue to see hope slip back into the markets. Having said that, we have also given back some of the gains above the 0.74 level, so it does suggest that perhaps we may have a bit of ugliness ahead of us. If that is going to be the case, then the Aussie dollar will be one of the first currencies that people sell. Overall, AUD/USD traded with a low of 0.7408 and a high of 0.7485 before closing the day at 0.7421 in the New York session.

Euro-Yen

EUR/JPY is trading below 14, 50 and 100 days moving average. Fast stochastic is giving a bearish tone and MACD is also issuing a bearish stance. The Relative Strength Index is above 48 and lies below the neutral zone. In general, the pair has lost 0.29%.

Sterling-Yen

Currently, GBP/JPY is trading above 14, 50 and 100 days moving average. Fast stochastic is issuing a bearish tone and MACD is also indicating a bearish stance. The Relative Strength Index is above 52 reading and lies below the neutral zone. On the whole, the pair has lost 0.02%.

Aussie-Yen

Currently, the cross is trading below 14, 50 and 100 days moving average. Fast stochastic is giving a bearish tone and MACD is also indicating a bearish stance. The Relative Strength Index is above 40 reading and lies below the neutral region. In general, the pair has gained 0.20%.

Euro-Sterling

This cross is currently trading below 14, 50 and 100 days moving average. Fast stochastic is indicating a bearish tone and MACD is issuing a bullish signal. The Relative Strength Index is above 44 and lies below the neutral region. Overall, the pair has lost 0.27%.

Sterling-Swiss

This cross is trading above 14 and below 50, 100 days moving average. Fast stochastic is issuing a bullish stance and MACD is also indicating a bullish tone. The Relative Strength Index is above 50 and lies below the neutral region. In general, the pair has gained 0.08%.

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All information has been prepared by TraderFactor or partners. The information does not contain a record of TraderFactor or partners prices or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of futures performance.

Glimpse of the potential seasonal impact

The first week of August will be a busy one for the financial markets. Employment reports are due for release from the U.S, Canada and New Zealand along with central bank meetings in Australia and the U.K August is traditionally a challenging month for stocks and today we got a glimpse of the potential seasonal impact. The Dow Jones Industrial Average hit a record high at the start of the NY trade but gave up all its gains by the end of the day. U.S data was weaker than expected with the ISM manufacturing index sinking to 59.5 from 60.6. Economists predicted a pickup in manufacturing activity but shortages of raw materials and shift in spending to services caused activity to slow. Overall the number is still strong, particularly given the sharp rise in the unemployment index but that did not stop the U.S dollar from following Treasury yields lower. The big story today was the plunge in yields – at one point 10-year rates were down 5 percent. The Australian dollar was one of the best performers on Monday but most Australian banks are calling for the RBA to renege on its plan to taper bond purchases from September forward. The initial announcement to taper bond buys was made on July 5th. At the time Melbourne was coming out of a lockdown and Sydney just went into what was supposed to be a 2 week long snap lockdown. Darwin, Perth and Brisbane also tightened restrictions which meant that more than 12 million Australians were in lockdown but the period was expected to be short. Fast forward a few weeks and lockdowns in Brisbane and Sydney were extended with Sydney marking its sixth week under stay-at-home orders. All of this has and will continue to take a toll on Australia’s economy as the country faces a reasonable chance of contraction in the third quarter. As the year progresses, differences in monetary policy direction will become a stronger driving force for currencies. This week’s Australia and U.K rate decisions will highlight the divergence between two countries with vastly different COVID situations. Large parts of Australia were in lockdown in July whereas the U.K removed all restrictions last month. The Bank of England will be debating a further reduction in bond purchases. Divergences like these are not unique to these two countries and as they become more apparent, the impact on currency pairs will be more significant.

Euro

The single currency steadied as German consumer prices, to make them comparable with inflation data from other European Union countries, rose by 3.1% in July, a 13-year high, compared with 2.1% in June, leading services sector trade union Verdi to demand significant wage increases. It shows that unrestrained borrowing is no political plan in the long run. Overall, the EUR/USD traded with a low of 1.1850 and a high of 1.1907 before closing the day around 1.1868 in the New York session.

Yen

The Japanese Yen gained as the dollar lurched lower yesterday, back towards the one-month lows hit last week when it became clear the Fed was in no hurry to tighten policy and policymakers broadly shared Chairman Jerome Powell’s view that rate rises were “a ways away”. Markets are awaiting the July non-farm payrolls report, due on Friday. Overall, the USD/JPY traded with a low of 109.34 and a high of 109.81 before closing the day around 109.67 in the U.S session.

British Pound

The British Pound steadied yesterday versus the dollar, ahead of a Bank of England meeting later in the week, as global risk tone improved on optimism for the U.S infrastructure bill. A drop in COVID-19 cases and the reopening of the British economy fueled a rebound in the pound in July, with the currency re-emerging from its biggest fall in nine months in June. Overall, the GBP/USD traded with a low of 1.3886 and a high of 1.3981 before closing the day at 1.3903 in the New York session.

Canadian Dollar

The Canadian Dollar traded higher against the U.S Dollar yesterday. The week ahead contains little of note in the economic calendar for Canada ahead of Friday’s July job report that consensus expects to confirm a 145.7k increase in the number of new jobs created in Canada last month, which is seen pulling the unemployment rate lower from 7.8% to 7.3%. Overall, USD/CAD traded with a low of 1.2419 and a high of 1.2489 before closing the day at 1.2460 in the New York session.

Australian Dollar

The Australian Dollar popped higher after the country’s central bank surprised markets by sticking with plans to taper bond buying, arguing the economy will recover quickly once coronavirus lockdowns ease. The Aussie gained 0.6% when the Reserve Bank of Australia (RBA) said it would trim its weekly bond-buying to A$4 billion ($2.96 billion) in September as planned. Overall, AUD/USD traded with a low of 0.7408 and a high of 0.7485 before closing the day at 0.7421 in the New York session.

Euro-Yen

EUR/JPY is trading below 14, 50 and 100 days moving average. Fast stochastic is giving a bearish tone and MACD is also issuing a bearish stance. The Relative Strength Index is above 46 and lies below the neutral zone. In general, the pair has gained 0.05%.

Sterling-Yen

Currently, GBP/JPY is trading above 14, 50 and 100 days moving average. Fast stochastic is issuing a bearish tone and MACD is also indicating a bearish stance. The Relative Strength Index is above 53 reading and lies below the neutral zone. On the whole, the pair has lost 0.20%.

Aussie-Yen

Currently, the cross is trading below 14, 50 and 100 days moving average. Fast stochastic is giving a bearish tone and MACD is also indicating a bearish stance. The Relative Strength Index is above 38 reading and lies below the neutral region. In general, the pair has lost 0.50%.

Euro-Sterling

This cross is currently trading below 14, 50 and 100 days moving average. Fast stochastic is indicating a bearish tone and MACD is issuing a bullish signal. The Relative Strength Index is above 41 and lies below the neutral region. Overall, the pair has gained 0.24%.

Sterling-Swiss

This cross is trading above 14 and below 50, 100 days moving average. Fast stochastic is issuing a bullish stance and MACD is also indicating a bullish tone. The Relative Strength Index is above 48 and lies below the neutral region. In general, the pair has lost 0.49%.

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All information has been prepared by TraderFactor or partners. The information does not contain a record of TraderFactor or partners prices or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of futures performance.