Forex news from the European trading session - 31 August 2021
Headlines:
- ECB's Holzmann: Would advocate for slowdown of PEPP purchases in Q4
- Eurozone August preliminary CPI +3.0% vs +2.8% y/y expected
- UK July mortgage approvals 75.2k vs 79.0k expected
- Italy Q2 final GDP +2.7% vs +2.7% q/q prelim
- Germany August unemployment change -53.0k vs -34.0k expected
- France August preliminary HICP +2.4% vs +2.1% y/y expected
- France Q2 final GDP +1.1% vs +0.9% q/q prelim
- Month-end in focus in trading today
Markets:
- NZD leads, USD lags on the day
- European equities lower; S&P 500 futures flat
- US 10-year yields up 1 bps to 1.293%
- Gold up 0.1% to $1,812.50
- WTI down 0.7% to $68.70
- Bitcoin down 1.5% to $47,941
The dollar is the laggard among the major currencies today as the selling from the end of last week continued, with month-end rebalancing perhaps a consideration on the day.
The greenback came into European trading on the softer side and extended that drop slightly, with EUR/USD climbing up from 1.1820 to 1.1845 as buyers go in search of a potential push towards 1.1900 next.
GBP/USD also pushed up to a fresh two-week high as price moved up from 1.3770 to 1.3800, testing its 200-day moving average before keeping just below that.
The antipodeans also stretched earlier gains with NZD/USD moving up from 0.7030 to 0.7060 levels as New Zealand's virus situation looks to be contained, paving the way for RBNZ rate hike bets to reenter the picture.
Meanwhile, AUD/USD pushed up from 0.7310 to 0.7340 as buyers continue the rebound from trading last week - owing more to weakness in the dollar.
Equities were more optimistic initially as US futures were up around 0.3% to 0.4% but pared gains in the past hour or so, with European indices also falling across the board.
With month-end in focus, it may make for a bit of a tricky time in navigating through price action today. Adding to that, there will be US non-farm payrolls to deal with on Friday so there could be more of a push and pull before we get to that in the days ahead.
On the balance of things, equities may still breathe a little easier as the post-Jackson Hole narrative plays out but the dollar may be left hanging as Treasury yields are also meandering for the most part with the bond market still sorting itself out.
