Forex news from the European trading session - 9 July 2021
Headlines:
- ECB: Concerns voiced that sustained rise in rates could translate to tightening of broader financial conditions
- PBOC cuts banks' RRR by 50 bps w.e.f. 15 July
- China June M2 money supply +8.6% vs +8.2% y/y expected
- ECB's Weidmann: We are not aiming for inflation either above or below 2% target
- ECB's Rehn: New inflation goal is unambiguous
- UK May monthly GDP +0.8% vs +1.5% m/m expected
- Fed's Daly: It would be premature to say that we've achieved victory against the pandemic
Markets:
- AUD leads, JPY lags on the day
- European equities higher; S&P 500 futures up 0.3%
- US 10-year yields up 5.8 bps to 1.346%
- Gold down 0.2% to $1,798.50
- WTI up 1.1% to $73.74
- Bitcoin down 0.1% to $32,770
The bond market rally was the key story in the market this week and that seems to be cooling off as we near the weekend, as Treasury yields surged higher and that is feeding calmer tones across the market in general today.
10-year yields are up over 5 bps to 1.34% as the jitters from yesterday ebb and that is seeing European indices rally while US futures are posting modest gains on the session.
In FX, that saw the aussie and kiwi turn around earlier losses in Asia to modest gains with AUD/USD rising from 0.7425 to 0.7470 while NZD/USD pushed up from 0.6950 to 0.6978 in European morning trade.
With yields on the rise, USD/JPY is also contesting the 110.00 level though the dollar is sitting slightly softer against the likes of the euro and pound.
In other news, China also cut its banks' RRR for the first time since April last year, bolstering support for the economy; aiding risk sentiment in general too.
Meanwhile, the ECB's unanimity and cohesion behind the strategy review results yesterday quickly crumbled as remarks from policymakers today were all over the place with Rehn suggesting that they are following a somewhat similar reaction function to the Fed on inflation while Weidmann shot that down completely.
It's Italy against England in the final this weekend. Hopefully they will both deliver a good and enjoyable game. In any case, the Euros has been quite the entertaining tournament as a whole, in a time where many may not find much sporting pleasure.
Have a great weekend, everyone!
