Forex news for North American trading on October 5, 2021:
- US September ISM services index 61.9 vs 60.0 expected
- US Sept Markit services PMI 54.9 vs 54.4 prelim
- US international trade balance for August -$73.3B versus -$70.5 billion
- Canada Aug international merchandise trade balance +1.94B vs +0.43B expected
- ECB Lagarde: Will pay close attention to wage developments
- Sen Warren: We need changes at the Fed
- IMF: Global growth in 2021 now expected to be slightly below July forecast of 6%
- Fed's Evans: I'm comfortable that prices will come down as supply chains improve
Markets:
- WTI crude oil up $1.56 to $79.18
- European TTF gas prices +21.5%
- US Henry Hub natural gas +8.9% to highest close in 12 years
- S&P 500 up 45 points to 4345
- US 10-year yields up 5.2 bps to 1.532%
- GBP and CAD lead, JPY lags
The FX moves today weren't large aside from yen and CHF crosses. Both of those lagged on a positive risk tone right across the board.
The tone improved after the services PMIs though that might be correlation more than causation. We've seen equities bounce around for several weeks and it's been more of the same so far this week as the inflation-worriers and dip-buyers fight it out.
A more durable trend at the moment is in energy prices. It's undoubtedly a crisis in Europe now with TTF prices up another 20% today and up 8x from a year ago. The squabbling and foot-dragging around Nord Stream 2 continues and surely that didn't help.
There were solid intraday pops in EUR and GBP but they didn't last, perhaps owing to the energy crisis and potential economic knock ons. Lagarde was prescient when she said that the ECB raising rates won't make more gas.
CAD showed some early life on the higher oil prices but faded later. It did hold onto the bulk of its gains versus JPY in a rise to the best levels since early July. Given the gyrations in USD, that might be a better gauge of how the loonie is faring.
