Markets:
- Gold down $15 to $1920
- US 10-year yields up 7 bps to 2.39%
- WTI crude oil down 97-cents to $109.00
- S&P 500 up 50 points to 4511
- NZD leads, JPY lags
It feels like for far too much of this year, FX market participants have been watching from the sidelines while volatility explodes elsewhere. Much of the can be explained by the global sychronized nature of the pandemic and the lack of interest rate differentials because of it. That’s changing as yields pop and FX is finally starting to move.
The yen move today was one of the larger ones of the year with most currencies gaining around 2% against the yen. Much of that was payback from a Japanese holiday yesterday but the moves were exacerbated by technical levels breaking in yen crosses and momentum.
US equity futures had been flat before the open but the yen weakness was a hint of what was to come. The markets have suddenly grown resilient against rising yields and that’s breathed new life into BTFD trades, including today.
The commodity currencies rattled back and forth but finished at the highs of the day against the US dollar and multi-month highs against the yen. The pound was also a solid gainer as it continues to trade alongside the risk move.
Headlines weren’t a big driver, though as flows dominated. We’re now approaching quarter end along with Japanese fiscal year end so keep that in mind.A few rattled the oil market and that reverberated in CAD but not to any lasting degree.