- Gold flat at $1674
- US 10-year yields up 4 bps to 3.49%
- WTI crude oil up 35-cents to $85.46
- S&P 500 up 26 points to 3899
- GBP leads, NZD lags
The dollar hit session highs early in Europe and wasn’t too far off of those levels as New York arrived. A skid in oil prices sent USD/CAD to a fresh 22-month high at 1.3344 with parts of Canada on holiday.
But when US equity markets opened, a turnaround got underway. Deeply negative futures found a bid in the cash market and dollar sellers emerged. Adding to the move was the WSJ Fed preview from Timiraos. There was no hint at 100 bps and many asked: Would the Fed do 100 bps without leaking it? In reaction, the dollar slid further.
As the mood in markets extended, so did the dollar reversal and by the end of the day it was complete on all fronts aside from JPY and NZD. USD/CAD fell 100 pips from the high and cable rallied 85 pips.
A lack of support for the move was curiously absent in the bond market. US 2s finished near the highs of the day while 10s touched above 3.50% earlier in the day and finished just below.
Overall, the turn today doesn’t change much as we wait on the FOMC but it does halt the relentless US dollar rally, at least for a couple days.