Forexlive Americas FX news wrap: Dollar and bonds go for a wild ride

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Markets:

  • Ora apartment is $ 1806
  • US 10-year yield declines by 8.5 bps to 2.89%
  • WTI oil rose $ 2.51 to $ 108.29
  • S&P 500 up 1.1%
  • JPY leads, AUD lags

This was a holiday-thinned trade with Canada outside and many U.S. traders coming out early for the long weekend but it was also the start of a new month of trading.

There have been some massive moves in FX and bonds. The dollar and yen soared in Asia and Europe with the euro, pound and Australian dollar crumbling. The latter stopped after the May low and fell to 0.6765, the lowest since June 2020.

In the bond market, 5-year yields fell 22 bps from lows to 2.88%, down from 3.62% on June 14th. It’s a similar story across the curve when flattened. The Fed fund market fell the terminal high to 3.34% in February and fell 50 bps for the rest of the year from there.

The moves in the dollar and bonds both unfolded to some degree. 5-year yields halved the decline while the dollar did the same.

EUR / USD fell as low as 1.0367 before rebounding to 1.0422. Cable was even more intense in a swan dive to 1.1971 before bouncing 130 pips (and still ending down 85 pips).

The commodity coins turned and the loonie ended up almost flat with the help of oil and gas, far surpassing its commodity cousins. I would warn of that trade because Canada was out.

The yen was the winner on the day as widespread compression becomes the norm. The BOJ may have won the war if inflation starts to fall again and so will international bonds. That will be interesting to watch in the coming days.

fx wrap

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