Forex News for North American Trading August 27, 2020:
- Gold drops from $ 23 to $ 1930
- US 10-year yields up 5.4bp to 0.74%
- WTI crude oil down 39 cents to $ 43.00
- S&P 500 up 6 points to 3,485
- AUD leads, JPY lags
What have we learned today? The shift to medium inflation targeting was mainly considered, but the knee-jerk reaction came as some surprise when the dollar fell, but soon after it was more of a sell-off trade. – in particular for longer-term bonds. The dollar followed this, but it only really stuck in USD / JPY.
The more you dig, the more it looks like a hectic market looking for something to hold onto; even technology hasn’t delivered its usual free money. Stocks hit a new all-time high, but it was a roller coaster ride that saw a sharp rise in volatility and short, harsh selling in the middle of the day.
At the end of the day, the dollar, euro, pound sterling and franc are all almost unchanged after trying both higher and lower. Commodity currencies are slightly higher than attempted breakouts were rejected.
Gold was a loser as it fell $ 24, but still finished $ 20 above the lows. It initially climbed on Powell to $ 1,975 before crashing to $ 1,910.
Where does it all leave us? There is US personal spending on Friday, but it’s hard to see that redefining the debate. I’m tempted to think that nothing has changed and that the easy-money fiscal and monetary policy paradigm will continue to do what it does.