Dollar has traded in mixed Today, the ranges have been relatively narrow. EUR-USD reached a six-day-low at 1.1842, while the DXY index of dollar prices rose to a five-day-high at 92.19. Then both returned to near-mid-range levels. Various countervailing factors are curtailing directional aspirations in EUR-USD. Not least is the continued dovish commitment of both the ECB & Fed.
| DJIA F | 34,931 | -67 | -0.19% | ||
| S&P F | 4,408.00 | -7.10 | -0.16% | ||
| NASDAQ F | 15,040.75 | -5.50 | -0.04% | ||
| Gold | 1,822.20 | 8.10 | 0.45% | ||
| Silver | 25.860 | 0.278 | 1.09% | ||
| Crude Oil | 69.48 | -1.08 | -1.53% |
The U.S. Jobs Report for July, which is due this Friday, will be an important factor for the markets to assess the Fed’s approach towards tapering. “sufficient progress” Before tightening the lever, we should first examine the labor market. We expect a positive report (with 600k as the headline), but factors from pandemic-era events may again slow progress.
Bonds, stocks and the stock market all rallied in the past two days. While they continue to trade on similar fundamentals, the markets are now moving according to their own rhythms. The Delta virus, uncertainty about growth, earnings, central banks policies, and the momentum. Treasury yields grew at the start of the day and continued to rise into the afternoon. The rally lasted until rates started moving northward and buying stopped. The 10-year rate slid to 1.152% and the 30-year was at 1.827% into the afternoon but closed at 1.177% and 1.85%, respectively.
The 2-year has also continued to oppose QE tapering, and tightening of risks. Since late June, the rate fell from 0.269% to 0.170%. This is not too far away from the 0.155% range where it was just before the FOMC’s June 16 surprise with the upward movement in dots. And Wall Street, after a choppy start, found its footing through the afternoon and posted solid gains with the Dow and S&P 500 up 0.8%, while the NASDAQ increased 0.55%.
ADP’s private payroll report for July highlights where we expect to see a 500k rise today, versus a 692k increase yesterday. On paper, the services ISM for July is projected to improve from 60.1, to 61.0. Also, the weekly MBA mortgage and oil inventory numbers are available.
Fedspeak will find Clarida’s comments interesting after several policymakers have called for QE tapering in the latter part of this year. He is a speaker at the Peterson Institute. The earnings calendar includes CVS Health (including Booking Holdings), Uber, GM, Roku and Emerson Electric. It also features Electronic Arts, Allstate Manulife, Marathon Petroleum ANSYS, McKesson Sun Life, MPLX Etsy CDW Amerisource Bergen Vulcan Materials FleetCor Fox MGM resorts GoDaddy Apollo Global.
