- WTI crude up $2.03 to $84.15
- US 10-year yields up 7.5 basis points to 1.784%
- S&P 500 up 4 points to 4662
- Gold down $6 to $1,816
- JPY leads, AUD lags
The mood was bad early on and a dismal retail sales report threatened to make things worse, but the headlines didn’t trigger big moves, at least not at first. Eventually, the dollar rallied across the board, which is counterintuitive to the data. Rising yields helped fuel the move and around 3.8 rate hikes are now scheduled for this year.
There was not much form in the FX market moves as it had been a straight dollar bid for about 20 minutes after the retail sales report. US stocks stumbled hard in the afternoon, then rebounded late. The final move brought some relief to the USD rally outside of USD/JPY.
Elsewhere, the loonie was not helped by oil’s incessant rise. It was briefly negative after retail sales, but has stabilized and is now within striking distance of the November highs. The loonie fared much better than its commodity cousins in this environment, but was still below the USD on the day.
Cable capped off another solid week by halving its decline against the US Dollar late in the day. There were decent sales in the London patch and right after, but that bottomed out.
USD/JPY ended the day flat, but it was a small win for the bulls as the pair fell as low as 113.50 before rebounding to 114.23 as yields rose sharply late. This is where I will be watching in the coming week as the 10 threatens recent highs and a potential reactivation of anxiety about rising borrowing costs.
Watch out for Chinese data on GDP, retail sales and industrial production soon after the FX market reopens.
Have a good week-end.