- CHF leads, GBP lags for the day
- European equities down; S&P 500 futures down 0.6%
- US 10-year rates down 2 basis points to 3.943%
- Gold down 0.4% to $1,622.27
- WTI crude up 0.3% at $78.75
- Bitcoin down 0.8% to $18,911
It’s a crazy time in the markets when you see that a central bank has to intervene in a big way because of its own government’s policy and not an external shock. Yet this is the case in the UK, as the Bank of England was forced to reinitiate QE in its £2 trillion gilt market, in order to restore functioning and orderly market conditions.
UK gilt yields reacted accordingly, falling sharply with 10-year yields down 30bps on the day to 4.20%, with the low hitting 4.01% earlier after the announcement. However, the pound came off after an initial boost that took Cable to a high of 1.0838 and is now down 1.4% at 1.0580 at the time of writing.
The BOE’s announcement provided brief relief for risky trades as US futures pared down about 1% before now falling back heading into North American trading. In the major currency space, it is still the dollar as the greenback continues its wild run across the board.
EUR/USD is down 0.3% at 0.9555 as downside pressure persists while USD/JPY is steady around the 144.60-70 levels as buyers remain cautiously poised to try to retest 145.00 amid intervention fears.
Commodity currencies remain on the back with USD/CAD up 0.3% at 1.3770 after previous highs of 1.3832. Meanwhile, the aussie continues its journey to recover its Pacific Peso headline with another 0.6% drop to 0.6395 – but also off its previous low of 0.6365.
The UK circus may steal the show in the markets, but let’s not get too distracted because the buy the dollar, sell everything else the narrative is always the main narrative.