ForexLive European FX news wrap: Dollar firms slightly, equities down

Forex news from the European trading session - 29 October 2021

Headlines:

Markets:

• CHF leads, NZD lags on the day
• European equities lower; S&P 500 futures down 0.4%
• US 10-year yields up 3.6 bps to 1.605%
• Gold down 0.3% to $1,792.88
• WTI up 0.4% to $83.11
• Bitcoin down 0.8% to $60,933

There were plenty of data to digest in European morning trade but they pretty much reaffirmed modest recovery conditions in the euro area in Q3 while October inflation surged higher, creating more headaches for the ECB despite their defiance yesterday.

Euro area inflation surged to its highest in 13 years and bond yields - especially peripheries - are moving sharply higher on the day, with markets accelerating rate hike bets by the ECB (10 bps fully priced in for July next year).

With long-end yields climbing back again today, that is keeping yen pairs more buoyed with USD/JPY moving up from 113.55 to 113.85 on the day.

Meanwhile, a more subdued tone in equities (tech leading the way lower after poor earnings by Apple and Amazon) is pinning risk currencies lower while the dollar is seeing a slight advance for the most part on the session.

EUR/USD fell from 1.1665 to 1.1645 and is keeping at the lows currently, while USD/CAD is a touch higher around 1.2340-50 levels since early morning trade.

The aussie is trailing slightly as AUD/USD backed away from nearing a test of its 200-day moving average, slipping from 0.7550 to 0.7535. And NZD/USD fell from 0.7185 to 0.7165 as the antipodeans struggled in general amid the softer risk mood.

Month-end trading might offer up some volatility before the weekend but be wary of the moves in the bond market as that will likely carry through to next week and start to have more of a broader impact perhaps, with the FOMC meeting also just around the corner.

October 30, 2021 at 12:07AM
Justin Low
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