Forex Today: Taper that is not taper and plummeting yields lead the way
|What you need to know on Friday, September 10:
The dollar fell alongside US government bond yields. The yield on the 10-year Treasury note fell to 1.287%, piercing the 1.30% critical threshold after a disappointing 30-year note auction. The US auctioned 30-year bonds at 1.91%, down from 2.04% previously. As yields stabilized near daily lows ahead of the close, the greenback also remained near its lows vs other currencies.
The EUR/USD pair trades around 1.1830 after a disappointing ECB monetary policy decision. As widely anticipated, the ECB left its rates unchanged, with the main refinancing rate 0.00%. The central bank also maintained the emergency bond-buying program (PEPP) at €1,850 billion until at least March 2022, although it will continue at a “moderately lower pace.” Additionally, APP purchases will continue at a monthly pace of €20 billion for as long as necessary. However, policymakers added that they are ready to adjust all instruments to ensure inflation stabilizes at their 2% target over the medium term.
The pound was among the best performers, helped by the absence of news coming from the United Kingdom.GBP/USD approached its weekly high at 1.3867, ending the day at around 1.3840.
Commodity-linked currencies posted modest intraday gains vs their American rival, as the soft tone of global indexes partially offset the broad greenback’s weakness. USD/CAD trades around 1.2650 while AUD/USD stands at 0.7370.
Yields’ slump sent USD/JPY to 109.61, currently trading nearby.
Gold prices seesawed between gains and losses but were unable to find a way. XAU/USD trades marginally higher on a daily basis, around $1,793 a troy ounce. On the other hand, Crude oil prices were sharply lower amid a worse than anticipated EIA stockpiles report, which showed stockpiles declined 1.529 million. WTI settled at around $68.00 a barrel.
Wall Street was unable to retain modest intraday gains and finished the day in the red, with all of the major indexes posting modest losses.
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