Forex Today: Falling yields spur a dollar sell-off

Valeria Bednarik FXStreet

What you need to know on Thursday, October 14:

The dollar sold-off on Wednesday dragged lower by falling US Treasury yields. The market mood was dismal throughout most of the day, with Asian indexes closing in the red after a mixed Chinese Trade Balance, which posted a surplus off $66.76 billion, much better than anticipated. Exports were sharply up, although imports contracted.

Yields were weaker ever since the day started, but accelerated their slump following the release of US inflation data. The September Consumer Price Index was upwardly revised to 5.4% YoY from a previous estimate of 5.3%, while the core annual reading was confirmed at 4%.

The US Federal Reserve published the Minutes of its latest meeting. As expected, the document showed that policymakers are ready to kick-start tapering, a gradual reduction in the pace of asset purchases, aiming to end it in mid-2022.

Wall Street once again struggled to advance, with the three majors indexes closing mixed around their opening levels. JP Morgan announced upbeat third-quarter earnings, reporting profits of $11.7 billion.

The EU announced a series of proposals that would reduce the burden on Irish Sea trade created by Brexit’s Northern Ireland Protocol. Meanwhile, BOE’s Governor Andrew Bailey reiterated his hawkish message.

The EUR/USD pair trades near the 1.1600 figures near fresh weekly highs, while GBP/USD hovers around 1.3660. Commodity-linked currencies resumed their advances with USD/CAD trading at 1.2430 a fresh multi-month low, and the AUD/USD approaching 0.7400 ahead of the release of Australian employment figures.

Gold benefited the most from the broad dollar’s weakness, now trading at $1,791 a troy ounce. Crude oil prices remain steady, with WTI at around $80.50 a barrel.

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

EUR/USD weakens as US jobs data trims Fed rate cut bets

The EUR/USD pair trades in negative territory for the third consecutive day near 1.1860 during the early European session on Thursday. Traders will keep an eye on the US weekly Initial Jobless Claims data. On Friday, the attention will shift to the US Consumer Price Index inflation report.

GBP/USD bullish outlook prevails above 1.3600, UK GDP data looms

The GBP/USD pair gains ground near 1.3635, snapping the two-day losing streak during the early European session on Thursday. The preliminary reading of UK Gross Domestic Product for the fourth quarter will be closely watched later on Thursday. The UK economy is estimated to grow 0.2% QoQ in Q4, versus 0.1% in Q1.

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Gold sticks to modest intraday losses through the Asian session on Thursday, though it lacks follow-through selling and remains close to a nearly two-week high, touched the previous day. The commodity currently trades above the $5,070 level, down just over 0.20% for the day, amid mixed cues.

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Markets will be watching closely on Thursday, when the United Kingdom’s Office for National Statistics will release the advance estimate of Q4 Gross Domestic Product. If the data land in line with consensus, the UK economy would have continued to grow at an annualised pace of 1.2%, compared with 1.3% recorded the previous year.

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