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Needle Still Points South


Yields Bounce as Equities Make New Monthly Highs


Heading North


Bull Rally Accelerates


Economists Survey Raises 2021 CPI Forecast To 4.9%

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  • After some initial choppy price action, greenback weakness resulted across the board following the release of the September FOMC decision/statement. The Dollar Index made fresh lows for the week in the aftermath of the release, briefly touching below the 93.00 mark.
  • Referencing the substantial progress for the labor market during the press conference, Chair Powell was clear that the test could be met by the following meeting. Adding that tapering ending around mid-2022 may be appropriate was enough to bolster a greenback recovery.
  • The DXY surged throughout the press conference, making new highs for the session and then extending to the week's best levels and the highest point since August 23.
  • Particular weakness for the Japanese Yen with equity indices in the green saw USDJPY bouncing significantly from 109.11 support once more to trade 0.55% higher on Wednesday.
  • EURUSD echoed broad dollar sentiment, breaching both sides of the week's range and eventually breaking below 1.1700 support. This opens key support at 1.1664, Aug 20 low and an important bear trigger, a break of which would strengthen a medium-term technical bearish case.
  • CAD the best performing G10 currency, despite the weaker dollar. Further catch up with recent moves in oil prices in play here as well as a relief rally following Monday's election. CADJPY has firmed 1.2%, approaching its 200-day moving average at 86.42.
  • Improved risk sentiment has outweighed the broader moves in the dollar with AUD and NZD also around 0.3% higher, bucking a recent string of losing days.
  • Central Bank meetings continue tomorrow with the SNB and the BOE decisions/statements. On the data front, European Flash PMIs are scheduled before Canadian Retail Sales and US unemployment claims headline the NY session docket.