Forex news for North American equities on November 30, 2021
- Powell: It's appropriate to talk about speeding up taper at coming meeting
- Powell: It is time to retire "transitory" for inflation. Dollar moves higher.
- US November consumer confidence 109.5 vs 111.0 expected
- Canada Q3 GDP +5.4% vs +2.5% expected
- Clarida: Getting inflation down close to 2% key to managing expectations
- BOE's Mann: It's premature to talk about rate hikes
- BOE's Mann: Omicron is a particular question mark over consumer confidence
- Dallas Fed Texas service sector index 22.7 in November versus 20.7 in October
- ECB's De Cos sees significant downward revision of 2021 Spanish GDP forecast
- US Sept Case-Shiller 20-city house price index +19.1% y/y vs +19.3% expected
- US Sept FHFA house price index +17.7% y/y vs +18.5% prior
- OPEC November oil output rose 220K bpd
Markets:
- Gold down $12 to $1771
- US 10-year yields down 9 bps to 1.436%
- WTI down $3.25 to $66.69
- S&P 500 down 88 points to 4566
- EUR leads, CAD lags
The tone for the day was set in Asia when Moderna's CEO warned that the vaccines might not offer protection. Others pushed back against that idea and the mood was slowly improving early in US trade.
Then Powell pulled out the rug by putting a faster taper squarely on the table for the December meeting and retiring the phrase 'transitory'. This was his final appearance ahead of the Dec 15 meeting and he cleared wanted to send a message. There were caveats about omicron but the market reaction was considerably with the dollar jumping and equities crumbling. Stocks finished on the lows but the dollar trade afterwards wasn't so easy.
The Powell spike marked the highs of the day for the dollar and from there it was a steady bleed lower. Perhaps that was month-end at work but the moves were big. The euro has now retraced nearly all of the move and is 120 pips from the lows.
Aside from month end, it's tough to square the moves in the US dollar. One thing you could say is that omicron is the real factor, despite Powell's comments. By the time of the Dec 15 FOMC we'll know much more. If omicron is bad, they certainly won't taper faster. If it's not bad, then the Fed (and everyone else) are back to where we started. Still, the moves are jarring.
Aside from the dollar, yen crosses were weak but showed at least a bit of resilience. After hitting new lows, all the commodityFX/JPY crosses closed above Friday's lows.
Onto December!
