Forex today: dollar drops with a shift in euro yields outpacing UST yields
With a shift in euro yields outpacing UST yields, forex today was not kind to the dollar.
DXY is -0.51% at the time of writing, with its biggest loss in a week after a lacklustre European session with shares closing in the red where traders eyes were then on the US ADP report that failed to impress missing expectations, extending the dollar's downside.
ECB’s Weidmann added fueled to the fire when saying that “the continued economic recovery is opening the perspective of a monetary-policy normalization,” This came after the ECB minutes overnight showed that members discussed the health of the economy and the implications of shifting away from the easing bias that is associated with its bond-buying program but showed that officials are cautious not to create unwarranted tightening in financial conditions.
The risk-off tone continued in the US session with U.S. equities dropping in technology, and plunging health care and real estate shares. The VIX was up to 12 at the start of the session.
From data, the ADP survey showed that the private sector added 158K new jobs. this way below the expected 185K and has brought tomorrow's nonfarm payrolls expectations into question and thus the dollar dropped again. Not even the positive surprise in the final services PMIs could keep the bears at bay. This arrived at 57.4 and beat the expectations of 56.5. The Markit index jumped to 54.2 from an initial estimate of 53.0.
Elsewhere, eyes were on Donald Trump who warned the future of the West is in peril in a speech in Poland ahead of the G20 meeting where lefties are protesting against Globalisation:
"The fundamental question of our time is whether the West has the will to survive. Do we have the confidence in our values to defend them at any cost? Do we have enough respect for our citizens to protect our borders? Do we have the desire and the courage to preserve our civilisation in the face of those who would subvert and destroy it?"
Trump also pledged to act 'very strongly' on North Korea missile threat.
In respect to the majors, EUR +0.59%, GBP +0.28%, Yen, -0.05%, AUD -0.20%, NZD -0.16%. CAD, +0.10%, CHF, -0.35%.
Key notes from US session:
- BoE’s McCafferty: Number of small rate hikes expected over next 2-years
- ECB's Weidmann: Ongoing recovery opens up prospect of monetary policy normalization
- Atlanta Fed: Forecast for GDP growth in Q2 of 2017 eased to 2.7%
- US: ISM Non-Manufacturing Index recovers in June - Wells Fargo
- US: Private sector employment increased by 158,000 jobs in June - ADP