Dollar remains under pressure, stocks consolidate
20 October 2021
The greenback was trying to consolidate after this week's decline, but volatility has been minimal so far today, with the EURUSD, GBPUSD, and USDJPY pairs showing only marginal movements.
The 2-year US yield has risen sharply since September and effectively doubled in a matter of weeks as market participants are pricing in rate hikes by the Fed. Firstly, it used to be bullish for the USD, but right now, it looks like the USD has peaked, and it has been down sharply since its October highs.
The Yen has also lost ground recently as the BoJ remains committed to its ultra-lose monetary policy, and sentiment improved notably, further undermining the safe-have JPY.
Commodities seem unstoppable again, with gold, silver, copper, and oil jumping vigorously this week, helping the Australian and New Zealand dollars advance further in their uptrends. The AUDJPY cross pushed above 85.50 and printed fresh three-and-a-half-year highs.
US equity indices staged an impressive recovery from their September decline, and they renewed their medium-term uptrends, rising five days in a row. New all-time highs might be reached soon if the current bullish mood persists.
Later in the day, inflation data are due in Canada, possibly influencing the USDCAD currency pair.
Meanwhile, Richmond Fed President Thomas Barkin said Tuesday that US labor shortages could outlast COVID-19 and limit overall economic growth unless the US improves education, health, and childcare policies to boost the number of people willing and able to work. However, his comments were ignored and failed to spur any volatility in the markets.