Dollar unchanged, equities flat on Monday
08 November 2021
Volatility has been minimal so far on Monday, with the major currency pairs showing no desire to move, while equities were also consolidating after the last week's massive rally.
US equity indices rose every day last week, pushing to new all-time highs five times in the week. Stocks now look overbought, and a correction could happen anytime now.
So far, the US 10-year yield has managed to defend its 200-day moving average at 1.46%. As long as it trades above it, the medium-term uptrend in yields remain intact. However, it looks like the yield has topped (despite the market expecting nearly two rate hikes in 2022), and we could see lower yields till the end of the year.
On Friday, traders paid attention to the US labor market update. October nonfarm payrolls increased by 531,000 jobs, and data for September was revised higher to show 312,000 jobs created instead of the previously reported 194,000. Nevertheless, both the USD dollar and US yields fell after the numbers.
Later in the day, several FOMC members will have speeches, including Federal Reserve Chair Jerome Powell, who will deliver opening remarks at an online conference on gender and the economy, virtually hosted by the Federal Reserve Board. Since the topic is not monetary policy, it might not cause market volatility.
In commodities, both silver and gold surged last week, boosted by the plummeting US (real) yields. Since inflation remains very high and yields fall, the real yields fell deeper into negative territory to record lows. Oil defended the 80 USD threshold, and the uptrend is still intact.