7/30/2021 3:36:52 PM GMT
The US Federal Reserve disappointed markets by showing no rush to taper.
The US economy is expected to have added roughly 1 million jobs in July.
EUR/USD has recovered nicely, but a course change has not been confirmed.
The EUR/USD pair reached fresh July highs on the last trading day of the month, settling just below the 1.1900 level. The pair has advanced ever since the week started but gained momentum on Wednesday after the US Federal Reserve smashed the dollar.
No time for tapering
The US central bank left its monetary policy unchanged, as expected, and noted that the economy has continued to progress but noted that “substantial further progress” toward the Fed’s goal of stable prices and maximum employment has not yet been achieved. “We are not there yet,” said Chairman Jerome Powell in the Q&A that followed his speech. Market participants were hoping for some clues on how and when the US central bank will start to reduce its bond-buyin
This graph shows new home sales for 2020 and 2021 by month (Seasonally Adjusted Annual Rate).
The year-over-year comparisons were easy in the first half of 2021 - especially in March and April.
However, sales will likely be down year-over-year in the 2nd half of 2021 - since the selling season was delayed in 2020.
And on inventory: note that completed inventory (3rd graph in previous post) is near record lows, but inventory under construction is closer to normal.
This graph shows the months of supply by stage of construction.
The inventory of completed homes for sale was at 36 thousand in June, just above the record low of 33 thousand in March and April 2021.
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Responses to the Durable Goods results were limited with the Fed meeting on Wednesday dominating market considerations.
Equities were slightly lower, with the S&P 500 losing 0.47%, the Dow shedding 0.24% and the NASDAQ taking the largest hit,1.2% related to China’s crackdown on some of its largest tech firms.
Treasury yields fell due to the expected continuation of the Fed’s easy money policy and the lack of new information on the prospects for a tapering of the bond program.
The dollar was mixed, gaining against the euro, sterling, Australian, New Zealand and Canadian dollars but falling versus the Japanese yen and Swiss Franc.
7/28/2021 12:59:43 AM GMT | By Anil Panchal
US inflation expectations, as measured by the 10-year breakeven inflation rate, per the St. Louis Federal Reserve (FRED) data, eased from the seven-week top on Tuesday. In doing so, the risk barometer fades the one-week-old recovery moves, suggesting further hardships for the traders to predict the market sentiment.
The drop in inflation expectations could be linked to the latest US data concerning housing prices and Durable Goods Orders as the figures slipped beneath the market forecasts but the previous readouts were revised up. Also challenging the inflation expectations could be the latest Delta covid strain fears in the Asia-Pacific, as well as in the West.