September 10, 2021
EUR/USD: The European currency slightly rose against the US dollar on Thursday. The European Central Bank said it would reduce bond purchases over the coming quarter, taking a first step towards unwinding the emergency help that has supported the Eurozone economy during the pandemic. The Eurozone inflation readings head towards their highest in nearly a decade. Authorities say there has been a strong recovery in employment, business investment, and there are enough opportunities for private consumption to rise further. The ECB has raised its growth and inflation forecasts for this year but left its 2023 Gross Domestic Product forecast without changes. Meanwhile, investors are also focused on when the US Federal Reserve is likely to begin reducing bond purchases. As for US data yesterday, it showed that the number of Americans filing new claims for jobless benefits keeps falling. Today, Germany releases the final version of its August inflation figures, while the US will publish the Producer Price Index and Wholesale Inventories for the same month.
USD/JPY: The US dollar fell against the Japanese yen on Thursday after the US government saw strong demand for the sale of 30-year bonds. The greenback has largely moved in line with Treasury yields this week. Yields fell on Thursday after the Treasury completed $120 billion in coupon-bearing supply scheduled for this week. Yesterday, Japan published the Money Supply that was worse than market expectations and Foreign Investment in Japan Stocks and Foreign Bond Investment, which showed a positive difference between capital inflow and outflow. The local support level can be seen at 109.60. A breakout below could take the pair towards 109.15.
S&P500: The S&P500 ended lower yesterday after weekly jobless claims fell to a nearly 18-month low, dispelling fears of a slowing economic recovery but also stoking worries the Fed could move sooner than expected to scale back its policies. The main US indices finished weaker but stayed close to all-time highs. Microsoft and Amazon each declined about 1%, both among the stocks weighing most on the S&P 500 and Nasdaq. The S&P 500 real estate and healthcare indexes each fell over 1% and were the poorest performers of 11 sectors, while financials, energy and materials made a modest rise. The local resistance level can be seen at $4510. A breakout to the upside can trigger growth to $4550.