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Currency Market Analysis

Sep 24, 2021 | Currency Market Analysis

Global Themes

USD slips as taper news boosts shares, bond yields

After months of to-ing and fro-ing, firmer detail on the US Federal Reserve’s taper program looks to have removed some uncertainty and allowed US shares to rise and bond prices to fall.

US bond yields leaped higher with the US ten-year bond yield ending at 1.44% -- the highest level in almost three months.

The Fed said on Thursday that a move to taper “could come as soon as the next meeting” and would be expected to come to an end by the middle of next year.

USD lower

The USDSGD fell sharply with the pair down 0.6%.

The British pound gained with the Bank of England’s more optimistic assessment of the UK economic overnight.

The AUD was higher with commodities lifted by the broad improvement in sentiment. Gold, however, a key safe haven, tumbled.

The Canadian dollar also gained.

Fed in focus

Global markets stronger were despite mostly weaker PMI numbers.

PMI, which provide the most up-to-date reading of economic activity, missed expectations in Europe, the UK and the US.

This extends a recent theme of slowdown seen since May.

Tonight, the focus switches back to central bank policy, with Fed chair Jerome Powell due to speak at 10.00pm.

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