The US dollar is at the best levels of the day.It's now mostly erased yesterday's rout that came on weak PMI data.I think the FX market is looking to
The US dollar is at the best levels of the day.
It’s now mostly erased yesterday’s rout that came on weak PMI data.
I think the FX market is looking to bonds. The reaction yesterday in fixed income to the PMI wasn’t nearly as dramatic as FX and now rates are pushing above yesterday’s levels. The US 2-year yields is up 2.1 bps and a close here would be the highest since June 14 during the CPI-scare.
Today’s durable goods orders report showed an economy that’s stable. Non-defense capital goods orders excluding aircraft rose 0.4%, slightly better than 0.3% expected. The prior was also revised higher.
Many market participants are looking for a hawkish speech from Fed chairman Jerome Powell on Friday and that could be what we’re seeing in both FX and rates.
EUR/USD and cable have both completely erased yesterday’s gains and are down 38 and 64 pips respectively. Some of that is related to a 10% jump in TTG gas prices due to a longer shutdown of Freeport LNG in the US.
USD/JPY hasn’t completed the round trip yet but the rise above 137.00 breaks the 61.8% retracement, a level I highlighted yesterday.
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