Forex today: US yields rally hard, supportive of the DXY in recovery mode
FX today saw the US dollar rally on a rise in US yields spiking as bonds continued to drop with Kuorodas Davos comments sparking a sell-off.
The greenback was also able to find buyers coming in late riding President Trump’s Davos speech while those late to the party were perhaps tentative to funny trust in his conviction that indeed the US is about to depart materially from the G20 Accord.
"There is no doubt that trade is high on Washington’s agenda this year, but last week’s heightened anxiety about currency and trade wars is receding for now," explained analysts at ANZ. Meanwhile, the US two years moved through 2.70% and toward the 3.00% danger zone which could become more of a material problem that the dollar is not going to find buyers upon as some analysts warn and perhaps is reflected in some of the moves lower today on Wall Street, (The S&P 500 fell 0.4%).
As far as data went, and as we head into the FOMC’s assessment of inflation, the December personal spending was higher by 0.4% for m/m while the headline PCE inflation rose 0.1% m/m (+1.7% y/y). The Core PCE rose 0.2% m/m and 1.5% y/y.
USD/JPY was not very convincing and stalling at the weekly Cloud base of 109.29 ahead of Japanese Retail Sales and Jobs data tonight.
GBP/USD was a heavy fall on the back of the Brexit disarray, while the UK government remains divided on EU exit terms. Cable did find some support near the 200-HMA down at 1.40/2531 in London before recovering back to 1.4070. EUR/USD was quiet overnight around 1.2400 but sank 20 pips on a stronger dollar and then some the 200-hour SMA, and made a low of 1.2337.
As for the commodity bloc, Oil gave back some of its recent gains, with WTI falling 1.0% to USD65.5/bbl. Gold was down 0.5% to USD1342/oz and closed $1,339/oz. AUD/USD was in a 10 pip range just below the 0.081 handle while the bird opened near 0.7345 before moving down to break the 10-DMS near 0.7310 where it closed.
Key US events
- Wall Street ends down on soaring yields
- WTI settles lower as dollar rebounds
- Gold edges lower on stronger dollar
- US Dollar Index extends recovery to 5-day highs
- US: Personal Income stronger in December - Wells Fargo
- UK Brexit Sec. Davis: Brexit talks could last longer than October deadline
Looking ahead ot Asia's events
- Jap retal and unemployement
- AUD HIA New Home Sales and National Australia Bank's Business Conditions