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Dollar Index Fades, But Pockets of Strength Remain

FOREX
  • The USD Index is fading off the cycle high posted after the ISM release, with 109.977 the new high watermark. This marks the strongest level since 2002. Moves in the USD now coincide with a bear market for global bonds, with BBG flagging that the BBG Global Aggregate Total Return Index (an index of sovereign and IG corp debt) is now 20% below the 2021 highs.
  • USD/JPY remains notable, with a second session above Y140 as the pair looks to establish a base north of the handle. Authorities again spoke out on the FX moves overnight, with FinMin Suzuki again warning that "FX stability is important" and that he is to "keep in touch with others on any needed response". 140.67 marks next resistance, the 2.0% 10-dma envelope.
  • NZD is the modest underperformer headed into London hours, with NZD/USD plumbing new cycle lows of 0.6051, although the move looks more muted in AUD/NZD, which trades either side of the 1.12 level and below the week's highs.

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