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FOREX: USD Juggernaut Rolls On, US PPI Up Later

FOREX
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The USD juggernaut rolls on, with the BBDXY index trending towards 1287 at the time of writing. This is fresh highs in the index back to Nov 2022. 

  • Firmer yields continue to underpin dollar strength. US benchmark Tsy yields are 2-3bps higher, led marginally by the front end. The 10yr yield is near 4.48%, fresh highs back to early July.
  • This has weighed on the yen, with USD/JPY breaching the 156.00 handle. We are down around 0.40% in yen terms. SO far today, we haven't seen any fresh rhetoric from the Japan authorities around FX weakness. As we noted earlier, the continued rise in US yields and less short positioning in yen (compared to earlier in the yen) may blunt any intervention effectiveness in the near term.
  • Focus could rest on 156.67, a projection level, while 157.86 was the July 19 high.
  • AUD/USD is down close to 0.25%, last near 0.6465/70. This is fresh lows back to the intra-session sell off on Aug 5. Employment figures showed a slowdown in jobs growth but a steady unemployment rate.
  • NZD/USD is closer to intra-session Aug 5 lows (0.5850), last near 0.5860. Earlier data showed mixed Oct inflation trends, but the RBNZ is still likely to be confident of the 1-3% inflation target being maintained in Q4.
  • EUR/USD is back under 1.0550, fresh lows back to Nov last year.
  • In the equity space, US equity futures are down a touch. In the regional Asia Pac space, trends are mixed. China and Hong Kong markets are lower, but losses are less than 1% at this stage. Japan and Australian markets are higher.
  • Looking ahead, the Fed’s Powell, Kugler, Barkin and Williams speak and US October PPI and jobless claims print. The ECB’s Lagarde, de Guindos and Schnabel appear and the October meeting account is published. Preliminary Q3 euro area GDP & employment and September IP are released.
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The USD juggernaut rolls on, with the BBDXY index trending towards 1287 at the time of writing. This is fresh highs in the index back to Nov 2022. 

  • Firmer yields continue to underpin dollar strength. US benchmark Tsy yields are 2-3bps higher, led marginally by the front end. The 10yr yield is near 4.48%, fresh highs back to early July.
  • This has weighed on the yen, with USD/JPY breaching the 156.00 handle. We are down around 0.40% in yen terms. SO far today, we haven't seen any fresh rhetoric from the Japan authorities around FX weakness. As we noted earlier, the continued rise in US yields and less short positioning in yen (compared to earlier in the yen) may blunt any intervention effectiveness in the near term.
  • Focus could rest on 156.67, a projection level, while 157.86 was the July 19 high.
  • AUD/USD is down close to 0.25%, last near 0.6465/70. This is fresh lows back to the intra-session sell off on Aug 5. Employment figures showed a slowdown in jobs growth but a steady unemployment rate.
  • NZD/USD is closer to intra-session Aug 5 lows (0.5850), last near 0.5860. Earlier data showed mixed Oct inflation trends, but the RBNZ is still likely to be confident of the 1-3% inflation target being maintained in Q4.
  • EUR/USD is back under 1.0550, fresh lows back to Nov last year.
  • In the equity space, US equity futures are down a touch. In the regional Asia Pac space, trends are mixed. China and Hong Kong markets are lower, but losses are less than 1% at this stage. Japan and Australian markets are higher.
  • Looking ahead, the Fed’s Powell, Kugler, Barkin and Williams speak and US October PPI and jobless claims print. The ECB’s Lagarde, de Guindos and Schnabel appear and the October meeting account is published. Preliminary Q3 euro area GDP & employment and September IP are released.