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FOREX: USD Index Edges Higher, Aided By Higher Yields, RBA Expected To Cut Later

FOREX
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The USD is slightly firmer against the majors in the first part of Tuesday dealing. We were last near 1289.5 for the BBDXY index up close to 0.20% versus end Monday levels. We are still some distance from the 50-day EMA, near 1296.25. 

  • US Tsy cash markets have re-opened with a bias towards firmer yields (after Monday's holiday). The Tsy benchmarks are 2-3bps firmer at the back end of the curve. The 10yr yield back to 4.50%. Fed Governor Christopher Waller stated overnight that recent data supports holding rates steady, but rate cuts could be appropriate later on in 2025.
  • The improved yield trend so far today is likely benefiting the USD.
  • NZD is down around 0.30%, most of the other majors are off 0.15-0.20%. NZD/USD was last 0.5715/20.  To the downside, a hold above the 50-Day EMA at 0.5700 is important, a break here would open a move to 0.5668 (20-day EMA). 0.5763 is upside resistance the Dec 18 high.
  • AUD/USD is back to 0.6340/45, off a little over 0.20%. We have the RBA meeting later, followed by the Governor's press conference. A cut is widely expected today and firmly priced by the market. If delivered the statement and Governor's tone will be watched for signs of follow up easing. AUD/USD is above key short term resistance at 0.6331, albeit just.
  • USD/JPY got to lows of 151.24 earlier, but now sits higher at 151.70/75. The firmer US yield backdrop a likely support for the pair.
  • The data/event risk calendar is relatively quiet outside of the upcoming RBA announcement. 
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The USD is slightly firmer against the majors in the first part of Tuesday dealing. We were last near 1289.5 for the BBDXY index up close to 0.20% versus end Monday levels. We are still some distance from the 50-day EMA, near 1296.25. 

  • US Tsy cash markets have re-opened with a bias towards firmer yields (after Monday's holiday). The Tsy benchmarks are 2-3bps firmer at the back end of the curve. The 10yr yield back to 4.50%. Fed Governor Christopher Waller stated overnight that recent data supports holding rates steady, but rate cuts could be appropriate later on in 2025.
  • The improved yield trend so far today is likely benefiting the USD.
  • NZD is down around 0.30%, most of the other majors are off 0.15-0.20%. NZD/USD was last 0.5715/20.  To the downside, a hold above the 50-Day EMA at 0.5700 is important, a break here would open a move to 0.5668 (20-day EMA). 0.5763 is upside resistance the Dec 18 high.
  • AUD/USD is back to 0.6340/45, off a little over 0.20%. We have the RBA meeting later, followed by the Governor's press conference. A cut is widely expected today and firmly priced by the market. If delivered the statement and Governor's tone will be watched for signs of follow up easing. AUD/USD is above key short term resistance at 0.6331, albeit just.
  • USD/JPY got to lows of 151.24 earlier, but now sits higher at 151.70/75. The firmer US yield backdrop a likely support for the pair.
  • The data/event risk calendar is relatively quiet outside of the upcoming RBA announcement.