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USD Index Weakness Puts Greenback at New Multi-month Lows

FOREX
  • The USD Index's weakness into NY hours has put the currency at the lowest levels since late July, mirroring the pullback in the bellow of the US yield curve. Greenback weakness is most notable against NOK and GBP, both of which trade firmer on the session.
  • EUR/USD has matched yesterday's high, led by the slippage in Treasury yields mentioned above. Should momentum pick up on any break of the 1.1013 level, the next upside level crosses at 1.1017 - the Nov 29 high and bull trigger. Clearance here puts the pair at highest level since mid-August.
  • The brings the more notable expiries for today's cut into play, with E699mln rolling off at the $1.1020 strike - which could come into focus should today's PCE/durable goods/new home sales data fail to move prices meaningfully.
  • Recall the solid equity rally this month may prompt month-end FX rebalancing flows to be USD negative - an effect that could be brought forward given the staggered nature of market opening/closings across the next week or so.
  • EUR/GBP slippage followed a mixed set of UK data releases, with retail sales topping expectations with growth of 1.3% on the month vs. Exp. 0.4%. GDP, however, fared more poorly - with Q3 growth revised lower to -0.1%. Another negative quarter would tip the economy into recession.
  • November’s PCE data headlines the NY docket ahead of the weekend, with ~23.5bp of cuts priced into the Fed funds futures strip through the March FOMC and a cumulative ~157bp of cuts showing through ’24.
  • Note that final UoM sentiment survey prints, preliminary durable goods data and new home sales readings will also cross in NY hours.
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