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USD Mixed-to-Lower Despite Solid Buy Signal Into Month-End

  • The dollar trades mixed-to-lower early Monday, running against the bulk of sell-side models for month-end, which continue to signal a strong USD buying need into the January close. This suggests that markets will be on watch for USD rallies through the NY crossover - or alternatively, much of that month-end flow has already worked its way through markets across last week's volatile trade.
  • AUD is comfortably the outperformer Monday, with AUD/USD recovering close to 100 pips off the Friday lows. The moves come ahead of Tuesday's rate decision at which the RBA are seen weighing a conclusion to bond purchases, The internal debate at the bank is seen switching to rate hikes, as markets price four full rate hikes by year-end.
  • Haven currencies are offered, with JPY and CHF among the poorest performers so far today. Equities sit somewhat stronger, with US futures holding the bulk of the late Friday rally, but indicating a more mixed cash open.
  • German national CPI readings for January take focus going forward, with regional turnouts suggesting we may see a higher-than-expected nationwide release later today. The MNI Chicago Business Barometer is also due, with markets expecting activity to decelerate to 61.8 from 63.1 previously.

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