USD On The Defensive, Cable Tops $1.29

The greenback breaks overnight lows (in BBDXY terms) after Asia-Pac hours saw Monday’s weakness extend, with regional participants reacting to the downtick in U.S. Tsy yields, softening in near-term inflation expectations outlined by the New York Fed and the fall in the Manheim used car auction price index.

• The wage components of the latest UK labour market survey keep the broader USD under pressure during the Asia-London handover, as cable moves to fresh session highs, showing above $1.2900 for the first time since April ’22. Our technical analyst notes that the pair has resumed its medium-term uptrend, with bulls now eying a pair of Fibonacci projections ($1.2925/77) as the next areas of technical resistance.
• USD/CNH threatens a break below CNH7.20, on the broader USD move and after Chinese media outlets leant heavily on the potential for further stimulus measures.
• USD/JPY bears have failed to force a meaningful test of 140.50 thus far, with spot showing around Y140.70 last, representing a ~400 pip pullback from the late June high.
• Today’s docket is fairly limited with German ZEW data and Fed/ECB speak providing the highlights now that UK labour market data is in the rear-view.