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UST Yields, Month-end Flows in Focus

EUR
MNI (London)
  • Disappointing demand at the US 7-yr note auction provided an added boost to rising UST yields Thursday which in turn provided a sharp upside correction in the USD.
  • EUR/USD touched an extended high of $1.2243 in early NY before it dropped to $1.2161. Recovery efforts were capped below $1.2200 before closing the day at $1.2174.
  • Despite the pullback EUR/USD proved to be fairly resilient compared to USD corrections in other pairs, the rate aided by corrections in EUR crosses.
  • Rate marked a high of $1.3184 in early Asia then dropped to $1.2138 in initial risk off trade, market reacting to equity losses and UST yields.
  • However, as UST yields eased, said to be a reaction to headline that the US Senate had denied a minimum wage increase, so EUR/USD edged to $1.2183 then settled between $1.2145/60 through to the European open.
  • UST yields continue in the driving seat for direction via USD strength. Fed speak also continues in focus. Month-end flows will also be a factor today. Preliminary model predictions was for USD sell interest to emerge, though this may be weaker due to the pullback in US equities. We await final model predictions.
  • Support $1.2138/33, $1.2110/00, $1.2075. Resistance $1.2185, 1.2200/10, $1.2218(76.4% $1.2243-1.2138)
  • Germany Import Prices 0700GMT, France GDP, PPI/CPI 0745GMT.
  • European Council video conference 0730GMT statement. ECB Schnabel 0830GMT, Visco 1600GMT.
  • US Personal Income/Spending, PCE 1330GMT, UofM 1500GMT.
MNI London Bureau | +44 203-586-2231 | john.webb@marketnews.com
BulletMarketsForeign Exchange Bullets
MNI London Bureau | +44 203-586-2231 | john.webb@marketnews.com
BulletMarketsForeign Exchange Bullets

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