Comment: US recap: USD slide on falling UST yields pared ahead of U.S. CPI

Noram Lithium

12/08/2024 21:54

(Repeat with no changes)
       Aug 12 (Reuters) - The USD index held at 103.21, trading
either side of flat in NorAm's afternoon, having churned in a
slight 103.31-103.09 range on Monday. Summer liquidity is on
full display as moves appear more dramatic based on flows, with
no significant data released on Monday.
    Markets are treading water awaiting U.S. PPI data on Tuesday
and U.S. CPI on Wednesday which may inform on the state of
inflation, and the near-term depths and size of Fed rate cuts.
    EUR/USD, the largest component of the USD index, edged up
0.16% to 1.0933, while trading in a 1.0939-1.0912 range. EUR/USD
is steady awaiting Tuesday's ZEW euro zone expectations, as well
as German economic sentiment and current conditions data.
Technically, euro support is at 1.0892, the 50% Fibo of
1.0777-1.1009, and 1.0835, the 200-DMA.
    USD/JPY rose 0.34% to 147.13 in NorAm afternoon trade. The
yen rallied to a 148.23 high in Asia as local markets were
closed for holiday. Falling UST yields supported the yen in
NorAm as U.S.-Japan yields converged. USD/JPY's rally off Aug 5
post-payroll lows is intact, and the pair traded a third
consecutive session of higher- highs and lows. Resistance is at
148.23, Monday's high, then 149.77, the August 2 high.
    GBP/USD rose to a session high at 1.2794 in NorAm as UST
yields slipped. Sterling bulls are a bit wary ahead of Tuesday's
UK employment data release and Wednesday's UK and U.S. CPI data.
The recent paring of record GBP/USD spec longs perhaps providing
fodder for longs to reload. UK SONIA futures indicate the BoE
may cut rates a further 44bps into year-end 2024, while U.S.
SOFR futures hint at 100bps of Fed cuts. With Fed rate cuts seen
deeper and faster than the BoE, further GBP/USD gains may be
likely, depending on the upcoming inflation releases.
    UST yields slipped 2-4bps in the 2-to-10-year space, a
steeper decline in rates than other developed markets adding
downside pressure on the dollar.
    Equities whipsawed early in the session, but are hovering
near flat in NorAm afternoon trading, amid tipped option
interest, geopolitical unrest and mounting U.S. political
uncertainties.
    Commodities rallied, led by oil  CLc1  which is up nearly
3%, as Middle East tensions gain traction. Copper is up around
1.7% as markets expect rates to move lower in the near-term.
     
    For more click on  FXBUZ   

(Editing by Terence Gabriel
Paul Spirgel is a Reuters market analyst. The views expressed
are his own.)
((mailto:paul.spirgel@thomsonreuters.com))