BUZZ-COMMENT-US summary: EUR / USD starts to fall again, yen remains under pressure
October 12 (Reuters) – The dollar index rose on Tuesday, extending recent gains to a new one-year high thanks to gains against generally weaker-yielding reserve currencies, with EUR / USD sliding to key support near 1.1500 and the y remaining under pressure.
The higher-yielding pound resisted the dollar’s advance, the Aussie edged higher while oil-linked currencies such as NOK, CAD and USD / MXN remained supportive after crude hit multi-year highs this week .
Weighing in on EUR / USD, German economic sentiment indicator ZEW fell for a fifth month and ECB policymaker François Villeroy de Galhau was cautious about how to cut asset purchases.
Fed speakers reinforced the idea that tapering will begin after the November 2-3 meeting, strengthening the case for rising Treasury yields since the last meeting.
US job openings in August finally retreated from July’s sixth straight record, but the exit rate hit a record high as the wave of the Delta variant of the pandemic surged during the month, although the data is relatively old news.
The Treasury yield curve flattened slightly in the middle of the 3-year and 10-year auctions, the latter easily removed after a big concession ahead of the auction since Friday’s jobs report.
EUR / USD fell 0.2% and moved closer to major supports at 1.1500 including barrier options and the March 2020 high and 50% Fibo of the 2020-21 pandemic rally to 1, 1495/925 on EBS.
USD / JPY extended its rally by more than 4% since the Fed meeting with a 0.3% gain on the day to its highest since December 2018, led by 5-year Treasury yield spreads which hit their highest since early March 2020, and closer to the key 2018 peak of 114.55.
GBP / USD was held steady in choppy trading between 10 and 21 day moving averages, despite record UK employment and aggressive pricing of BOE rate hikes starting next month.
It comes amid lingering concerns about energy in the UK and Brexit, and perhaps some apprehension that the BOE is tightening too quickly or that 2-year gilts yields have already returned to pre-levels. the pandemic suggest much less room for improvement, dropping from just 2.8bp in August to 61.8bp this week.
AUD / USD was up 0.03% after abandoning earlier gains aided by Sydney’s partial reopening and recent surges in commodity prices, but equity weakness also dampened the Australian dollar’s first rally , risk sensitive.
Bitcoin and Ether have been swayed lower by weaker stocks.
Wednesday features the US CPI and FOMC minutes, with core CPI stable at 4.0% yoy and + 0.3% mo.
For more click on FXBUZ
(Edited by Burton Frierson Randolph Donney is a Reuters market analyst. The opinions expressed are his own.)
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.