The USD is trading lower as London traders look to exit for the day. The greenback is making new lows vs the:
- EUR
- CAD
- AUD, and
- NZD
The GBPUSD is moving toward the Asian session high and the USDJPY is moving back toward closing levels from yesterday after trading to the highest level since June 30th earlier in the US morning session.
The declines come despite US yields near session highs.
- 2 year yield is at 3.12%. The high yield reached 3.146 with the low at 2.99%
- 10 year yield is at 3.09% just off the high at 3.093% (up 9.2 basis points). The low was at 2.967%
- 30 year yield is at 3.263% with a high for the day at 3.269% (up 7.4 basis points). The low was at 3.165%.
Looking at the hourly chart of the 10 year yield, the yield has moved back above its 200 hour MA at 3.025% and 38.2% of the move down from the June 15 high at 3.034%. The 50% midpoint of the same move comes in at 3.122%.
With the strong report another 75 basis point rise is expected at the July 27 meeting. That would take the target rate to 2.25% – 2.5%. The Fed officials have said the neutral rate is at that area. Other rate hikes are expected at the final 4 meetings into year end.
CPI data next week is expected to show a 1.1% gain for the month for the headline with 0.6% for the core. That is not going to dissuade the Fed from continuing to keep the hikes coming.
Meanwhile, the ECB is stuck between a rock and a hard place as it makes it’s way through land mines from Ukraine war, higher energy costs which are crippling growth prospects and the dilemma from still low rates. The BOJ is intent on keep the pedal to the metal. The BOE has tightened policy but faces similar pains that the EU faces from high inflation .
That should keep the dollar well supported.
However, for now the dollar is seeing some selling pressure as the week moves toward the close in Europe and London.