Summary: The US dollar remains firm after Tuesday’s shocking CPI data and with US retail sales for August today being the final data point ahead of next Wednesday’s FOMC meeting where a minority A sizable number is looking for 100 basis points from the Fed, while long-term US yields have broken out of a bullish range. The Chinese Yuan is trading weakly after China eased the rate overnight and although the country is easing regulations on real estate investment, USDCNH touched 7.00 mark today.
Focus on forex trading: USDCNH breaks above 7.00. USD targets retail sales, new long term high yields.
The reaction of US yields and the US dollar after August core CPI data was much stronger than expected in the US surging well, with US yields on the curve at or near the cycle highs. period and the US 10 years of index. Benchmark Treasury yields are out of range to hit a June high of 3.50%. The US Retail Sales Report for August released shortly after this article is published will lead to further upside for US yields and the US Dollar, which is likely to move in the same direction. However, somewhere on the horizon, I wonder how the US dollar trades during the downturn and investors continue to drop in stock prices, not due to multiples challenge from yields. higher, but due to a recession in profits. The „norm” in the past has been that stocks bottomed out only during a period when the Fed was rapidly easing to stem a collapsing economy. For now, Risk Approach has cast NZD and NOK as weaker pairs of interest, with AUD and CAD not far behind and the British Pound struggling a bit more today, even if the market Bank of England price hike a bit. week closer to 75 basis points (still less than 50/50 odds on forward prices). Pound Sterling is unlikely to perform well if risk sentiment
But perhaps most importantly, USD selling picked up a little bit of pace today as USDCNH rallies above 7.00 for the first time since summer 2020 and whatever Despite continued feedback from the PBOC through stronger daily fixation over the past three weeks on a daily basis. Overnight, China also left the exchange rate unchanged, although there were some bright spots in the news from China overnight as local authorities heeded Xi Jinping’s call to ease real estate investment by a series of measures. In addition, the Chengdu Covid lockdown is easing. However, any meaningful extension above USDCNH 7.00 will keep the market competitive, especially if the all-time high of 7,187 emerges. USD
strength and rising yields prevented further declines in USDJPY after USDJPY traded south of 1
3.00 overnight. We all know the BoJ/MoF is more likely to step in if USDJPY trades north of 1
5.00 again, but note a deeper correction at crossovers like AUDJPY, which is probably a better place to go. speculate on a JPY revival if risk sentiment remains pessimistic. The pair rejected the recent extension above 97.00, although it likely needs to drop to 95.00 with longer global yields to suggest something bigger is afoot. Chart
: AUDUSD
Australians grabbed a broad, albeit brief, overnight offer based on a strong August jobs report, but faltered in today’s trade as sentiment Risks are back and CNH’s decline against the US Dollar has increased a bit and has broken past the psychologically important 7.00 level. Watch the cycle low here below 0.6700 for an extension to at least 0.6500 on a break lower and retest the cycle low from June. Table
: Development development and strength of trends FX Council and CNH G10.
Interestingly, CHF is leading the charts as EURCHF tries to hit a cycle low today and Europe can’t be on the same page in an attempt to cap energy prices (risk on CPI results) higher and a stronger CHF to compensate). Elsewhere, the NZD is the weaker of the bunch, while the Japanese authorities have impressed with their latest verbal intervention, as evidenced by last week’s huge dynamic shift in broader JPY picture. .
AUDNZD remains in a positive trend, but it is at multi-year highs as we watch to see if a proper trend develops. Elsewhere, NZDUSD is sinking into psychologically challenged levels below 0.6000, while USDCAD is hitting cyclical resistance at 1.3200 and USDNOK is hitting domestic highs and just over 1 cent above with the highest closing levels since the pandemic panic began. 2020 around 10:25 am I wonder if today is the key day for EURGBP confirmed uptrend.