Forex today: US yields new highs, dollar firm again, but are the US politics as stable?

Ross J Burland FXStreet

Forex today carried over the Trump trade with optimism still building around tax reform while investors jumped back into stocks, driving the dollar higher by 0.2% in the DXY. However, there are some concerns that there may ot be enough support from the Republicans, so one to keep an eye on this week.

The US 10yr treasury yields broke through the psychological 2.4% level from 2.37% lows to 2.42%, a fresh six month high. 2yr yields were also higher up 0.4%, travelling from 1.56% to 1.59% to make for a nine-year high. Markets are factoring in the Fed fund futures yields that offer a chance of a December rate hike at 99%.

The other driver is Fed's Taylor who was drawn by the Republican Senate in a show of hands for the next Fed Chair. Taylor believes the administration can substantially lift non-inflationary economic growth through deregulation and tax changes, making for an easier and less expensive business climate in the US. Yellen’s current four-year term ends on February 3rd. what is key though, is that Taylor’s monetary policy rule calls for interest rates significantly higher and that is bullish for the US dollar.

As for currencies, the EUR outperformed, rising from 1.1750 to 1.1793 despite the ECB coming up this week and a stronger dollar on the session. This was, however, a short-lived rally that was sold into leaving the single currency flat on the session. GBP has closed NY at 1.3114 as investors build their concerns that the UK economy is not strong enough for a rate hike; subsequently, the 55-DMA support at 1.3153 was broken, and that is significant with eyes now back to 1.3080 recent lows. The EUR/GBP cross was higher to 0.8975.

USD/JPY tested back to the 114 handle from 113.40 with the Dow making fresh record highs. The Antipodeans have been pressured again, with the Aussie losing the 0.78 handle to score a low of 0.7771 and the Kiwi was still under pressure due to the new government’s policies, dropping to a five-month low to 0.6886.

Key events ahead in Asia:

Analysts at Westpac noted that we have the Australian Q3 CPI data that is expected to rise 0.8% (core +0.5%). "Westpac sees a softer 0.7% for the headline and 0.3% for the core with broader pressures absent. Westpac’s headline forecast ex-energy (household electricity and gas) is 0.27%."

Key notes from US session:

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

GBP/USD clings to multi-day peaks below 1.3500

GBP/USD trades with marked gains on Friday, now giving away some gains following an earlier surpass of the key 1.3500 yardstick. Indeed, Cable gathers fresh steam amid the strong offered stance in the Greenback, all after US NFP badly missed expectations in July.

EUR/USD: Post-NFP bounce falters around 1.1580

EUR/USD reverses Thursday’s decline and trades with solid gains in the 1.1560 region, or two-month peaks, on Friday. The pair’s firm performance comes in a context of a sharp correction in the US Dollar as investors continue to assess disheartening US NFP readings.

How Wall Street rigs the game [Video]

In this week’s Live from the Vault, Andrew Maguire is joined by Peter Antico and Sean Stone to discuss the Paradigm of Money - an in-depth expose of financial market corruption, from naked shorting to the two-tier system that protects Wall Street.

XRP Price Forecast: XRP nears critical $1.00 support

Ripple (XRP) remains pressured on Friday, trading around $1.03 at the time of writing. The token appears to hold this current level as support but lacks a catalyst to sustain a knee-jerk rebound toward the next key resistance at $1.10.

Is Gold about to enter its biggest bull run since 2020?

Gold has stormed back into the spotlight and its next move could leave late buyers chasing. On August 5, the yellow metal surged almost 7% – roughly $174 – to close near $4,308 an ounce, posting one of its biggest daily advances in recent history. A weaker U.S dollar, falling Treasury yields, changing Federal Reserve expectations and renewed safe-haven demand all struck at once.

9-3: Is the Federal Reserve’s vote tally Warsh's new forward guidance?

The rate did not move. Neither did the statement, and that’s the more interesting fact. Set the July 29 Federal Open Market Committee (FOMC) statement beside the one issued on June 17, and the two documents are identical apart from a single verb and a paragraph at the bottom naming three dissenters.