Forex today: dollar firmer on the macro news wires
Forex today was mixed with some headlines grabbing the attention and causing a bit of a stir in sterling and the dollar.
For the dollar, it was mostly political with a hint of the Fed. There were mixed rumors around US and N.Korean diplomats moving towards talks that were initially supportive of the dollar, but that seemed to fall apart along the same news wire. US yields popped on the idea that John Taylor could become the next Fed chairman who is second place behind Powell in the betting markets. Yellen was bullish at the IMF today, reported to be saying that low inflation will not persist. subsequently, this underpinned the dollar's strength. At the same time and in the same consequence, Trump alluded to an economic development bill.
US 10yr treasury yields ranged between 2.28% and 2.30% before jumping to 2.31% and 2yr yields rose from 1.51% to 1.54%. The Fed fund futures yields firmed, now pricing the chance of a December rate hike at 87%. The US dollar index is 0.2% higher on the day, possibly forming H&S bottom.
The euro was caught between a 1.1780 and 1.1820 range but pressured was by the Austrian election threatening the EU status quo. Catalan leaders failed to clarify their stance on independence, while the Spanish have given them until Thursday to drop the campaign.
Cable was lower on the back of speculation that Brexit talks were breaking down ahead of the EU summit on Thursday, falling from 1.3311 to 1.3225. USD/JPY held the 200 DMA for another day and popped to test the 100-D SMA at 112.16 with a lack of commitment from the bears below 111.65. The antipodeans struggled with a firm greenback even after a strong move in metals, with copper exploding to its highest in more than three years on an expanding macro theme. AUD/USD held at 0.7843 and the Kiwi at 0.7161.
Key events ahead
Analysts at Westpac offered the key events for the forthcoming Asian session:
"NZ: Q3 CPI is expected to rise 0.4%, for an annual pace of 1.8% (Westpac estimates 1.9%, RBNZ 1.6%). This will be mainly due to temporary effects such as food and fuel.
Australia: The RBA minutes are released and will provide the Board’s opinion on the key topics of housing, jobs and the consumer. RBA Assistant Governor Ellis participates on a panel at the Australia & New Zealand Investment Conference.
Key notes from US session
- Catalonia doesn’t plan to respond to govt demand on Thursday - TV3
- Wall Street ends day at all-time highs led by financials and energy
- Market wrap: dollar slightly higher with a lack of catalysts - Westpac
- John Taylor "impresses" Donald Trump for Fed chairman - BBG
- North Korea rejects diplomacy with US for now - CNN
- Fed communications in the spotlight - UOB
- US Pres. Trump: Total termination of Iran nuclear deal is a very real possibility
- US: More (positive) surprises in store? - ING
- NY Fed: Business activity grew at a robust pace in New York State