The US CPI data will be released at 8:30 AM ET with the expectation of 0.2% for the MoM headline and 0.3% for the core. That data may be the catalyst for more price action in the currency markets.
In today’s video, I break down the latest movements in the US dollar against three of the world’s most traded currencies — the euro, Japanese yen, and British pound. The USDJPY is the biggest mover with a change of 0.3%. The EURUSD and the GBPUSD are within 0.09% of the closing level from yesterday.
Trading ranges are also limited with the EURUSD having only a 41 pip range (vs 86 average over the last month), and 46 pips for the GBPUSD (vs an average of 88 pips). The USDJPY range is higher at 68 pips but the average is 141 pips.
Taking a look at the other markets, the yields are higher by 2-3 basis points across the yield curve:
US 2Y T-NOTE: 4.0412 (+0.029)
US 5Y T-NOTE: 4.1103 (+0.026)
US 10Y T-NOTE: 4.4977 (+0.024)
US 30Y T-BOND: 4.9614 (+0.022)
Today, the US treasury will auction off $39B of 10 year notes at 1 PM after an average distribution of 3 year notes yesterday. The treasury will complete the coupon auctions tomorrow with the 30 year bond ($22B).
Treasury auctions provide key insight into investor appetite for duration amid softening yields and shifting expectations around Federal Reserve policy. The focus will be on demand metrics such as bid-to-cover ratios and foreign participation, particularly as the longer-dated paper often reveals sentiment around inflation and growth prospects. There may be a redirection of foreign funds as a result of auctions as well. The 10 year is a key issue and proxy, as it is an influence on corporate borrowing as well as consumers with mortgages, car loans and other consumer credit loans hinging on that rate.
In the US stock market, the major indices are trading marginally lower with the futures currently implying:
- Dow Industrial Average -62 points
- S&P index down -5.31 points
- Nasdaq index down -18 points
This article was written by Greg Michalowski at www.forexlive.com.
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