FX Daily: Staring at the geopolitical headlights
USD: Should be doing a little better High energy prices and an above-consensus August NFP reading mean the dollar should really be doing better than it is. The fact that it is not probably owes to the still constructive investment environment, where global equity markets, including emerging markets, continue to perform well. In fact, of ...
USD: The US dollar has struggled to gain momentum despite high energy prices and a better-than-expected August NFP reading. This lack of improvement might be attributed to a robust investment environment, with global equity markets, including emerging markets, performing well. The inverse correlation between global equities and the dollar is currently the strongest among various monitored correlations.
Additionally, the USD/JPY drop last week has led global macro accounts to speculate on potential September or October developments, such as a grand bargain involving faster Bank of Japan tightening and portfolio shifts towards domestic assets by the $2trn GPIF national pension fund. The 155 level in USD/JPY remains significant, with potential consolidation expected above it.
This week, the US macro focus should be on Friday's August CPI data, which may sway the Fed towards a 25bp rate hike on September 16. The US Treasury market will also be in focus due to $119bn auctions of three, 10, and 30-year bonds. The Treasury's buy-back operation of longer-dated Treasuries could weigh on the dollar. The US Labor Day holiday may limit activity today, but the DXY could drift higher in a 99.00-99.50 range.
Written by urgent.news from Hellenic Shipping News's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.