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US Dollar Edges Higher Along with Treasury Yields as USD/JPY Scopes 150+

US Dollar Edges Higher Along with Treasury Yields as USD/JPY Scopes 150+

Daniel McCarthy, Strategist

US Dollar, DXY Index, USD, USD/JPY, GBP/USD, Treasuries, Crude Oil, Gold - Talking Points

  • US Dollar bumped up a notch today, supported by higher Treasury yields
  • USD/JPY is enjoying a ride above 150 but intervention risks appear to be building
  • The Fed have made it clear rates need to be elevated. Will that boost USD further?

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The US Dollar is firmer across the board so far today as markets take stock going into the weekend.

Not surprisingly, Sterling is the largest underperformer of the majors in the fallout from the resignation of Prime Minister Liz Truss. GBP/USD is languishing below 1.1200.

USD/JPY continues to nudge above 150 with no sign of official selling at this stage. Japanese Finance Minister Shunichi Suzuki mused something about confronting speculators, seemingly ignoring the ultra-loose monetary policy being enforced by the Bank of Japan (BoJ) as directed by the Ministry of Finance (MoF).

Japanese national headline CPI printed at 3.0% year-on-year, slightly above 2.9% forecast. The core number was also 3.0% year-on-year but that was in line with estimates.

Equity markets have been fairly tame through the Asian session with Australia’s ASX 200 the main mover, slipping almost 1%. Futures are indicating a soft start for the North American cash session.

Treasury yields across the curve are a couple of basis points higher in Asian trade after surging once again in the US session. The benchmark 10-year bond hit 4.27% today, the highest since 2008.

Commodities are a mixed bag with gold slightly softer and crude oil nudging up a touch on the day so far, but both are heading toward another negative week.

After UK retail sales data, Canada will also get retail sales numbers. The Fed’s Williams and Evans are expected to be making comments that will cross the wires later today as well.

The full economic calendar can be viewed here.

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US DOLLAR (DXY) INDEX TECHNICAL ANALYSIS

The DXY index is a US Dollar index that is weighted against EUR (57.6%), JPY (13.6%), GBP (11.9%), CAD (9.1%), SEK (4.2%) and CHF (3.6%).

The DXY index remains in an ascending trend channel after making a 20-year high at the end of last month at 114.78, which may offer resistance.

The last few sessions have seen the price cross back above the 10- and 21-day simple moving averages (SMA) and this may suggest that bullish near-term momentum could be resuming.

The price has remained above the medium and longer term 55-, 100- and 260-day SMAs which may suggest that underlying bullish momentum could evolve further.

The recent range of 111.77 – 113.92 might provide support and resistance respectively.

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Chart created in TradingView

--- Written by Daniel McCarthy, Strategist for DailyFX.com

Please contact Daniel via @DanMcCathyFX on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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