Headlines:
- Things are all lining up for the dollar towards the end of the week
- The bond market starts to make a move
- Stocks bleed lower in European morning trade
- Germany July PPI +5.3% vs +0.6% m/m expected
- UK July retail sales +0.3% vs -0.2% m/m expected
- Eurozone June current account balance €4.2 billion vs -€4.5 billion prior
Markets:
- USD and CHF lead, NZD lags on the day
- European equities lower; S&P 500 futures down 0.9%
- US 10-year yields up 6.3 bps to 2.943%
- Gold down 0.4% to $1,752.08
- WTI crude down 2.2% to $88.50
- Bitcoin down 8.4% to $21,445
The dollar refused to wait around in trading yesterday and with its push higher, it is triggering a broader reaction in markets today. The tail is wagging the dog as the dollar jump also sees Treasury yields push higher, vindicating the advance in USD/JPY firmly above 135.00 yesterday. The pair has extended gains to today and is now trading above 137.00 as things fall into place for the greenback.
10-year Treasury yields are finally ticking above its 100-day moving average after having furiously been kept below that for several weeks now. The mood is helped as inflation worries return after having seen a record jump in German producer prices earlier in the day.
Meanwhile, equities are looking fragile as European indices slumped while US futures extended its early decline into a heavier drop at the moment ahead of North America trading.
With China also seeking to weaken the yuan, the dollar is in a good spot against the major currencies bloc. EUR/USD extended its fall from 1.0070 to 1.0050 while GBP/USD slumped heavily from 1.1910 to 1.1820 on the session. As risk trades falter, USD/CAD pulled higher from 1.2960 to 1.3000 and AUD/USD fell from 0.6915 to 0.6880 with the dollar staying firm across the board.
The technicals are also favouring the greenback at the moment and barring a shift in broader markets, the dollar looks poised to head into the weekend as king of the hill.
