The US dollar has found a big bid.
The move has accelerated since the ISM manufacturing data but I'm loathe to pin it all on that. The index rose to 56.1 from 55.4 when it has been expected to decline slightly. Prices paid were slightly below expectations. One take is that still-strong growth is a sign the Fed will need to hike more.
I'm sympathetic to that thinking but I suspect that flows in the new month are the driver. Bonds are are selling off with 2-year yields up 10.6 bps to 2.64% in a flattener. That's the highest in two weeks.
Today is the first day of the Fed's stepped up quantitative tightening so the are plenty of moving parts here.
In terms of the moves, they largely erase some of the recent moves, though cable and the euro are worrisome as they hit one-week lows. The real mover though is USD/JPY, which has now climbed for three straight days in what could be the end of a six-week consolidation period.
