USD March Continues, Yields Pushing Higher

It’s been business as usual today, as the USD march continues, with yields pushing higher but moves looking strained in both cases. Despite the overextended levels, we continue to see the EUR and JPY under pressure, with the former trading below 1.0700 as growing talk of a move to parity permeates through the market. USD/JPY resistance ahead of 110.00 has limited gains in the relentless move higher in the wake of last week’s election result – the move stemmed to 109.75 or so, but with dip buyers seen ahead of 109.00 since. Given stretched levels in the 5 and 10yr rates, corrective moves look imminent.

Against the CAD, we are already seeing moderation as the spot rate is testing through support in the low 1.3400’s, with oil prices firmer and going against another build reported in the DoE today. AUD/USD is now through .7500, but faces more key levels in the mid .7400’s along with (.7400) the figure. In the UK, the jobs report was tainted by the higher than forecast Oct claimant count, which was also revised higher in Sep. However, average earnings were as expected as the unemployment rate eased to 4.8%.

Cable looks well contained inside recent trading ranges, with 1.2350 and 1.2700 looking to provide the near-term limits as the focus has shifted elsewhere. EUR/GBP is under pressure due to that seen in EUR/USD, but we are noting some support into .8560-75. For EUR/USD though, bids into 1.0680 now being filled, but more demand of note seen all the way down to 1.0600 as stop chasers look to ‘stay onside with the USD’ and press for a move to 1.0650 initially, with the Dec base in the mid 1.0500’s thereafter. On the US data side, both PPI and industrial production came in on the weaker side of expectations, but the USD steam train rumbles on with USD/JPY still eyeing a move on 110.00.

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