FOREX: Greenback Advances as Trump Tariff Announcements Awaited Next Week
Feb-07 18:11
- U.S. businesses created fewer jobs in January than the previous month and market forecasts, but the unemployment rate unexpectedly dipped a tenth to 4.0%, reinforcing the Federal Reserve's propensity to keep rates on hold for now. This dynamic provided sharp two-way swings for the greenback following the data.
- Initially, the US dollar gapped lower and prompted a 151.35 print for USDJPY. However, there was a very swift reversal which took the pair to a fresh session high of 152.42 just 1 minute after the release.
- This mixed sentiment prompted the USD index to oscillate around unchanged levels in the following hours, however, as Trump headlines began to cross, the USD remained on the front foot for the majority of the late Friday session.
- A plethora of tariff related headlines prompted a lot of noise in G10 currency markets, however, the underlying message that announcements will be made on reciprocal trade has bolstered a risk off theme, supporting haven currencies.
- The euro was hard hit during the flurry of messaging, with EURUSD extending the pullback from 50-day EMA resistance to around 1.4%, a level that was firmly rejected during Wednesday’s session. This renewed weakness places the focus back on 1.0272, the Feb 4 low.
- For EURJPY, weakness today briefly extended the week’s decline to around 3.05%. Price action saw the cross pierce key support at 156.18, the Dec 3 low. Below here, greater attention will be on the medium-term cluster of support between 153.27 and 154.46.
- JPY strength has been a key development of currency markets this week amid a relatively more hawkish BOJ narrative, and USDJPY has had two tries below the 151 handle on Friday. A solid bounce has ensued on both occasions with market participants citing an oversold condition for the pair and a late mention from Trump that tariffs on Japan are an option.
- Global FX markets will continue to be primarily driven by tariff related developments, however, Chinese CPI/PPI data is also due this weekend.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
US TSYS/SUPPLY: Review: 30Y Bond Re-Open: Small Stop
Jan-08 18:04
Treasury futures climbing higher, USH5 currently 112-07 (+2) after the $22B 30Y auction reopen (912810UE6) stops .7bp through: 4.913% high yield vs. 4.920% WI; 2.52x bid-to-cover vs. 2.39x in the prior month.
- Peripheral measures has indirect take-up 66.63% vs. 66.53% prior; direct bidder take-up 20.71% vs. 19.10% prior; primary dealer take-up 12.66% vs. 14.37% prior.
- The next 30Y auction is tentatively scheduled for February 13.
FED: US TSY 29Y-10M BOND AUCTION: HIGH YLD 4.913%; ALLOT 67.56%
Jan-08 18:02
- US TSY 29Y-10M BOND AUCTION: HIGH YLD 4.913%; ALLOT 67.56%
- US TSY 29Y-10M BOND AUCTION: DEALERS TAKE 12.66% OF COMPETITIVES
- US TSY 29Y-10M BOND AUCTION: DIRECTS TAKE 20.71% OF COMPETITIVES
- US TSY 29Y-10M BOND AUCTION: INDIRECTS TAKE 66.63% OF COMPETITIVES
- US TSY 29Y-10M BOND AUCTION: BID/COV 2.52
US TSYS/SUPPLY: WI 30Y Re-Open
Jan-08 17:57
- WI has receded to 4.922% from 4.939% earlier heading into the $22B 30Y auction re-open (912810UE6) cutoff at 1300ET, 38.7bp cheap to last month's tail: 4.535% high yield vs. 4.523% WI.
- Treasury futures still weaker but off session lows (TYH5 -.5 at 108-05), curves steeper: 2s10s +1.047 at 40.019, 5s30s +0.599 at 45.227.
