USD: Profit-Taking Into the Weekend

The BBDXY range overnight was 1222.73 - 1231.23, Asia is trading around 1230. Finally a sustained move higher in the USD off levels that were overdone in the short-term.

• US 10-Yr yields bounced quite hard off their support around 4.25% as the market eases back on rate cut expectations for this year and the next.
• The market seems to be paring back some USD shorts going into the weekend, as we await the outcome of the meeting between the US and China.
• Resistance in the BBDXY around 1230 is currently being challenged, the market has failed here previously but this move does feel as if it has more to do. A move back here will target the longer term resistance towards 1250. 
• Longer term USD longs would potentially use that bounce to start reducing their overweight in US Assets and USD’s. 
• Bloomberg - “Meiji Yasuda Life Insurance Co. may need to boost hedging of its foreign-currency investments on concerns the yen has scope to strengthen even more in reaction to the Trump administration’s trade policies.”(BBG)
• “The company's investment portfolio is vulnerable to currency market volatility, with 35% of its ¥39.7 trillion worth of investments made up of foreign securities.”
• Data : US N/Y Fed 1-Yr Inflation Expectations

Fig 1: BBDXY Hourly Chart

Source: MNI - Market News/Bloomberg