FOREX: USD Index Off Recovery Highs into Close, GBP Recovers Well
Sep-26 16:50
* Following two days of strong gains for the greenback, the USD index has eased off recovery highs...
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FED: US TSY 5Y AUCTION: NON-COMP BIDS $107 MLN FROM $70.000 BLN TOTAL
Aug-27 16:45
- US TSY 5Y AUCTION: NON-COMP BIDS $107 MLN FROM $70.000 BLN TOTAL
FOREX: Early Dollar Strength Dissipates, US GDP/PCE Awaited
Aug-27 16:41
- Initial weakness for European stocks on Wednesday worked in favour of the dollar, prompting some notable weakness for the rest of the G10 FX complex. French political uncertainty likely stoked these concerns, weighing on EURUSD in particular. However, firmer sentiment for equities as the session progressed, and a bounce for French OATs then assisted a reversal back into the ranges for most major pairs.
- For EURUSD, the initial price action took spot below 1.16 and the key 50-day EMA pivot support, threatening an important bearish development. However, with spot now residing around 50 pips off the 1.1574 lows, the bullish overall trend looks set to stay intact.
- EURAUD breaking to new daily lows through the WMR fix puts the price clear of both the 50-dma at 1.7893 and likely avoids the formation of support at a possible uptrendline drawn off the February lows.
- Weakness for the New Zealand dollar still stands out, and despite the most recent bounce, spot has narrowed the gap to the pre-Powell lows overall, located at 0.5800.
- Friday’s low print adds to the medium-term significance of this level, which has proven an important pivot point dating back to late 2023. A break of the figure will be required for a deeper selloff, potentially targeting a move to 0.5728, the 61.8% retracement of the Apr/Jul rally.
- Despite USDJPY attempting to break back above 148.00 during the European morning, the pair tracks back around 147.50 as US GDP (2nd read) and PCE prints are awaited across Thursday and Friday.
- In emerging markets, more concrete details on a security deal being achieved between Mexico and the US provided a late boost for the Mexican peso. USDMXN had traded back up to resistance at 18.80 before the headlines, and the late dollar weakness provided an additional headwind for USDMXN, which trades back towards 18.69 approaching the APAC crossover.
US TSYS/SUPPLY: Preview 5Y Auction
Aug-27 16:41
- Tsy futures trade mixed with 2s-10s off lows (FVZ5 +.75 at 109-10.5 vs. 109-06.75; TYZ5 currently +0.5 at 112-08 vs. 112-01.5 low) ahead of the $70B 5Y note auction (91282CNX5) at 1300ET, WI is currently running at 3.732%, 25.1bp rich to last month's tail.
- July auction recap: Tsy futures dipped (FVU5 at 108-05 from 108-06 at the cutoff) after the latest $70B 5Y note auction (91282CNN7) tailed: 3.983% high yield vs. 3.973% WI; 2.31x bid-to-cover vs. 2.36x prior.
- Peripheral stats: Indirect take-up to retreated to 58.28% from 64.68% prior, directs at 29.50% vs. 24.44% prior, primary dealer take-up 12.23% vs. 10.88% prior.
