• The dollar trades firmer headed into Friday's NY session, reversing a brief bout of weakness that came just ahead of reports that China state banks were selling dollars to shore up the USD/CNY rate ahead of 7.25. The supposed intervention failed to reverse the tide, however, with the USD/CNY touching 7.2512. The currency fluctuations followed fixed income markets closely, with the intraday dollar high coinciding with the rise to 4.2886% in the US 10y yield.
  • For USD/JPY, the pair broke to new highs following Kyodo reports flagging a Y20trl spending package. The report sees the package subject to cabinet approval as soon as Oct 28th. The total spending looks to have been downsized after LDP officials saw "an economic stimulus package of ~30t yen" on Oct 18th. The rate took out resistance at 150.45 (3.618 proj of the Aug 2 - 8 - 11 price swing) and opens 151.20 next.
  • GBP is the poorest performer, with the acute political risk premium on the currency making itself evident in a rising yield environment. EUR/GBP is back above 0.8750, while GBP/USD touches new weekly lows of 1.1123. The moves also follow a dire set of retail sales data for September, which slipped well below expectations.
  • Data should play second fiddle to central bank speakers Friday, with Fed's Williams and Evans on the docket today ahead of the beginning of the media blackout at the end of play today. Canadian retail sales are on the docket, expected at +0.2% on the month.

Greenback Looks Through Chinese FX Intervention as Yields Surge

Last updated at:Oct-21 09:26By: Edward Hardy
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  • The dollar trades firmer headed into Friday's NY session, reversing a brief bout of weakness that came just ahead of reports that China state banks were selling dollars to shore up the USD/CNY rate ahead of 7.25. The supposed intervention failed to reverse the tide, however, with the USD/CNY touching 7.2512. The currency fluctuations followed fixed income markets closely, with the intraday dollar high coinciding with the rise to 4.2886% in the US 10y yield.
  • For USD/JPY, the pair broke to new highs following Kyodo reports flagging a Y20trl spending package. The report sees the package subject to cabinet approval as soon as Oct 28th. The total spending looks to have been downsized after LDP officials saw "an economic stimulus package of ~30t yen" on Oct 18th. The rate took out resistance at 150.45 (3.618 proj of the Aug 2 - 8 - 11 price swing) and opens 151.20 next.
  • GBP is the poorest performer, with the acute political risk premium on the currency making itself evident in a rising yield environment. EUR/GBP is back above 0.8750, while GBP/USD touches new weekly lows of 1.1123. The moves also follow a dire set of retail sales data for September, which slipped well below expectations.
  • Data should play second fiddle to central bank speakers Friday, with Fed's Williams and Evans on the docket today ahead of the beginning of the media blackout at the end of play today. Canadian retail sales are on the docket, expected at +0.2% on the month.

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