(Bloomberg, July 9) -- The greenback is holding session gains as Treasury yields firm after Fed Chair Jerome Powell, in Senate testimony, stated a desire to see inflation slow further before reducing rates.
- The Bloomberg Dollar Spot Index is up 0.1%, with the yen lagging peers as yields rise
- US 10-year yield up three basis point to 4.31%
- Rates moves were also influenced by Powell saying US regulators are close to agreeing to changes to plans to force big banks to hold significantly more capital
- “Powell’s comments are balanced and policy decisions will made ‘meeting by meeting.’ The market continues to expect a September rate cut, but it’s not set in stone. A sticky inflation print could easily tilt the probabilities. So the focus in the rates market will shift to long-end supply and CPI on Thursday, unless he says something unexpected in the Q&A.” according to Subadra Rajappa at Societe Generale
- Helen Given at Monex says markets could see more volatility during the Q&A section as Powell is grilled on policy outlook,” but for now, he did a good job of not rocking the boat.”
- USD/JPY rises 0.4%, most in a week, to 161.38 amid rising Treasury yields and buying ahead of the London fix; gains also follow $1.5 billion of 160 option expiries
- The Bank of Japan will speak face-to-face with market participants over the next couple of days to gauge a realistic pace for a reduction of its bond purchases to be announced later this month
- EUR/USD down for a second day, slipping 0.1% to 1.0810 amid slumping bond and share prices in Europe
- Unions at ADP, which run Paris’ CDG and Orly airports, put in strike notices for July 17, according to statement from the CGT, CFDT, FO and UNSA unions.
- Drop is slowed by low levels of volatility and limited volume
- European Central Bank Governing Council member Mario Centeno commented on the “current pace of the easing trajectory” via Econostream Media
- GBP/USD slightly lower at 1.2790 in relatively active real money and bank trading
- Reports indicate British consumers reined in retail spending in June during a cold spell failed to move the needle
- AUD/USD slips 0.2% to 0.6727 amid weakness in commodity prices and session low for the offshore yuan
- Kiwi is down 0.2% and overnight volatility rises to its highest level since May against the Australian dollar as a Reserve Bank of New Zealand policy decision nears.
- Some information comes from FX traders familiar with the transactions who asked not to be identified because they aren’t authorized to speak publicly
Reporting BY Robert Fullem in New York; Editors responsible for this story: Sydney Maki AND Michael B. Marois
