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Forex today: dollar bounces back as high betas unwind

  • US dollar resurgence on the back of lower global yields and unwind of high betas.

Forex today was dominated by a come back in the greenback, with the DXY +0.145 on the US session, between a session's range of 94.700 - 95.149.  Meanwhile, rate son the other hand for the 10-year yields were closing down -0.16% at 2.3127% within a range of between 2.3019% - 2.3379%.  (US 10-year yields have ranged between 1.7145% - 2.6394% over the last 52 weeks).

The liquidation of the higher betas drove the price of the DXY higher in the face of lower yields. Also, in the European shift, comments from ECB President Draghi added to the bid in the greenback when he explained that the condition for a deposit rate hike has not yet been met. Subsequently, this undermined the euro in the face of falling Euro yields while the Bunds broke the primary uptrend.

There was very little in the way of events on Tuesday, although the US's September JOLTS Job openings arrived at 6.093 m vs 6.09, consensus vs the 6.082 mln prev that was revised to 6.090 mln. Regarding politics,  the House Republicans are seeking a U.S. tax vote next week.

On a choppy NY session, the EUR/USD ranged between 1.1615 and 1.1554, closing at 1.1590 and down around -0.30% on the day. GBP/USD ranged between 1.3108 and 1.3178, closing at 1.3166 while Brexit remains the dark cloud for cable bulls that have been unable to sustain territory in the high 1.32's or low 1.33's, currently capped by the 100 4-h SMA at 1.3175. EUR/GBP ranged between 0.8791 and 0.8834, closing at 0.8802 while the divergence between the two economy's inflationary paths favors sterling strength.

USD/JPY ranged between 113.70 and 114.34 closing at 113.94 in a fairly risk-off theme in markets led by US stocks and US yields dropping while the euro cross remains capped below the 55-DMA that weighs on bulls. The pressure is mounting for USD/JPY while unable to convince the markets when breaking back onto the 114 handle. 

As for the antipodeans, AUD/USD ranged between 0.7627 and 0.7700 closing at 0.7644 and suffering the fall-out of the carry in the high betas while the same can be said for the Kiwi as well. NZD/USD ranged between 0.6891 and 0.6954, closing at 0.6905. Copper's slide of -2.1% did not help the case for bulls for both pairs while milk prices weighed specifically on the bird.  USD/CAD ranged between 1.2703 and 1.2820 closing at 1.2772 with a lack of a catalyst from Poloz's speech. Oil consolidated the 2.5 year highs while gold ended at $1,276, between $1,280 and $1,271.

deadlocked between competing pressure from higher USD and growing need for safety

Key risk events in Asia:

China's Trade Balance released by the General Administration of Customs of the People’s Republic of China.

Key notes from US sesison:

BOC's Poloz: Inflation risks to rise with full output and employment

US: Job openings remained elevated in September - Wells Fargo

OPEC’s Barkindo: Talks ongoing among all countries on oil cut pact’s duration beyond March 2018




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