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Forex today: dollar fights back in NY

  • Forex today was mixed, especially for the greenback.
  • US 10yr treasury yields fell from 2.35% to 2.32%.

The US treasury curve continued to flatten with the front end up about 1bp and long end down 1bp. Meanwhile, the DXY closed +0.12% and ranged between 92.496 - 92.928 as markets wait sceptically for progress in Washington to pass major tax/govt funding/immigration legislation within twelve working days, hence softer yield curve. However, Rand Paul threw support behind the tax-cut plan earlier in the session, getting it closer to the 50 votes needed for a floor vote on Thursday or Friday.

US 10yr treasury yields fell from 2.35% to 2.32%, with some jitters over a headline that claimed preparations for a North Korean missile launch had been detected. Fed fund futures yields continued to price the chance of a December rate hike near 100%.

All in all, it was a quiet day on Monday with a heavy feeling after the Shanghai woes. Initial reports that Black Friday and Cyber Monday sales were upbeat sent retail shares higher, but lower oil prices weighed on the energy sector.  Dallas Fed president Kaplan sounded more hawkish than usual, expressing concern the Fed may get behind the curve, given “full employment overshoot.”

EUR/USD fell from 1.1958 to 1.1896, unable to hold onto the recent gains from last week's rally that started at 1.1718 to 1.1961. The hourly 50-SMA at 1.1898 is supporting currently. Sterling suffered a similar fate in NY from 1.3383 to 1.3310 in the absence of domestic data or fresh Brexit news, (PM May faces mid-Dec deadline to raise UK Brexit offer, settle w/No. Ireland or risk no trade deal), instead, it was caught up in the cross flows while the EUR/GBP stuck to a 20 pip range between 0.8940 and 0.8924 in the US but fell from 0.8966 in European trade. USD/JPY dropped from 111.45 in European trade to go on to print 110.82 lows in NY.

Commodity currencies were softer, although the Kiwi outperformed as did the yen on the back of N. Korean headlines. Oil prices dropped 1-2% as well ahead of the OPEC meeting. Gold rose to USD1295/oz and closed up about 0.5%. AUD was dropping back from 0.7645 down to 0.7593 with copper being hit die to the downtrade in China while CAD was hurt due to the oil price sliding with USD/CAD finding a bid at the 40-DMA for a third day. 

No key data from Asia today.

Key notes:

  • Event risks ahead? - Westpac
  • US: Risk of a partial government shutdown is elevated - Wells Fargo 
  • Russia could have a difficult time complying with an extended OPEC output cut - Reuters
  • US Republican Sen. Cornyn: Senate plans to take up tax bill this week
  • Gold loses momentum ahead of $1300, still up $6 on the day
  • Fed's Kaplan: unlikely that govt debt path is ‘sustainable’
  • US New Home Sales easily top expectations - Wells Fargo



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