If the Fed wanted to get things in order, the market certainly wouldn’t let it. The odds of a 50bp rate cut had waned after the US CPI report earlier this week, but they resurfaced in trading yesterday. The odds have now risen back to around 45%.
There was no major catalyst as weekly jobless claims were flat while producer prices were more mixed when revisions were factored in. However, the dollar was down and remains so along with Treasury yields.
USD/JPY Daily Chart vs 10-Year US Treasury Yields (%)
The pair is now confirming a fresh decline in the USD/JPY pair, with the eyes turning towards the December 2023 low at 140.24 and the 140.00 level in general.
In addition, the EUR/USD pair also received demand after the ECB decision and after the expiry of large options from yesterday. The pair erased its losses during the week and is maintaining a slight rise as buyers continue to rebound from the 1.1000 level.
Elsewhere, GBP/USD is also holding its bounce from 1.3000 to 1.3145 currently. AUD/USD is holding its bounce from its 100-day moving average to return to 0.6725 now.
Then there’s gold, which has hit new highs once again. The precious metal is now trading about 0.4% higher at $2,569.
The dollar is certainly under pressure now with some broad-based moves. This is with the 2-year yield set to fall further, now at 3.58%. The key line here is the 2023 low of 3.55%.
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