By Stuart Talman, XE currency strategist
The US dollar's downside momentum has stalled through overnight trade, market participants refraining from further USD selling following the release of stronger than expected initial jobless claims data and the Uni of Michigan's twice-monthly consumer sentiment survey reporting that year-ahead inflation expectations rose for a second month in November.
Released a day early due to the Thanksgiving Day holiday, initial jobless claims dropped sharply from last week's 3-month high falling from 233K to 209K (vs 225K, expected). Week-to-week results can be volatile and with this week's print following a four-week trend of higher claims, it appears the US labour market has modestly loosened through late October and November.
Nevertheless, US treasury yields have leapt higher following the release, the yield on the benchmark US 10-year bond climbing from near 4.36% to mark intraday highs near 4.45%.
Having pulled back over 60bps from the 23 October high, its reasonable to expect the 10-year yield to form a swing low around current levels, a development that would slow or halt the dollar’s retreat.
Earlier in the New York morning, the dollar was trading flat against most of its major peers with its fortunes changing on the data flow.
Falling around two-thirds-of-a-percent, the New Zealand dollar has dipped back below 60 US cents, signalling that the near 4% ascent over the past half-dozen trading days may be topping out.
Tuesday's price action delivered a critical break above major resistance located near 0.6050, the pair extending to 3½ month highs in the 0.6080's. An important development for NZD bulls, we commented earlier in the week that a jump through 0.6050 likely paves the way for a key test of the 200-day moving average, currently located in the 0.6090's.
The midpoint of the July to October sell-off also located in the 0.6090's.
The US dollar's downside momentum has stalled through overnight trade, market participants refraining from further USD selling following the release of stronger than expected initial jobless claims data and the Uni of Michigan's twice-monthly consumer sentiment survey reporting that year-ahead inflation expectations rose for a second month in November.
Released a day early due to the Thanksgiving Day holiday, initial jobless claims dropped sharply from last week's 3-month high falling from 233K to 209K (vs 225K, expected). Week-to-week results can be volatile and with this week's print following a four-week trend of higher claims, it appears the US labour market has modestly loosened through late October and November.
Nevertheless, US treasury yields have leapt higher following the release, the yield on the benchmark US 10-year bond climbing from near 4.36% to mark intraday highs near 4.45%.
Having pulled back over 60bps from the 23 October high, its reasonable to expect the 10-year yield to form a swing low around current levels, a development that would slow or halt the dollar’s retreat.
Earlier in the New York morning, the dollar was trading flat against most of its major peers with its fortunes changing on the data flow.
Falling around two-thirds-of-a-percent, the New Zealand dollar has dipped back below 60 US cents, signalling that the near 4% ascent over the past half-dozen trading days may be topping out.
Tuesday's price action delivered a critical break above major resistance located near 0.6050, the pair extending to 3½ month highs in the 0.6080's. An important development for NZD bulls, we commented earlier in the week that a jump through 0.6050 likely paves the way for a key test of the 200-day moving average, currently located in the 0.6090's.
The midpoint of the July to October sell-off also located in the 0.6090's.
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Stuart Talman is Director of Sales at XE. You can contact him here.
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