US Dollar Pops Higher On Firmer Rates And Bears Unwinding

USDUSD/JPY Analysis & News

  • Equities Awaiting Catalyst.
  • USD Correcting with USD/JPY Tracks US Rates Higher.

QUICK TAKE: Equities Mixed, USD Bears Unwind, US Rates Extend Gains

There is relatively choppy price action across the equity space for European bourses, as the bullish sentiment fizzles out amid a lack of key catalysts. That said, US futures continue to hover around record highs. With the FOMC minutes providing little in the way of new information, focus now turns to tomorrow’s US NFP report.

As a reminder, the US ADP showed a surprise contraction of 123 thousand, however, the data hasn’t been a reliable indicator for NFP for quite some time. Nonetheless, it does emphasize the slowing momentum in jobs growth.

US Dollar Pops Higher on Firmer Rates and Bears Unwinding - US Market Open

The US Dollar is on the front-foot as US yields continue to track higher, with 10-years up over 3 bps and on the day to 1.07%. However, it is important to keep in mind that given the persistent downtrend in the greenback, it is natural for a corrective move, shaking out weak hands. Key resistance on the topside is the 90.00. That said, in light of the Democrat sweep, USD risks remain tilted to the downside.

Elsewhere, the Japanese Yen has extended on recent losses as the currency tracks US yields closely, which puts focus on resistance situated at 104.00. That said, the USD/JPY downtrend remains intact for now.

USD/JPY BULLISH Data provided by IG. 54% of clients are net long.

CHANGE IN LONGS SHORTS OI
DAILY -6% 22% 4%
WEEKLY -14% 66% 9%

USD/JPY vs. US 10-Year Yields

US Dollar Pops Higher on Firmer Rates and Bears Unwinding - US Market Open

Source: Refinitiv

USD/JPY Chart: Daily Time Frame

US Dollar Pops Higher on Firmer Rates and Bears Unwinding - US Market Open

Source: Refinitiv

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