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Rebound In Yields Provided Support To Dollar

ByActionForex
Published 09/17/2013, 02:38 AM
Updated 03/09/2019, 08:30 AM

US equities jumped sharply overnight on Summers' news and with DOW closing strongly at 15494.78, just inches below 15658.43 high. Treasury yields initially took a beating but recovered most of the ground with 10 year yield closing at 2.874% after diving to 2.777%. 30 year yield has indeed closed higher at 3.871%. Rebound in yield in late US session provided some support for greenback which stabilized from earlier selloff. Meanwhile, consolidation in Asian stocks also lifted dollar mildly. The economic calendar is rather busy today but investors mild will mainly be on tomorrow's FOMC announce where the Fed is expected to taper the $85b asset purchases.

RBA minutes released today noted that policy makers thought the central bank "should again neither close off the possibility of reducing rates further nor signal an imminent intention to reduce them." And it noted that, "some further decline in the exchange rate would be helpful." The minutes also indicated that lending rates had declined to historically low levels and recent deprecation in exchange rate "were continuing to provide a substantial degree of policy stimulus to the economy." And, that was "most evident in the housing market". It also noted that expectation on US tapering triggered "capital outflows" from emerging markets, and "put downward pressure on exchange rates".

On the data front, UK inflation data will be a main focus in European session with PPI and CPI featured. The CPI is expected to moderate to 2.7% yoy in August. Another focus will be German ZEW, which is expected to improve from 42 to 45 in September. In US session, The CPI will be released and is expected slow further to 1.6% yoy in August. TIC capital flow and NAHB housing market index will also be released.

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