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  • Forex today was seeing a turnaround in the greenback after Tokyo’s flurry into the yen on the back of speculation that the BoJ was about to tweak its monetary policy at next week’s meeting.  

In fact, global bond yields on a whole rose on Monday while investors get set for what is expected to be a strong US GDP this Friday and the dollar was playing catch up, rising from the day’s lows at 94.2070 and to a high of  94.7160. US 10yr treasury yields climbed from 2.88% to 2.96%, another high since mid-June’s levels while the 2yr yields popped from 2.58% to 2.63% – this was the highest level since 2008. Traders continue to anticipate that the Fed will have hiked four times before the year is out and the Fed fund futures yields are now pricing almost two more full hikes in 2018.

Currency action

The Yen was unable to sustain its power in Tokyo yesterday and USD/JPY was picked up on the cheap from 110.75 where traders took the pair back to a more respectable and key the Tenkan technical level around 111.50. Markets are now back to thinking that the policy tweak noise amounts to nothing, or at least, is setting markets up for a tweak to policy sometime in the future, but the not-so-near future which leaves the uptrend from March intact while markets get set for this week’s US GDP and interim data such as today’s PMIs.

The single currency dropped back from the wide Ichimoku cloud resistance zone that spans the 1.1726 to 1.1962 area on the charts. EUR fell from 1.1740 to 1.1684 ahead of Eurozone PMIs as multiple failures to stay above the 55-D SMA sucks in the supply for a test of the 10-D SMA in a widening of the DE/US spread.  

GBP/USD was weak again after the UK polling showing that there is a growing opposition to PM May’s soft Brexit plan and cable ended the North American session at 1.3105, down 0.21% within the 1.3158-1.3082 range. As for the cross, EUR/GBP it ended higher by +0.01% at 0.8922 within Monday’s range of between 0.8938-11 while Brexit angst trumps elevated sentiment for a BoE hike at Aug 2 MPC meeting. Meanwhile, the high betas were a poor turn-out with a comeback in the greenback weighing, leaving little room for copper to perform. The Aussie is trading inverse to the Chiese currency and advances in USD/CNH hurt the Aussie that fell from 0.7434 in Tokyo yesterday down a low of 0.7371 in NY overnight. From there, the pair moved into a sideways drift between a narrow 0.7384/71 Noth American range – weighed also by a sharp rise in US yields – (NZD/USD followed and fell from 0.6820 to 0.6777).

Key notes from US session:  

Wall Street closes mixed, Google reports higher-than-expected Q2 earnings after closing bell

  • (No key events  for Asian markets today).