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USD

30 Jun 2023

Slowing consumer demand weighs on US yields, forces dollar into incremental retreat

The Federal Reserve’s preferred inflation measure slowed and consumer spending flatlined in May, suggesting that the central bank’s monetary tightening efforts are beginning to take a toll on the economy. Data released by the Bureau of Economic Analysis this morning showed the core personal consumption expenditures index – targeted by the Fed – rising 0.3 percent in May from the prior month, up 4.6 percent year-over-year – coming in slightly below consensus estimates for a 4.7-percent print. The so-called “supercore” measure – services inflation excluding housing and energy services – favoured by Jerome Powell rose 0.2 percent month-over-month, rising at the...

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29 Jun 2023

Even higher for even longer

• Rates re-pricing. Positive US GDP & jobless claims data has seen interest rate expectations adjust higher. US bond yields have moved up.• USD firm. The repricing has supported the USD, although yesterday’s better than expected AU retail sales data has helped the AUD hold its ground.• AUD events. Ahead of next week’s ‘line-ball’ RBA rate decision, the China PMIs, Eurozone CPI, and US PCE deflator are due today. Bond markets came alive overnight, with yields spiking on the back of stronger than anticipated data. In the US, the run of positive surprises continued. Q1 US GDP growth was revised...

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29 Jun 2023

Stabilizing policy expectations drive volatility lower

Markets are preternaturally calm, with most major pairs trapped in sub-20-pip ranges this morning after policymakers stuck to their “higher for longer” scripts during yesterday’s panel at the European Central Bank’s summit in Sintra, Portugal.  The Bank of England’s Andrew Bailey delivered a relatively hawkish message, hammering it home by saying “I’ve always been interested that the market thinks the peak will be short-lived in a world where we’re dealing with more persistent inflation”. Christine Lagarde seemed to suggest that her shop could follow a widely-expected July hike with another in September. And Jerome Powell said a “strong majority” of...

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28 Jun 2023

AUD tumbles

• Central bankers. Fed Chair Powell, ECB President Lagarde & BoE Governor Bailey maintained a ‘hawkish’ message. The BoJ remains an outlier.• AUD slides. AUD has continued to fall (now 4.3% below its mid-June highs). A firmer USD compounded the slowdown in Australian headline inflation.• AU events. Retail sales & job vacancies due today. A soft retail sales print is likely to add to the AUD’s woes. RBA meets next week. Central bank speak was in focus overnight with Fed Chair Powell, ECB President Lagarde, BoE Governor Bailey, and BoJ Governor Ueda appearing on a panel. On net, a ‘hawkish’...

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28 Jun 2023

Signs of US resilience lift dollar

The dollar is strengthening and Treasury yields are pushing higher after yesterday’s raft of second-tier data releases pointed to continued outperformance in the US economy relative to its rivals.  Durable goods orders topped expectations in May, posting a 1.7 percent gain against a forecast -0.9 percent decline. New home sales jumped 12.2 percent, well above the predicted 1.2-percent gain. And consumer confidence surged, smashing market forecasts and suggesting that cooling inflation is intersecting with strong labour markets to bolster optimism about the economy’s direction. The Conference Board’s index jumped to 109.7, beating consensus estimates that were set closer to 102. An...

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