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- The danger is that if the US data are strong, the Dollar pushes to new near-term highs – SocGen
The danger is that if the US data are strong, the Dollar pushes to new near-term highs – SocGen
The Dollar sell-off has run out of momentum in under 24 hours. Kit Juckes, Chief Global FX Strategist at Société Générale, analyzes Greenback’s outlook.
Small sell-off quickly stalled
The Dollar sell-off has rather fizzled out, lacking fresh impetus. The next moves will be driven by US data (Wednesday’s CPI, Thursday’s Retail Sales, Friday’s Industrial Production), and perhaps, by the next load of supply (USD35 bn in 10s today and USD20 bn in bonds on Wednesday), and the ECB meeting (Thursday).
But the BoJ and the Chinese have made their point about the Dollar rallying too fast, without convincing anyone that there is a bazooka-like policy response coming to trigger a change of direction. The danger is that if the US data are strong, the Dollar pushes to new near-term highs.
USD/JPY continues to track yield differentials which are about 40 bps narrower today than when we broke through 150 last year. How Treasuries react to CPI and supply will determine whether we make a big stride towards 150 or lose momentum.
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