Little respite for the dollar so far after the CPI data as US bond yields lead the way

Just before the data we tweeted that 2.37% was an important level in US 10’s, as if good data can’t help break it, it could mark the top for any USD rallies. Conversely, on the other side, the 2.28% area is support and we’re trying to break it now.

US 10yr yields 13 10 2017

US 10yr yields 13 10 2017

As we’ve been mentioning on here for a while, the buck is walking hand in hand with bonds once again and we’re seeing them driving the bus for moves today. Therefore it’s no surprise to see USDJPY sitting on its low as 10’s hover around 2.28%

USDJPY 15m chart 13 10 2017

USDJPY 15m chart 13 10 2017

Some actual respite might come from the Michigan consumer sentiment data at the top of the hour but it might need something special to turn today’s post-data trend around. Probably the most important component of the data will be the inflation expectations. If they drop, we could see another minor leg down in the dollar. Actual inflation data is only one part of the Fed picture, consumer expectations of inflation is another. Just a reminder, last month, 1yr inflation expectations stood at 2.7%, 5yr 2.5%.

Ryan Littlestone

Psychedelic chartist extraordinaire. Have your shades ready.
Philosophy: “Don’t be a Dick for a tick”

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Ryan Littlestone

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