US Dollar, Treasury Yields, Fed, Gold, Crude Oil, NZD, JPY – Talking Points
- The US Dollar found support after Fed speakers re-affirmed a hawkish stance
- Treasury and real yields are higher after the commentary and gold is lower
- Nancy Pelosi’s visit to Taiwan has had little impact. Will China action hit USD?
The US is slightly lower in Asia after a strong rally into the New York close overnight. Federal Reserve presidents from four districts hit the wires and presented a unified front to talk down any inkling that they were not committed to reining in inflation.
The Fed hawks were Cleveland’s Loretta Mester, Chicago’s Charles Evans, San Francisco’s Mary Daly and renowned rate hike cheerleader, St. Louis’ James Bullard. They all said in their own way that rate hikes will continue unfettered until price increases are under control.
US Treasury yields galloped higher at each turn with the benchmark 10-year note trading 17- basis points higher to be trading over 2.70%.
Real yields also went higher, somewhat undermining the gold price, now trading around US$ 1,769 an ounce at the time of going to print. The precious metal got a small boost after US House Speaker Nancy Pelosi arrived in Taiwan.
Fallout from the visit remains unclear with plenty of rumblings emerging out of China at a time that they are carrying out military drills.
Crude oil continues to languish ahead of today’s OPEC+ meeting. The American Petroleum Institute (API) reported a 2.165 million bbl build in US crude oil stocks for the week. The market will be looking to the Energy Information Administration’s report later to today to see the level of changes of inventory there.
APAC equities were mixed after a soft lead from Wall Street. After a series of European PMIs, in the US, ISM Non-Manufacturing PMI will be released.
The full economic calendar can be viewed here.
USD (DXY) INDEXTECHNICAL ANALYSIS
The US Dollar (DXY) Index has bounced off an ascending trend line. This could suggest that the trend remains intact for now.
While the price is below the 10- and 21-day simple moving average (SMA), it remains above the 55-day and 100-day SMAs. This could indicate persistent underlying medium and long-term bullish momentum, but it faces the challenge of bearish short-term momentum. A move above the 10- and 21-day SMA may see bullish momentum resume.
Resistance could be at previous peaks of 107.43, 108.74 and 109.29. On the downside, support might lie at the ascending trend line or at the prior lows of 103.67 and 103.42.
— Written by Daniel McCarthy, Strategist for DailyFX.com
To contact Daniel, use the comments section below or @DanMcCathyFX on Twitter