Bonds fall, USD eased!

US 10-year Bond under 1.30%

Market analyst – IFC Markets

US U.S. 10 Year Treasury yields fall under 1.30% towards 1.275% earlier today and the USD index is trading way lower than opened price (92.64), with a 0.2% decrease at 92.46. 

Yesterday was a volatile and disappointing day for the US Dollar index. After US inflation numbers, the index fall all way down to 92.30 and then with ignoring the data by a market participant, with 0.04% gain, closed at 92.60. 

USD index expected to have another volatility day, especially with mixed data, from the US, EU, and China, market sentiment changing so fast from hoping to grow faster to the slowdown in economic growth. Inflation numbers on the other hand also are something with a mixed-signal. Slowing down inflation pace in the US, and some European countries like Italy come with inflation concerns above 3% in UK, Germany, and some other economies. 

While the market hoping for Disinflation after September, which means inflationary pressures to reduce bond purchases will ease, and it is negative for the US dollar index, Delta concerns, and its impact noneconomic growth outlook, increase the USD haven demand. It means, for now, we will have limited movement on both sides. None of the bulls and bears will have enough power to move the market in the specific direction for the long term, as long as we are not clear with the exact economic growth situation and FED policies, probably by end of the FOMC meeting on 22 September. 

For the rest of the week, we have to follow the MBA Mortgage Applications, Industrial Production data today and tomorrow Retail Sales, Initial Claims, Philly Fed Index, Business Inventories will be important, and in the last day of the week, Flash September Consumer Sentiment is what we have to check to trade the DXY better. 

From the technical point of view, DXY is down 0.16% at 92.45 to break its key support at 92.48. Trading stable under this level, can send the index to the lower levels and remain the bearish sentiment. A downtrend under 92.48 can put 92.32 (weekly low Sep.14) and then 91.94 (monthly low Sep.3) in the spotlight. On the flip side, the uptrend needs to pass 92.76 to confirm its power. Technical indicators have mixed-signal and not confirming any specific direction. 

DXY and Bonds


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