It remains largely a long term rates and reflation rather...
It remains largely a long term rates and reflation rather than general risk sentiment story in terms of Dollar direction and corresponding moves in other currencies by default, but global stocks are beginning to get twitchy about the implications of soaring yields and steeper curves to keep the Greenback underpinned on safe haven grounds even when US Treasuries and bond peers enjoy bouts of consolidation and recuperation. Indeed, the index is just shy of a fresh rebound high and mostly above the 21 DMA that comes in at 90.624 today within a 90.844-617 band in the run up to a raft of data, more Fed speak and FOMC minutes from the January policy meeting. However, the impending Usd 27 bn 20 year note auction results may have more bearing for the Buck via any reaction in USTs. This could lead us slightly higher which would put a lot of pressure of the majors underperforming.
Comment:
Greenback gains have accumulated in wake of a splurge in US retail sales, including a whopping rise in the control group measure that bodes well for Q1 GDP, or at least the start of 2021, plus firmer than forecast PPI and IP data, as the former will fan inflation flames alongside the recent resurgence in oil. The index extended its rebound as a result through more upside chart hurdles beyond the 21 DMA that had already been cleared to 91.056 before fading as Treasury yields retreated from initial post-release peaks ahead of 20 year supply. However, the Buck may bounce again pending the reaction on Wall Street to the latest consumption, factory price and output updates in context of implications for fiscal stimulus and Fed policy ahead of FOMC minutes and more up to date commentary from Fed’s Kaplan. Nevertheless, technical impulses and momentum have become more constructive for the Dollar and DXY, with the latter now eyeing 91.500 and the 100 DMA just above (91.551 to be precise).