If the Fed wants to organise things in an orderly manner, the market sure isn’t letting them do so. The odds of a 50 bps rate cut dwindled after the US CPI report earlier this week but were reignited again in trading yesterday. The odds of that have moved back up to ~45% now.
There wasn’t much of a key trigger with the weekly jobless claims coming in steady while producer prices were more mixed at the balance when accounting for the revisions. Still, the dollar tracked lower and is keeping that way alongside Treasury yields.
USD/JPY vs US Treasury 10-year yields (%) daily chart
It is now reaffirming a break lower in USD/JPY again, with eyes turning towards the December 2023 low at 140.24 and the 140.00 mark in general.
Besides that, EUR/USD also caught a bid after the ECB and after large option expiries from yesterday lapsed. The pair has erased losses for the week and is holding marginally higher as buyers keep a bounce off 1.1000.
Elsewhere, GBP/USD is also keeping its own bounce off 1.3000 to 1.3145 currently. And AUD/USD is holding a bounce off its 100-day moving average to sneak a push back to 0.6725 now.
Then, there’s also gold which has broken out to fresh record highs again. The precious metal is trading up another 0.4% to $2,569 currently.
The pressure is certainly on for the dollar now with the moves being rather broad-based. And this is with 2-year yields still on the verge of plunging further, now seen at 3.58%. The key line in the sand there is the 2023 low of 3.55%.