The US dollar is at the lows of the day against the euro and is giving back gains against the pound.
GBPUSD 10m
It’s also at a session low against the yen.
The dollar selling comes after the Bank of England press conference wrapped up. The BOE hiked rates by 25 bps with Bailey saying there was never a case for 50 bps in his mind. The market had priced in a 33% chance of a 50 bps cut as the BOE falls behind the curve on inflation.
Also contributing to the USD turn was the Q2 prelim unit labor costs report. It showed costs up 1.6% compared to 2.6% expected. Q1 was also revised down to 3.3% from 6.3% as productivity was much stronger than believed. That means non-inflationary growth and less reason for the Fed to hike.
Watch out for dip buyers in broader risk assets but also watch the bond market. Bill Ackman sounded the alarm today and the Fitch downgrade is also contributing. US 30-year yields are up 10 bps to 4.27%.
US 30y yields