USD back on track

27 January, 2017

The overnight trading results in a continuation of the US dollar gains. A broad based recovery of the US currency is what has been missing yesterday morning to call the market behavior a proper return of the ’Trump trade’. 

A long-time not seen morning picture; G-10 fx performance againbst the US dollar; source: Bloomberg

As has been often seen recently, the best movers are GBP and JPY, the latter has already lost 1.7% to USD if we add its result from yesterday. As for GBP Trump-May talks will be held today with a joint press conference due at 6 pm GMT.

What needs to be stressed here is that we finally see a convergence of the US Treasury yields and the USD (purple line is the Bloomberg Dollar index, a weighted mix of main dollar pairs). The relation was working smoothly during the Trump trade phase so if it is going to be again the main driver of market moves then the dollar still has much catvhing up to do. 

A reduction of the bizarre gap between US yields and the US currency; source: Bloomberg

Asian markets are quiet as the celebreations of the Chinese Lunar New Tear have already started and are to last for a week. 


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