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Markets on Thursday: USD Runs on Yield

Wall Street had some busy moment overnight, but a slew of strong data and higher yields were the highlights without a doubt.

Equity markets finished the day relatively unchanged but most of the attention was on a spike in yields. The yield on the US 10-year Treasury note jumped 11 basis points to 3.18 per cent, which in turn pulled the USD higher.

At the same time we also saw some strong data points. The ADP employment number came in far stronger than anticipated with 230K new jobs. Which is a very positive lead into the main numbers on Friday. While ISM came in above expectations too and really helped bolster the US markets.

The story of the day then became the USD, which jumped sharply. As rates rose it become a precursor to what we will see going forward with the FED.

Gold also turned things around after yesterday’s big surge. The yellow metal dropped after demand clearly fell away. While oil once again jumped and looks to be well and truly above that key resistance level of $75.

 

The USD Outlook

The DXY couldn’t quite make it through the resistance level at 96.20 and we tagged the upper bounds before settling back around 96.00.

This was a big move in the USD and one that I felt needed a strong catalyst. I was waiting for Friday’s jobs, but it appears the ADP and some strong bond yields did the trick.

We still have plenty of resistance overhead, but if we consolidate below that key level, I’ll be waiting for a big breakout to follow.

DXY
DXY – 240 min.
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Rowan Crosby
Asia-Pacific Analyst
Rowan Crosby is a professional futures trader from Sydney, Australia. Rowan has extensive experience trading commodities, bonds and equity futures in the Asian, European and US markets. Rowan holds a Bachelor of Finance and Economics degree and is focused heavily on Investment Finance and Quantitative Analysis.
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