AUD/USD to New 2023 Lows after another RBA Rate Hold
The pair dropped to new 2023 lows, after the Reserve Bank of Australia kept rates at 4.1% for fourth straight meeting on Tuesday, in the first decision under its new governor
The pair dropped to new 2023 lows, after the Reserve Bank of Australia kept rates at 4.1% for fourth straight meeting on Tuesday, in the first decision under its new governor
The spread between the US 10-year bond and the Japanese 10-year bond continues to widen. This is the primary driver of the USDJPY currency pair. The correlation coefficient between the two is a remarkably robust 90%.
The US 10-year real yield remains elevated at the start of the week. This is putting pressure on the risk market and supporting the dollar as the current preferred haven. The question is how much higher can yields run?
The USDCAD has charted a higher trough. This is a show of strength and lays the platform for a potential higher peak for the currency pair.
The US real benchmark yield is normalising from an overbought condition. This is rippling through the market, with FXCM’s USDOLLAR also pulling back from an overbought condition. The corollary to this is that the EURUSD is also reacting.
A key driver of the financial markets is the higher real benchmark yield.
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The US 10-year real yield continues to climb higher and is currently at 2.286%, largely due to the Federal Reserve’s narrative of “higher for longer.” This is adding headwinds to the risk market and driving money towards the safety of the dollar. This, in turn, is impacting on gold. The precious metal is moving inversely to the real yield. To this end, the correlation coefficient (bottom indicator) between gold and…
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The US 10-year real rate has supported FXCM’s USDOLLAR basket. As the real rate has moved up, so has the USDOLLAR. The correlation coefficient between the two is a robust 84%. This is not surprising. The higher real yield is likely to exert pressure on the risk side of the market, with the dollar benefitting as a safe-haven.
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