FXCM's USDOLLAR is correlated with the real US 10-year yield, with a correlation coefficient of 78% (bottom chart). The real rate is adjusted for inflation and represents the true cost of borrowing. It helps participants make better informed decisions.
Last week, Fed chair Jerome Powell was more relaxed during his press conference regarding the market's leaning towards a Fed pivot. However, that was before Fridays' strong 517K NFP print.
The real rate has drifted back in its neutral region between its blue bands (top chart). USDOLLAR is still to follow remaining in its bearish channel between the lower blue and red bands (middle chart).
Chair Powell will take part today in a moderated discussion at the Economic Club of Washington DC (5:00pm GMT). A more hawkish tone is now a distinct possibility, which may push USDOLLAR into its blue bounded channel.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.