US recap: USD slips a touch with lower UST yields as risk angst ebbs
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Aug 9 (Reuters) -The USD index dipped 0.15% to 103.12 by NorAm afternoon as the rally from Monday's low at 102.31 petered out slightly.
Despite today's slippage, the week is ending in a much healthier place risk-wise, as recent U.S. data has allayed post-payroll fears of imminent U.S. recession and faster and deeper Fed rate cuts.
LSEG's IRPR is indicating only slightly more than four Fed 25bp rate cuts into year-end in contrast to more than 5 cuts priced after the below-forecast payroll data last Friday.
Stocks were up slightly in Friday trading, also significantly higher than earlier in the week with the Nasdaq and S&P both gaining more than 0.2%.
EUR/USD hovered near flat at 1.0915 in NY afternoon trade after the pair traded a slight 1.0932-1.0909 range in NorAm. German inflation came in as forecast and the French unemployment rate dipped slightly limiting EUR/USD volatility. EUR/USD resistance is found at Tuesday's 1.0963 high and Monday's haven flash high at 1.1009.
USD/JPY eyed Wednesday's pullback high at 147.94 in early Asia trading, rising to 147.83, before following UST yields lower. The pair is ending NorAm at 147.62 down 0.35%, while trading in a 147,83-146.27 range Friday. Resistance is holding at Tuesday's high as traders consider U.S.-Japan rate differentials continuing to narrow as the Fed begins to cut rates starting in September.
GBP/USD rose 0.07% to 1.2760 in NorAm's afternoon after having risen to a high at 1.2773 earlier in the session. Despite the slight rise, GBP/USD is holding near resistance at its 10-DMA by 1.2776. Traders seem willing to test the upside after three consecutive failures below 1.27 which saw the 100-DMA at 1.2686 tested but hold on a closing basis.
With trading normalizing after the recent heightened volatility and haven flows, UST yields slipped from recent highs, with yields in the 5-30 year space falling 4-6bps, and not having a deleterious effect on risk markets.
Cryptos were off early NorAm highs, with bitcoin holding a 1.5% gain to $60.4k, having traded in a $62.7-$59.5k range. Ether rose 0.6% to $2,587 ending NorAm on the lower end of its $2,723-$2,570 range.
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Editing by Terence Gabriel
Paul Spirgel is a Reuters market analyst. The views expressed are his own.
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