The US dollar remains elevated against its G10 peers, supported by higher yields, boosting the dollar index. The ongoing theme of ‘higher for longer’ continues to keep the greenback bid, and this message was further reiterated yesterday by the Federal Reserve Bank of Cleveland President. Loretta Mester said that the Fed will likely need to raise rates one more time this year and then hold them at higher levels for some time to get inflation back to its 2% target.
The single currency slipped again against the greenback, with EURUSD touching its lowest level since last December, trading around 1.0460, where it is currently consolidating. Yesterday’s manufacturing PMI numbers for the eurozone failed to provide any support and respite for the euro and markets will turn their attention to a speech from ECB Chief Economist Philip Lane this morning. With EURUSD falling below recent support levels the latest drop potentially gives the bears a run at the 1.0390 area, whereas a break above 1.0520 would support a move to test the 50-day MA.
The pound followed the euro lower with cable dropping below the psychological 1.21 level to trade as low as 1.2061. The next level of support on the downside comes in at 1.2050, which opens up a potential test of the psychological 1.20 area. With little UK data to focus on, markets will be driven by the US labor market data coming out in the next few days. Job Opening data is due out this afternoon with markets looking for confirmation that the labor market continues to soften.
The price of oil has fallen again overnight after falling to the lowest level in three weeks in the previous session. Brent crude fell to $90 per barrel, driven by rising US yields and the strength of the greenback.
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