The dollar staged a minor rally yesterday which lifted the dollar index from 104.388 in early trading to 104.625 by end of day, or 0.23%. Dollar gains continued overnight, lifting the DXY by another 0.20%. The dollar is higher vs. the G10 except for a 0.08% decline vs. CHF. Standout dollar gains are +0.58% vs. SEK, +0.32% vs. AUD and +0.26% vs. CAD.
The dollar index is +3.48% for the year. Dollar YTD gains include a 10.41% advance vs. JPY, +7.21% vs. CHF, +3.84% vs. SEK, +1.79% vs. NOK, +1.27% vs. CAD, +0.93% vs. AUD, +0.88% vs. NZD and +0.22% vs. EUR. The dollar’s biggest yearly declines include a 5.04% drop vs. MXN and a -2.26% loss against the GBP.
The U.S. 10-year yield touched a 3-week high today, reaching 4.576% (last traded May 2nd). Yesterday’s government debt auction received mild interest, pressuring debt prices and lifting yields to more attractive levels. More debt auctions are scheduled today, and another poor reception could force yields higher. Yield gains are primarily in the long tenors with 25-yields leading +0.043%.
Gold is lower by 0.81% today, pressured by higher treasury yields.
USDJPY reached 157.40 today, the yen’s weakest level since the BoJ’s intervention on May 1st. The yen carry trade (buying USD yield, selling JPY yield) is proving too much of a temptation with traders earning a 2.31% return during May despite the intervention.
U.S. Mortgage applications declined 5.7% through the week ending May 24th, the biggest weekly decline since Feb 23rd.
