With US yields surging to the upside, the US dollar is also moving higher. The US 2 year is trading at 3.500%, up 10 point basis points. The 10 year is at 3.34% up 14.9 basis points. The ISM data came in better-than-expected giving the Fed the go ahead to raise rates by 75 basis point (with CPI data yet to come). The US jobs report on Friday showed a solid 315K rise in a new jobs, but admittedly there was some dampening pieces of data as well with the unemployment rate moving up to 3.7% from 3.5%. Still that is a historically low level giving the Fed the ability to increase rates.
US stocks are not reacting well with the NASDAQ index note down -1.17%. The Dow industrial average is down -0.65% in the S&P is down -0.75%.
Looking at the major currencies:
- EURUSD: The EURUSD moved to a new low going back to 2000 and a 2 at 0.98633. That moved below the low from yesterday's trade at 0.98776. Prior to that low, the August 23 low was at 0.9899. The 0.9900 area will now be eyed as close resistance. There is another risk defining level up to 0.9913. There are a number of lows between August 23 and September 1 between 0.9906 and 0.9913.
- USDJPY: The USDJPY has run up to a high of 142.897 – a new 24 year high. Looking at the hourly chart, the price moved above a old topside channel trendline currently at 142.388 (and moving higher,). Stay above that level keeps the buyers in firm control. A move below the aforementioned trendline – and staying below – would have traders looking to around toward 141.88 which is the 38.2% retracement of the trading range today. That range is up to 266 pips which is about twice the average over the last 22 days of 135 pips. Admittedly, the pair is overbought. However, until the price action breaks back below the aforementioned broken trend line, it is important to respect the trend. Trends are fast, directional, and tend to go further than what traders expect.
