A closely watched U.S. dollar index fell sharply Tuesday, accelerating a retreat from a 20-year high and giving stocks and commodities room to bounce. But the tune in the FX market, as well as other assets, remains largely a function of the bond market, reminded Kit Juckes, global macro strategist at Société Générale, in a Tuesday note .A closely watched U.S.
The following August-September rise in the 10-year Treasury yield TMUBMUSD10Y , which went from 2.6% to almost 4%, gave the ICE U.S. Dollar Index DXY an almost 10% lift and took the S&P 500 down by more than 10%, with major indexes ending last month at their lowest levels since 2020, he noted. See: ‘This is not healthy’: The latest advance for stocks could signal more pain ahead for markets. Here’s why.
The dollar, of course, was seen as heavily stretched versus major rivals. The British pound GBPUSD plunged to an all-time low versus the U.S. dollar late last month as the U.K. government’s budget plans sparked a fiscal crisis that forced the Bank of England to begin buying U.K. government bonds to stave off a collapse of pension funds.
“First is profit taking in tactical longs that have been built over the past few weeks. Second is the ‘peak rates’ narrative which has been given some life due to the softer ISM, [job openings data] and shift lower of late in breakevens/inflation swaps,” Rai told MarketWatch, in an email.
Wait a minute, earlier it was the dollar surging
Fx traders longing euro to 1.02?
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