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US Dollar Forecast: DXY Index Losing Support; USD/JPY Coils into Triangle Advertisement US Dollar Outlook: Rising US Treasury yields aren’t helping the US Dollar as rising inflation pressures are outpacing near-term growth expectations following the April US non-farm payrolls report. The DXY Index is sustaining the loss of its uptrend from its intrayearly swing lows, while USD/JPY rates are in the early stages of funneling into the vertex of a symmetrical triangle. US Dollar Bleeding Continues The US Dollar can’t catch a break as May plods forward, despite seemingly having a tailwind amid the best month of the year from a seasonal perspective. Alas, the best laid plans of mice and men often go awry. This statement rings perfectly true for the US Dollar in the case of US Treasury yields, which have been steadily recovering since the disappointing April US non-farm payrolls report – and the US Dollar (via the DXY Index) has not benefited in the slightes ....
Will Lumber Prices Prick US Housing Bubble or Will Low Mortgage Rates Prevail? Advertisement US Housing Market Outlook: There’s a lot of chatter among market participants about the state of the US housing market, which has seen its strongest run of price growth since 2006 – right before the US housing bubble burst, which helped lead to the Global Financial Crisis. Supply chain issues (e.g. closed sawmills) have helped lift lumber prices to all-time highs, leading to over a $35K increase in new home prices in the US since the start of 2021. Low mortgages have kept measures of housing affordability within reason, but US Treasury Secretary Janet Yellen’s warning this week about higher interest rates are a stark warning. ....
Central Bank Watch: BOE & ECB Interest Rate Expectations Update Advertisement Central Bank Watch Overview: The BOE and the ECB won’t meet again for six weeks. Nevertheless, speculation around what they may do next continues to drive markets. Throttling back its QE program is just the beginning of the normalization process for the BOE, while rising inflation pressures may give pause to the ECB when thinking about another easing step. Beginning to Throttle Back In this edition of Central Bank Watch, we’ll cover the two major central banks in Europe: the Bank of England and the European Central Bank. Both central banks won’t meet again until late-June, giving ample space for speculation around their past, present, and future policy moves to dictate price action in EUR- and GBP-crosses. Throttling back its QE program is just the beginning of the normalization process for the BOE, while rising inflation pressures may give pause to the ECB when thinking abo ....
USD/CHF, USD/SEK Lose 2021 Uptrends; USD/NOK Retains Bear Flag Breakout Posture Advertisement US Dollar Outlook: Even though May is the best month of the year for the US Dollar (via the DXY Index) from a seasonal perspective, significant technical weakness has set in after the extremely disappointing April US non-farm payrolls report. Both USD/CHF and USD/SEK have traded below their intrayearly uptrends, while USD/NOK’s bear flag breakout remains on track. Non-Major USD-crosses Still Look Bearish The April US non-farm payrolls report was the worst case scenario for the US Dollar: the result has been a mix of lower nominal bond yields and higher inflation expectations, curating an environment of falling real yields. Even though chatter about the Federal Reserve unveiling a taper timeline in the coming months was growing, the narrative around the US Dollar has dramatically changed at the start of May. ....