Currency Market Analysis

Oct 13, 2021 | Currency Market Analysis

Global Themes

Greenback at highs ahead of CPI, Fed minutes

The US dollar extended recent gains overnight with the USD index trading to the highest level since September last year.

The US dollar has been boosted by a jump in bond yields with the US ten-year bond climbing from 1.30% to an overnight high of 1.63% over the last three weeks.

US bond yields have been mostly driven by expectations the US Federal Reserve would begin to end its money-printing program at its 4 November meeting.

Low yielders hit

The USDSGD gained 0.1%.

The low-yielding currencies remained pressured with the euro and Japanese yen both lower overnight.

The Canadian dollar outperformed as higher energy prices boosted the CAD.

US data key

The USD’s gains overnight were also supported ahead of two major US releases.

Tonight, US inflation is due, with an annual headline rate expected at 5.3% in annual terms while the core number, which strips out food and energy, is expected at 4.0% in annual terms.

Later, the Fed minutes are released, with markets keen to hear more detail about the Fed’s likely next move.

Any further evidence of a November taper might push the USD higher.

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