Risk sentiment was the driver in FX yesterday, with both GBPUSD and EURUSD clawing out gains countering a rise in treasury yields that would normally mean a stronger USD. Safe haven currencies CHF and JPY also lost out yesterday.
*Daily move - against G10 rates at 7:30am, 09.04.24
** Indicative rates - interbank rates at 7:30am, 09.04.24
Risk sentiment likely to be the driver again today ahead of US CPI numbers and the Bank of Canada rate meeting tomorrow, as well as the ECB meeting on Thursday. Trading remains in tight ranges whilst we wait for catalysts.
Since the start of the month, we have noticed a dislocation in the correlation between treasury yields and US dollar index. Whilst the 10-year treasury yields soared to the highest since November 2023, the US dollar has been unable to push through its 2024 highs. Ultimately with hawkish repricing on Fed rate expectations, we could well be waiting for dovish repricing from other central banks before we see demand for USD pick up again. BoC and the ECB will be in focus this week.
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