The US dollar is mostly weaker this morning after strengthening yesterday. The dollar is flat against the euro and the Canadian dollar, while selling off against the Japanese yen. Looking at markets, US 10-year and 30-year bond yields were sharply higher yesterday. US yields have been rising after the Bank of Japan announced it would taper its purchases of long-dated Japanese government bonds. As higher yields make holding the US dollar relatively more attractive, the currency strengthened as a result. Interest rate-sensitive assets such as bonds and gold weakened. Looking at economic data, yesterday's JOLTS job openings figures missed (fairly high) expectations. Upcoming initial jobless claims figures tomorrow should provide more cues regarding the health of the job market. Despite recent strength, the US dollar remains weak and our outlook is thus bearish.
USD/JPY is down today and currently trading above 112.0. EUR/USD is flat and is trading above 1.1930. The pound is down, and GBP/USD is currently above 1.3520.
Looking at economic data this week, markets will be watching upcoming retail sales and inflation figures. JOLTS job openings (5.9m vs. 6.0 expected) missed expectations. Later today, we'll see export and import prices. On Thursday, we'll get initial jobless claims and core PPI numbers. Friday is the most important day, and we'll see Core CPI, retail sales, and weekly earnings. Last week, nonfarm payrolls numbers missed expectations.
Following the holiday season sell-off, we are downgrading the US dollar to bearish. The currency is neither overbought nor oversold today, and trades within a normal range. This is based on technical indicators when looking at a weekly chart.