The US dollar is mostly flat today. While the currency opened higher earlier today, it has since given up some of its gains. The US dollar strengthened last Friday following non-farm payroll numbers that were ahead of expectations. Following the data, bond yields and the dollar soared, while equities and commodities weakened. Looking at US bond yields today, 10-year and 30-year Treasury yields continue to march higher. S&P 500 futures and crude oil benchmarks are down slightly. Thanks to its recent strength, the USD is no longer looking technically oversold on a daily chart. While some have suggested that the US dollar bear market may be coming to an end, strong ex-US growth (particularly in the Eurozone) means that the dollar is likely to stay weak. Our short-term and medium-term outlook on the dollar remains bearish.
USD/JPY is down slightly today and currently trading above 109.950. EUR/USD is flat and trading above 1.2450. The pound is flat, and GBP/USD is currently above 1.410.
Looking at US economic data this week, markets will be focused on more PMI surveys. Later today, we’ll see Markit services and composite PMIs. We’ll also see ISM non-manufacturing PMIs. Tomorrow, we’ll see the good trade balance and JOLTS job openings. On Wednesday, we’ll see MBA mortgage applications and consumer credit. On Thursday, we’ll see initial jobless claims. Last week, core personal consumption expenditures met expectations while non-farm payrolls beat expectations.
Thanks to recent dollar weakness, we are downgrading the US dollar to bearish. Note that the currency is looking oversold. This is based on technical indicators when looking at a weekly chart.