The information provided is of general nature only and does not take into account your personal objectives, financial situations or needs. Before acting on any information provided, you should consider whether the information is suitable for you and your personal circumstances and if necessary, seek appropriate professional advice. All opinions, conclusions, forecasts or recommendations are reasonably held at the time of compilation but are subject to change without notice. Past performance is not an indication of future performance. Go Markets Pty Ltd, ABN 85 081 864 039, AFSL 254963 is a CFD issuer, and trading carries significant risks and is not suitable for everyone. You do not own or have any interest in the rights to the underlying assets. You should consider the appropriateness by reviewing our TMD, FSG, PDS and other CFD legal documents to ensure you understand the risks before you invest in CFDs. These documents are available here.
Any references to Australian or international shares, sectors, indices, ETFs, crypto-related stocks or other instruments are provided for market commentary and watchlist purposes only and do not constitute a recommendation, offer or solicitation to buy, sell or hold any financial product or adopt any investment strategy. International markets may involve additional risks, including currency fluctuations, regulatory differences, market structure differences, reduced liquidity and higher volatility. Company-specific, sector-specific and macroeconomic risks may also affect performance.
Commentary on geopolitical developments, economic data, central bank decisions, earnings, policy changes and other global or financial market events is based on information available at the time of publication and may change without notice. Such events can lead to sudden market moves, price gaps, reduced liquidity, wider spreads and increased volatility, particularly in leveraged products such as CFDs. Forward-looking statements, expectations and scenario analysis are inherently uncertain and should not be relied on as guarantees of future market behaviour or outcomes.
US Dollar: CPI surprise could lift DXY toward 105 - MUFG
MUFG’s Derek Halpenny highlights that G10 FX volatility has eased after the recent spike driven by higher US yields, but warns risks remain skewed to renewed turbulence. He links Middle East tensions, potential US involvement, and energy prices to further upside in yields and Dollar strength. September US CPI is seen as pivotal for rates, with a strong print supporting another leg higher for the Dollar and DXY.
Yields and CPI drive Dollar
"G10 FX volatility is starting to turn lower again after the recent spike higher as the US dollar strengthened in response to the surge in sovereign bond yields. There has been a similar modest retracement in bond market volatility as well and if bond yields have settled around a new equilibrium then we could see volatility come down further in both rates and FX. However, the risks appear greater to us that we could still have further to go in this current spike in yields."
"Inflation data from the US today is very important and that will shape the very near-term direction of rates and a softer print would help ease the broader risks but the current conditions and geopolitical backdrop still point to increased risks of more volatile financial market conditions that would, at least initially, be supportive of another leg stronger for the dollar."
"Near-term though the Fed look set to hike again and any upside surprise in today’s data would likely trigger another rates sell-off and extend the dollar further stronger. Based on our 2-year UST bond yield projections, the DXY could certainly advance to the 105-level that would imply EUR/USD potentially falling below the 1.1000-level."
"A consensus CPI print today is unlikely to alter rate expectations much and a meaningful miss to the downside (0.0% m/m core) would be required to see a notable dollar sell-off."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Related Articles
