Dollar strong across the board

Daily Analysis - 24/07/2018

Jump in US bond yields lift dollar  

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Expectations that the Federal Reserve will continue its rate hike path this year helped the US dollar move higher. The benchmark 10-year US Treasury yield rose to the highest in five weeks. In equity markets, Google’s parent company Alphabet Inc. posted second quarter results on Monday that beat expectations, as Google ad sales helped boost the share price.

Yuan at lowest in a year


The Chinese yuan weakened to its lowest level in a year against the US dollar. USDCNH is trading at 6.8370. The deepening standoff between the US and China over trade war threatens to evolve into a currency war now. Could China be embracing purposeful devaluation as a policy tool?

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Oil prices extend lower


Crude oil prices are under pressure again on trade war concerns. The commodity has delinked more than 8 percent this month as the trade spat between the US and China has escalated, with uncertainties impinging on global growth. West Texas Intermediate crude for September delivery was above $67.70 a barrel in early Tuesday trading.

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PMI day


All eyes are on PMI data out of Europe today. Germany’s flash manufacturing PMI beat and came in at 57.3 in July versus 55.5 expected and above the previous 55.9. This helped the euro jump higher as Germany is the largest Eurozone economy and is seen as the region’s engine of growth. EURUSD rose towards the key $1.17 area after the German data before stalling.

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