US: Pause for the dollar - SocGen

Kit Juckes, Research Analyst at Societe Generale, notes that a bit of risk aversion overnight and US real yields’ advance has stopped, stopping the DXY rally at the same time.

Key Quotes

“TIIPS still do a good job of helping me understand where the dollar’s going and it’s clear that a rapid rally can’t happen while the reaction to talk of fed tightening is so muted at the longer end of the Treasury market,. So we’re bullish, but not over-excited.

Today, we get US durable goods, which we expect to be flat on a headline basis and not too sparkly if we dig further (non-defence ex-air capo goods are likely to be up 0.1%). Jobless claims are due, as are pending home sales, the Kansas fed index and St Louis fed President James Bullard speaks. But with parts of Europe off today, the real focus is now on tomorrow’s speech by Janet Yellen and a marginally softer dollar, correlating with the higher oil price, is the result.”