Forex today: dollar better bid despite lower yields

Markets were improved on Wall Street today and Forex was dominated by the Shanghai jumping to its best levels overnight in more than two months.

Risk on was the theme with USD/JPY at its highest levels since the end of March topping out at 111.94 and just shy of the psychological 112 handle. The BIS warnings over complacency were ignored and the carry trades performed well. However, anchoring the dollar were US yields going against the grain with the curve at new YTD lows. There was some concern over Washington again with rumours of the US Supreme Court swing vote and Anthony Kennedy’s retirement. However, the DXY was resilient and took up demand with Trump's win at the Supreme Court on the travel ban despite poor Durable Goods.

EUR was steady despite the strong IFO numbers overnight but weighed to some extent on the Italian banking news while a flattening German yield curve kept the lid on the single currency. Cable was consolidated while the Tories cut a deal with DUP. USD/CAD was lower on the bounce in WTI, and the antipodeans were better bid on the carry. 

The day ahead

NZ trade balance

Key notes from the US session

• U.S. President Trump on travel ban's lifting: a clear victory for our national security
• US Durable Goods Orders: Details disappoint - Wells Fargo
• UK: Conservatives agree pact with DUP to support May government - BBC