The dollar was sharply higher against the pack today (with CAD being the notable exception). Why? The big relative move in yield. The recent durable goods report and today’s GDP report seem to have quickly changed sentiment regarding Fed expectations and that was reflected in sharply rising relative dollar yield spread against all comers.
Fed Expectations Change – Source Financial Times:
EU-US 2-year Spread vs. EUR/USD:
US Dollar Index Weekly: Working higher but still in the range…
Also, early in the day, PBOC governor Zhou told the G-20:
“China won’t use competitive devaluation to enhance export competitiveness,” said Zhou Xiaochuan, governor of the People’s Bank of China at a news conference ahead of Friday evening’s meeting of finance chiefs from the Group of 20 major economies.
“Currently, China’s overall exports remain strong,” he added.
Maybe this will help tamp down on the volatility we have been seeing of late. So, watching to see if we get some follow-through on Monday.