Market Insight 09-04-2024

• Written by: Ian Morley
• 09/04/2024

Summary:

Yesterday, FX markets were primarily influenced by risk sentiment, resulting in GBPUSD and EURUSD making gains despite an increase in treasury yields, which typically strengthens the USD. Safe haven currencies like CHF and JPY experienced losses.

Speeches:

• No speeches were scheduled for today.

Market Insight:

Risk sentiment is expected to remain influential today, especially with the upcoming release of US CPI numbers and the Bank of Canada rate meeting tomorrow, followed by the ECB meeting on Thursday. Trading activity is subdued as traders await significant catalysts.

Analysis:

Since the beginning of the month, there has been a noticeable disconnect between treasury yields and the US dollar index. While 10-year treasury yields reached their highest point since November 2023, the US dollar has failed to surpass its 2024 highs. This suggests that despite hawkish adjustments in Fed rate expectations, demand for USD may not increase until there is dovish repricing by other central banks. Therefore, attention will be on the BoC and the ECB meetings this week.