FXStreet (Edinburgh) - Sean Callow, Analyst at Westpac Global Markets Strategy Group, believes USD-bulls need to be more patient.
“It has been another lousy week for US dollar bulls, particularly given the strength of the US June employment report. Headline job creation of 288k took the 3 month average gain to 272k, the swiftest pace since early 2012, with 1.4 million jobs growth in total over H1 2014”.
“The 10 year Treasury note yield jumped from 2.63% to 2.68% but this move fizzled out to a 2.64% close into the long weekend… the rally in German bunds is such that the 10 year yield spread has actually moved in favour of USD since end-May”.
“This should eventually work against EUR/USD and we retain a negative bias over a multi-month time frame. But near term, it seems that USD sentiment will not show notable improvement until US yields break substantially higher on a stronger economy rather than retreating back into ranges still a long way below end-2013 yields”.