USD Rebounds on Higher Bond Yields

EQUITIES PULL BACK, USD REBOUNDS AS YIELDS RISE AGAIN

The US dollar rebounded against all but one of the other G10 currencies on Thursday and during the Asian morning Friday. It gained the most versus NOK, NZD, AUD, and CAD in that order, while it gained the least against GBP. The greenback was found virtually unchanged against JPY.

S&P 500 -TECHNICAL OUTLOOK

Yesterday, the S&P 500 index hit a new all-time high, but after that it reversed sharply to the downside, wiping out the weekly gains. Certainly, this makes the buyers worry, however the index continues to trade above a medium-term tentative upside support line drawn from the low of October 30th, which could still be seen as a positive. Also, looking back at the historic price action, we can see that the 50-day EMA sometimes acts as a good support zone. Even if the index retraces lower but manages to stay somewhere above that 50-day EMA, we might class this move lower as a temporary correction, before another possible leg of buying.

AUD/USD — TECHNICAL OUTLOOK

AUD/USD reversed sharply to the downside yesterday, after the equity world switched to a risk-off mode. The pair made its way closer to the medium-term tentative upside support line drawn from the low of November 2nd. Even if the rate drifts a bit more to the downside, as long as it stays above that upside line, the trend will remain to the upside.

AS FOR THE REST OF TODAY’S EVENTS

On the indicators front, we only have Canada’s retail sales for January. Both the headline and core mom rates are expected to have risen, but to have stayed in the negative territory.

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