Jeremy Boulton is an FX analyst for Reuters in London and he says the dollar might be looking good for a buy at these levels as the fall in US yields look overdone and that the risk is that better data next week will boost the dollar.
He makes a good point that to see a real push lower in yields it would take a big risk averse event. As such, most of the current moves can be attributed to “froth” coming out of European stocks and periphery bonds.
He notes that pairs such as the aussie and kiwi are unmoved in the European session suggesting some “cherry picking” in FX and the value might be in buying the dollar against “ultra low yielders” such as yen, swissy and euro.
There are some big US data points on the calendar next week namely retail sales, industrial production and housing data, to name a few.
The problem is that the buck hasn’t been responding to good data of late but I get the feeling it’s not going to ignore it forever.
