Dollar slips after PCE report

USDJPY 10 mins

The bond market has found a strong bid and that's taking some of the air out of the US dollar. EUR/USD has rebounded to 1.2163 from a low of 1.2133 and there are similar-sized moves across the board.

The PCE report was a tough above expectations but it comes after a series of inflation reports have soared above estimates. Given that backdrop, it's likely there was some market expectation of a higher number, or at least some fear.

At the same time, it's the final trading day of the month and there has been a persistent bid in the dollar on what's likely rebalancing or other flows. I think we could see a bit more of that into the London fix but after that, it will be safer for the dollar bears to jump back in. Selling those pops has been a great strategy this month.