It is all lining up for the dollar right now as the currency pushes to fresh highs on the day and is seeking to extend gains further ahead of the weekend. Let's recap how markets are playing out today to see why:
- The bond market is finally waking up, 10-year Treasury yields above its 100-day moving average
- Stocks are sliding, risk trades losing ground i.e. risk aversion taking hold
- Dollar technicals look favourable (vs JPY, EUR, GBP)
- China sought to weaken the yuan, providing an added tailwind for the next leg higher
It's tough to fight the momentum when everything is moving in the direction that is supporting the greenback. As risk trades lose further ground on the session, we're now even seeing AUD/USD fall by nearly 0.5% to below 0.6900:
Notably, price is sliding past the 50.0 Fib retracement level at 0.6909 and looks poised to move towards the 5 August low at 0.6869 next.
