Dollar bulls expecting help from Powell?
What's with the dollar rally today?
Stocks aren't doing much and the bond market is flat. If it was a fundamental story, you would expect to see some kind of reaction outside the currency.
Powell is speaking at Jackson Hole early on Saturday, that could set up a move in markets after the weekend but could this be front-running on hopes for something hawkish? That's tough to believe with other, smaller markets not reacting.
So flows? That's a bit of a cop-out but there's no great reason for so much USD buying today. The market is already heavily net-long dollars so specs probably aren't a big factor, but that can't be ruled out because it's a less-liquid time.
Elsewhere, there are reasons to sell other currencies. The Australian dollar is getting hit by political trouble and a potential spat with China over 5G technology. Cable is always vulnerable to Brexit headlines, although there isn't anything damaging today.
Emerging market currencies are a good bet to be part of the problem. The South African rand is down 1% on Trump's tweet with every other EM currency also lower with the exception of Argentina's peso.
So on net, it's still a mystery. That could mean China is at work or some other central bank is buying dollars and that's what I guess is underway. The thing is, that's not going to be sustainable so I'm not sure this round of dollar buying will last.
USD/JPY is now butting up against the mid-month highs. If these flows ebb, I think it's vulnerable, especially given all the trade worries.
