Earnings Worries Fuel Dollar Growth

This morning, the US Dollar index continues to rise, fuelled by worries over US earnings and soaring treasury yields. Dollar pairs are on the back foot once again, with the AUD/USD leading the fallers. The Aussie is now down 1.2% on the week, breaking the 0.7600 level. The EUR/USD and GBP/USD both rallied yesterday.

The euro is falling harder though, with this morning’s selling erasing most of yesterday’s gains though. The EUR/GBP is unchanged this morning after follow on selling yesterday. Yields have risen continually over the last year as expectations of higher US rates have hardened with analysts expecting another two or three 0.25% hikes this year – market expectations of three further hikes currently stand at 48%.

Higher US interest rates draw money away from non-interest bearing gold. Gold is on the back foot and continues to be rangebound, with $1320 acting as support. With rising bond yields spoiling the fun and disappointment around the U.S. tech sector putting a dampener on sentiment, hopes are pinned on earnings delivering. Which are also not bright across the board for some of the industrial majors.

Coming up today: The only item worth noting today is US crude oil inventories at 15.30, BOC Poloz speaks at 21.15.

The Swiss franc has continue to slip, while the US dollar strengthens. The USD/CHF is now approaching parity, a level not seen since November last year. This could be a great trading opportunity to grasp here. Parity could be on the cards again, but it could be short lived like last time.