Dollar ignored better than expected ADP employment data. Instead, it responds negatively to ISM manufacturing miss and tumbles broadly in early US session. Additionally, the greenback is also weighed down by dovish comments from Dallas Fed Robert Kaplan, and the free fall in treasury yields.
Dollar is the weakest one for today so far, followed by Swiss Franc. Canadian Dollar over took Yen’s place as the strongest as decline in USD/CAD gathers steam.
In the stock markets, DOW tumbles sharply to as low as 22668.77 initially on Apple as well as weak manufacturing data. But for now, there is no apparent follow through in selling yet. While we’re expect strong resistance between 23431.98/23713.93 to limit upside to complete the corrective rebound from 21712.53, break of 22267.42 is needed to confirm completion of the rebound first.
US 10 year yield is now down -0.074 at 2.587 as recent decline accelerates. We’re expecting strong support from 2.517 fibonacci level but this view is getting vulnerable. Yield curve inversion is getting more serious with 1-year yield at 2.563, 2-year at 2.411, 3-year at 2.384 and 5-year at 2.340. It looks like it’s just a matter of time for 1- to 10-year yield to invert.