It was a mixed session for the dollar yesterday. US unemployment claims data printed weaker than expected, but only slightly, and then, as mentioned above, Philly Fed Manufacturing Index was a beat. USD/JPY rallied before New York came online helped by rising US Treasury yields, which supported a broader move higher in the dollar. However, this move was tempered later on as a war of words on US/China trade reared its head again with Trump calling China “very spoiled on trade.”
The USD reached a new five month high versus its pairs, rising 0.2% in yesterday’s session. The dollar started the session slightly weaker, but the Philadelphia Fed Business Outlook for May came much stronger than expected (34.4 versus 21 expected and versus 23.2 last month). The healthy number pushed US Yields higher again, with the US 10 YR Treasury reaching 3.115% (highest level since 2011) helping the USD recover for the session.
US yields are putting some pressure on the stock market, which ended the session slightly lower, also thanks to Trump wariness about the outcome of US-China trade talks. The war of words between U.S. and China may also intensify, but market participants believe action will be minimal. Other than that, it looks set to be a steady finish to the week.