• Home
  • Pro
  • Partners
  • Help and support
  • English (UK)
Pepperstone logo
Pepperstone logo
  • Ways to trade
    • Spread betting

      Bet on global price movements in £ per point

    • CFD trading

      Trade on 1000s of assets without owning them

    • Pricing

      Discover our tight spreads, plus all other possible fees

    • Risk management
    • Trading accounts
    • Trading hours
    • 24-hour trading
    • Maintenance schedule
  • Markets
    • Forex

      Get great rates on majors like EUR/USD, plus minors and exotics

    • Indices

      Enjoy 24-hour pricing on the UK100, US30 and more

    • Commodities

      Trade on metals, energies & softs, with oil spreads from 2 cents

    • Shares
    • ETFs
    • Currency indices
    • Dividends for index CFDs
    • Dividends for share CFDs
    • CFD forwards
  • Trading platforms
    • TradingView

      Trade through the world-famous supercharts with great pricing

    • MetaTrader 5

      Explore the apex in trading automation with our execution tech

    • The Pepperstone platform
    • MetaTrader 4
    • cTrader
    • Trading tools
  • Market analysis
    • Navigating markets

      Latest news and analysis from our experts

    • The Daily Fix

      Your regular round-up of key events

    • Meet the analysts

      Our global team giving your trading the edge

  • About us
    • Who we are

      Pepperstone was born from the dream of making trading better

    • Company news
    • Company awards
    • Protecting clients online
    • Spread betting

      Bet on global price movements in £ per point

    • CFD trading

      Trade on 1000s of assets without owning them

    • Pricing

      Discover our tight spreads, plus all other possible fees

    • Risk management
    • Trading accounts
    • Trading hours
    • 24-hour trading
    • Maintenance schedule
    • Forex

      Get great rates on majors like EUR/USD, plus minors and exotics

    • Indices

      Enjoy 24-hour pricing on the UK100, US30 and more

    • Commodities

      Trade on metals, energies & softs, with oil spreads from 2 cents

    • Shares
    • ETFs
    • Currency indices
    • Dividends for index CFDs
    • Dividends for share CFDs
    • CFD forwards
    • TradingView

      Trade through the world-famous supercharts with great pricing

    • MetaTrader 5

      Explore the apex in trading automation with our execution tech

    • The Pepperstone platform
    • MetaTrader 4
    • cTrader
    • Trading tools
    • Navigating markets

      Latest news and analysis from our experts

    • The Daily Fix

      Your regular round-up of key events

    • Meet the analysts

      Our global team giving your trading the edge

    • Who we are

      Pepperstone was born from the dream of making trading better

    • Company news
    • Company awards
    • Protecting clients online
USD
FOMC

Trader Thoughts – bull trends developing throughout the USD pairs

Chris Weston
Chris Weston
Head of Research
17 Jan 2024
Share
The focus from broad market players has been in part on developments in the Red Sea, but also on Fed gov Waller speech at the Brookings Institute. As many have seen in the price action, the aggregate view is that Waller's comments were hawkish, although in essence that’s only relative to the lofty expectations of cuts priced into interest rate and US swaps pricing – Gov Waller remains very much open-minded to cutting rates, but given his views lacked the urgency that the market craved, the result was that US Treasuries sold off and the USD built on its recent form.

We’ve seen a modest repricing in the US interest rate pricing, with the market pricing 157bp of cuts (down from 168bp on Friday) by December 24. and the implied probability of a cut in March has been massaged down to 69%. However, there has been a fair reaction across the US Treasury curve, notably in 10s where yields closed up 12bp and eying a push above the 5 Jan highs of 4.09%. We also see the US 2s vs 10s yield curve at -16bp, with a growing belief we see the spread turn positive for the first time since July 2022 – if we see an inverted US yield curve (i.e., 10yr Treasury yields are higher than 2yr yields), it will likely get great attention in the market.

Preview

Client activity has certainly picked up sharply, led by a broad rally in the USD and gold off by 1.4% and this was the first session where most forget the Christmas break and felt 2024 had finally kicked in.

We are seeing trends develop across the USD pairs, and this has big implications on a cross-asset basis as the world is not ready for a one-way move in the USD. I certainly don’t think this is a trend to be fighting at this juncture, as broad USD positioning is only small net long and the move higher has been somewhat of a stealth climb – CTAs and other systematic fast money players are yet to really beef up their USD long exposure and have only just been given a signal to buy-back USD shorts, so a further rise in the USD sees these rules-based players into USD longs in greater size and this is where strength begets strength.

Preview

The weakest links (vs the USD) have been versus the JPY, SEK, NZD, and AUD, although the MXN is now joining the USD party as well. USDJPY as always is a rates play, finding inspiration from the US-JP 10-year yield differential which has widened to 345bp, although spot has pulled away from where this spread implies. The cloud traders would have seen a close through the I-cloud which bodes well for those long, although resistance is being tested now with the 200-day MA marrying up nicely with the 61.8 fibo of the Nov-Dec.

Recall, short USDJPY was a top consensus trade for 2024, and once again we see these unwound quickly and it feels inconceivable that we could be considering BoJ/MoF verbal intervention is on the cards.

AUDUSD has fallen a long way from 0.6871 seen in late December, although on the day I favour selling rallies into 0.6625. When we look at the tape of China and HK equity it's hard to think we see a rally of that magnitude and moves in CHINAH is just ugly, the buyers are nowhere to be seen.

If long USDs, I’d want to see a USDCNH above 7.2200 and higher equity vol (a VIX above 15 would be helpful). Poor economic data from China today will be helpful to USD appreciation, but we now look ahead at UK CPI and US retail sales numbers – a retail sales print above 0.5% mom could see US bond yields rise further and see USD follow-through. Life across asset classes is far more interesting when we see a trending USD, especially if it results in higher market volatility – one to watch.


Related articles

Crude Moves Sideways As Focus Remains On Middle East

Crude Moves Sideways As Focus Remains On Middle East

Crude
Strategies for High Probability Trade Setups

Strategies for High Probability Trade Setups

Trading
5 charts front on mind for traders

5 charts front on mind for traders

Charts

The material provided here has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Whilst it is not subject to any prohibition on dealing ahead of the dissemination of investment research we will not seek to take any advantage before providing it to our clients. Pepperstone doesn’t represent that the material provided here is accurate, current or complete, and therefore shouldn’t be relied upon as such. The information, whether from a third party or not, isn’t to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product or instrument; or to participate in any particular trading strategy. It does not take into account readers’ financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of Pepperstone, reproduction or redistribution of this information isn’t permitted.

Other Sites

  • The Trade Off
  • Partners
  • Group
  • Careers

Ways to trade

  • Pricing
  • Trading accounts
  • Pro
  • Trading hours

Platforms

  • Trading Platforms
  • Trading tools

Markets and Symbols

  • Forex
  • Shares
  • ETFs
  • Indicies
  • Commodities
  • Currency indicies
  • CFD forwards

Analysis

  • Navigating Markets
  • The Daily Fix
  • Meet Our Analysts

Learn to trade

  • Trading guides
  • Videos
  • Webinars
Pepperstone logo
support@pepperstone.com
+448000465473+442038074724
70 Gracechurch St
London EC3V 0HR
United Kingdom
  • Legal documents
  • Privacy policy
  • Website terms and conditions
  • Cookie policy
  • Sitemap

© 2025 Pepperstone Limited 
Company Number 08965105 | Financial Conduct Authority Firm Registration Number 684312

Risk warning: Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73.7% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.

Trading derivatives is risky. It isn't suitable for everyone and, in the case of Professional clients, you could lose substantially more than your initial investment. You don't own or have rights in the underlying assets. Past performance is no indication of future performance and tax laws are subject to change. The information on this website is general in nature and doesn't take into account your or your client's personal objectives, financial circumstances, or needs. Please read our legal documents and ensure you fully understand the risks before you make any trading decisions. We encourage you to seek independent advice.

Pepperstone Limited is a limited company registered in England & Wales under Company Number 08965105 and is authorised and regulated by the Financial Conduct Authority (Registration Number 684312). Registered office: 70 Gracechurch Street, London EC3V 0HR, United Kingdom.

The information on this site is not intended for residents of Belgium or the United States, or use by any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.