USD up strongly against safe-havens

Up by almost 4% against JPY and 5% against CHF in past two weeks

Chart of the Day

We said yesterday that the USD could be on everyone’s radar this week, and it sure made itself known throughout the day yesterday, rising strongly against most currencies including further gains against the CHF and JPY. Over the past two weeks, the USD is up by almost 4% against the JPY and 5% against the CHF, as real rates in the US become too high for traders to ignore compared to the much lower returns in Switzerland and Japan - some say this is a sign that the euro has further to fall as well.


German export growth rose to -3.0% YoY in December. Export orders suggest growth will continue to improve.

Japan's economy watchers survey rose in February, but is still relatively weak.

In Canada, the leading index points to much stronger growth ahead.


It was another weak day for tech-focused stocks, but the rotation trade benefited some as Canada’s TSX edged up and the European indices increased strongly - we’ll see if any of those moves are reversed today though. Moves in stock markets ranged from a fall of 2.4% for the US Nasdaq to a rise of 3.3% for the German Dax.

Equity indices across the advanced economies have made up some ground against the S&P 500 in the past week.

The weakness of tech stocks was prompted by further larger rises in US real yields. Over the past week, they are up 24 bp for the 5-year and 42 bp for the 10-year.

The S&P 500 tech sector has now fallen by 5.5% over the past week.

While the link has been pretty weak lately, real 5-yr/5-yr yield differentials have moved sharply in favor of the USD vs the euro in the past week.

The rise in the DXY has not just been a euro story, it is up a similar amount against the other 5 constituents over the past week.

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