Dollar Adds to Gains; Pound Drops Below 1.23
A Bloomberg gauge of the dollar edged higher ahead of the release of the US jobs report Friday. The pound dropped below 1.23 for the first time since 2023 as the selloff in UK assets deepened amid concerns over the government’s fiscal deficit.
Bloomberg Dollar Spot Index rises 0.1%, following two sessions of gains
BBDXY overnight implied volatility rises above 15%, highest in two months, as traders position for release of US payrolls report
US equity markets closed in observance of a national day of mourning for former President Jimmy Carter; US bond trading closed at 2 p.m. New York time
Yield on 10-year Treasuries is little changed at 4.69%
“While October marked a key turning point for both Fed policy expectations and USD strength, the greenback’s continued surge owes more to political factors and relative safety than pure economic fundamentals,” wrote George Vessey, lead FX strategist at Convera, in a note
GBP/USD drops as much as 1% to 1.2239, lowest since November 2023, as the UK 10-year yield rises as much as 13 basis points to 4.92%
The moves lost traction with cable rebounding after testing a key support level and 10-year gilt yield steadying around 4.80%
One-week implied volatility in GBP/USD rises 108 basis points to 12.08%, highest since Nov. 6; the gauge traded as low as 8.67% on Wednesday
Risk reversals on the tenor reach as much as 160 basis points, puts over calls, the most since November 2022
Source : Bloomberg
