USD flows: Bit of a dollar squeeze; stretched risk pullback

A bit of a dollar squeeze was seen as the risk this week, given the backdrop and positioning, and it continues to gain some traction and broaden, encompassing a wider range of pairs as metals and stretched risk markets (see for instance the wild Kospi today) see some pullback. Cable continues to be greased by political news (Starmer reportedly will not block Burnham from standing in by-election setting up a later contest). But EUR/USD, USD/JPY picking up a touch with the level breaches too and commodity pairs bringing in more profit taking after stretched runs.  The more impressive the runs and popular the trade, the bigger the pullbacks today - worth watching USD/NOK potential weekly outside reversal for example on the charts, but in any case, if that not seen, a little bit of minor damage on the chart with the very short-term trend break. 

The run of firm US data has seen US2s clear the 4%-4.023 highs, pushing through the resistance offered by Warsh’s take over at the helm. US10s clearing 4.5%- and looking to last spring/summer’s 4.6%- spikes, and 30s likewise running on from 5% to have the 5.16/8 highs. The MOVE indeed is still pretty subdued at present but worth monitoring for any pick up in volatility.  Japan also sees 30s push through 4%. The probably of a BoJ hike at the next meeting has pushed up to the 70%s.