The index continues to decline after more fleeting dead cat bounces and just fell to a new y-t-d low at 91.989 despite more pronounced weakness in the Yen as jitters about the end of Abenomics in Japan are assuaged by the fact that at least 2 PM candidates appear content to keep the ideology going. Indeed, the DXY remains vulnerable and could come under renewed pressure on last minute end of August rebalancing flows that often reach a climax late in the EU session, especially if Wall Street evades similar equity selling for index, balance sheet and risk purposes. From a fundamental perspective, comments from Fed’s Clarida have not added much in the way of clarity on AIT, but he appears more inclined to keep YCC under consideration than July FOMC minutes seemed to imply and this has resulted in some US Treasury yield curve re-flattening. Elsewhere the Euro has shrugged off benign Eurozone inflation and downgrade to Italian Q2 GDP to breach 1.1950.



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