Archived IMT (2010.01.13)

USD-YIELDS CORRELATION: The correlation between the USD index and US-10 year yields pushes to +0.56, its highest since May 2009, recovering from a low of -0.85 in August. Although care must be paid in following these correlations, the recent rebound underpins our focus on yield differentials. 3.90% proves a vital obstacle to bond yields. Prolonged losses below 3.70% could result from reduced risk appetite/weak econ figures, so watch out from Thursdays retail sales and Friday's CPI from the US. But USDX remain comfortably supported above both of its 55 and 100 day moving averages--76.28 and 76.47 respectively. Were still bearish EURUSD aiming for a prelim target of $1.4430.