As we got into European trading earlier here, 10-year Treasury yields were down nearly 8 bps to 4.13% but fast forward less than two hours later and it is at 4.21% – pretty much flat on the day. This has caused a bit of a turn in sentiment with equities also losing appetite and the dollar slowly gaining a bit more poise after Friday’s fall.
The rough set of PMI data from Europe may be a trigger but I’d rather point towards markets reverting back to the main storyline after Friday’s brief relief. S&P 500 futures are now down 20 points, or 0.5%, on the day while European indices have seen its strong early gains wane in playing catch up to the Friday rally in Wall Street.
As for the dollar, it is sitting higher for the most part with only the pound doing better than the greenback so far today. The quid opened with a gap higher on the back of political and fiscal optimism after Boris Johnson pulled out from the race to become UK prime minister but has seen the opening gap eaten away with GBP/USD falling from the open at 1.1407 to 1.1310-20 levels now.
Meanwhile, the greenback is holding its ground against the euro while rebounding strongly against the yen in spite of Japan’s intervention play earlier. AUD/USD is also seen down over 1.3% at the lows for the day now and testing key near-term levels:
A fall back below the key hourly moving averages at the 0.6284-98 region will see sellers regain near-term control and look towards another potential push to 0.6200 again next.