Technical Analysis

US dollar strengthens as yields turn higher

USD/JPY is leading a broad US dollar bid at the moment as North American trade ramps up.

It’s not clear what’s behind the move but it’s a reversal of the equally-inexplicable US dollar selling we saw yesterday. One factor is bonds, with yields ticking higher at the moment though not in a big way. US 10-years are up 2 bps to 4.15% but had been as low as 4.10%.

On the bond-market side, Democrats did a bit better than expected and that might be extrapolated as a push for more public spending (or at least less of a backlash than expected) but tying it back to politics is a tall task.

What could be unfolding is that the dollar strength is a forerunner to more risk aversion and losses in equities.

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