What prohibit this scenario !?EUR/USD
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rssAccording to the US yield curve – it is time for volatility to move higher. Get ready.
Bond yields inch higher, risk mood improves slightly
10-year Treasury yields are now up by 1 bps on the day
That has helped USD/JPY move off the lows from near the 110.00 handle to 110.28 currently. Meanwhile, European equities are also trading more positively now posting gains between 0.2% to 0.4% across major indices.
I reckon it’s still too early to call for a turnaround in sentiment just yet but for now this is helping to provide some relief to risk at the very least. US equity futures have also pared losses to be flat on the day currently so we may just get a more neutral tone heading into North American trading later today.
Cable drops to four-day low as May’s offer to resign fails to break Brexit deadlock
Cable drops to its lowest levels since last Friday
Price is piercing through support around 1.3147 and is looking to extend a drop towards the 1.3100 handle. With parliament failing to reach a majority in indicative votes yesterday, the fact that May laying out her resignation path and still not getting enough support for her deal leaves us nowhere near a solution to the Brexit saga.
Her fate now rests in the hands of the DUP and that will be a key focus point before we move towards a third meaningful vote tomorrow – potentially.
Bids and swing region support is seen around the 1.3100 handle with further support seen around 1.3080. For now, sellers remain in control of cable after having defended a test of the 100-hour MA (red line) earlier.
Australia 10 year Real Yields turn negative for the first time since Marc 2009. -7 bps
New Zealand dollar extends decline but the previous drop is instructive
NZD/USD hits a session low
The New Zealand dollar was cut down in Asia-Pacific trading after the RBNZ surprised markets by shifting to an outright dovish bias.
” Given the weaker global economic outlook and reduced momentum in domestic spending, the more likely direction of our next OCR move is down,” the statement said, warning that the global economic outlook had weakened.
NZD/USD immediately fell 100 pips to 0.6810 and has mostly chopped sideways from there but with a negative bias. It has grinded to a fresh low of 0.6787.
Looking at the chart, today’s decline mimics a similar drop on February 6. That was a day when the RBA shifted to neutral from hawkish. Note that NZD continued to fall for a couple more days before finding support at 0.6725, just above the previous low.
It will need to do something similar to halt the decline this time.
EUR/USD stays pressured as 10-year bund yields fall to fresh 2½ year low
EUR/USD trades to session lows on the day
EUR/USD is slipping a little to start the morning as bond yields continue to track lower across the board. Germany’s 10-year bond yields have fallen to fresh lows last seen in October 2016, inching further into negative territory. Meanwhile, Treasury yields are also dipping slightly with 10-year yields down by 2.8 bps to 2.395% at the moment.
Once again, bonds are continuing to send a different signal to equities today and that continues to spark the debate that is brought upon as mentioned by Giles here.
As for EUR/USD, sellers are in near-term control and price looks to be headed for a further move lower at this point before things get better. Minor support around 1.1220-40 before the 1.1200 handle comes into play.
China & Australis Yields fall 5 and 3 bps respectively and seem to move in lockstep since November
An Update :US Dollar Index ,Euro ,INR ,YEN ,GBP ,CAD ,AUD ,CRUDE ,GOLD ,SILVER ,DJIA ,SPX ,Nasdaq Composite -Anirudh Sethi
The Federal Reserve was more dovish than expected, but that did not stop the dollar from appreciating against most of the major currencies last week. Even the Norwegian krone, which one would have thought would have been better supported following the central bank’s rate hike, closed lower on the week. Among the majors, the yen and Swiss franc were resilient in the face of the dollar’s strength.
The dollar also rose against many of the high-beta emerging market currencies, like the Turkish lira, the South African rand, the Hungarian forint, and Argentina’s peso. The Mexican peso was an exception. It had rallied nearly 1.8% until surrendering 2/3 ahead of the weekend, managing to close 0.6% stronger. The Indian rupee gained for the fifth consecutive week, but the momentum appears to be fading, setting the stage for a near-term pullback. The Hong Kong Monetary Authority intervened last week to further weakness, and helped by the fall in US yields, saw some success by the end of the week. The Hong Kong dollar gained 0.03% against the US dollar last week.
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AUSTRALIA’S 10-YEAR BOND YIELD DROPS TO ALL-TIME LOW
