Forex today: dollar climbs to test 91 handle, US 10yrs test 3%, commodity FX smacked

Forex today was once again seeing the greenback higher and US yields on the way to a more permanent fixture in the 3% handle.  

With little attention paid to data and underlying geopolitics, traders instead drew their concerns from prospects of inflationary pressures, higher oil and a flattening yield curve.

The US 10yr treasury yield was extending its recent surge to just below the 3.00% mark making a high of  2.996% high as the highest since Jan 2014.
However, the 2yr yields rose from 2.46% to almost 2.48% - the highest since 2008, still some way off anything resembling a negative curve. Either way, stocks are concerned that the Fed might wish to hike four times in 2018 with Bloomberg calculations showing that the Fed fund futures yields are pricing for the next rate hike in June at 97%. 

The US dollar was higher against all of G10 currencies. The DXY traded between 90.3200-90.9850 and was ending the session +0.70% at 90.95. 

As for the other currencies, the euro was changing hands below the 1.22 handle for the first time since the start of March this year. However, there was more to the move than just in dollar terms. We have the ECB on the cards this week and traders are nervous of a dovish outcome while positioning is at a record long. Also, the EZ PMI's were also unimpressive. 

For sterling, the story developed into the 1.39's having extended the fall from the attempts a the 1.44 handle last week. There were mixed messages from Brexit news on Monday, with another defeat in the upper house voting 316 to 245 in favour of an amendment to ensure the government's EU Withdrawal Bill - weighing on sentiment for the PM's leadership qualities - snap election coming up? On the flipside, Britain hailed new optimism about a Brexit deal for financial services.  The cross cheered the fall out of commitments in cable but was unable to break the 0.8770 resistance level. EUR/GBP ended NY at 0.8760 -0.17%, trading between 0.8775-0.8753 while the downside is limited on Carey's recent shift of tone.  The yen was one of the weakest to the dollar on Monday, falling to 108.75 vs the greenback after buys stops were triggered overnight through 108 the figure and the price did not look back while traders stayed clear of it. 

As for the commodity bloc, the Loonie was sent off a cliff on the back weekend noise from Poloz and again in today's testimony where he reiterated last week’s cautious policy outlook - 1.2857 was the high.  The Kiwi bear pressure extended in NY with the price breaking the European low and dropping to test 0.7150. The Aussie was the second-worst performing currency to the dollar bar the yen and made a session low of 0.7599 after opening NY at the 76.4 Fib of 0.7501-0.8136 rally at 0.7640. The Dec 14 low was taken out on the extension of US yields and with falls in the price of Copper and oil taking the pair down to test the bull's commitments at 0.76 the figure ahead of the Aussie Q1 CPI risk in Asia today. 

Key notes from US session:

• US session funda wrap: US yields are the driving force, dollar highest since Jan
• Wall Street stocks mixed as higher bond yields weigh on stocks

Key events ahead in Asia:

Analysts at Westpac explained that at 11:30am Syd/9:30am Sing/HK we see arguably Australia’s most market-sensitive data release since GDP in early March – Q1 consumer price index.