The rally in Treasury yields extended into Asia this Friday, which pushed the US dollar to an eleven-day higher versus its main competitors. Subsequently, the USD/JPY pair rallied and headed for a test of the key 107.78 resistance zone, up +0.30% so far, also as the Yen remained on the back foot amid softer Japanese CPI figures.
The Antipodeans also suffered from broad-based USD strength, as the yield differential favored the buck amid upbeat US fundamentals and further Fed rate hike prospects this year. The Kiwi emerged the biggest loser, as deteriorating risk sentiment also added to the weight on the higher-yielding currency.
Meanwhile, oil prices turned negative while gold futures moved further away from the $ 1350 mark, as global trade and geopolitical tensions eased.
Main topics in Asia 1123043091
US Fed's Mester: further rate hikes appropriate
Loretta Mester, President of the Federal Reserve Bank of Cleveland and voting member of the FOMC, has given her outlook on the Fed, the US economy, and monetary policy.
US Treasury considering emergency powers to restrict Chinese investment - Reuters
As reported by Reuters, the US Treasury is considering using an old law that would allow President Trump to restrict Chinese investment in key areas by declaring a focused state of emergency.
SNB's Jordan: no need for policy shift as Franc slides - Bloomberg
Swiss National Bank (SNB) President Thomas Jordan spoke with Bloomberg, stating that he sees no need to begin adjusting the SNB's policies, even though the CHF is sliding into new lows.
China MOFCOM to extend anti-dumping measures on pulp from the US, Canada and Brazil
China’s Commerce Ministry (MOFCOM) released a statement announcing that it will extend the anti-dumping measures on pulp from the US, Canada and Brazil.
UK Audit Office: Brexit divorce bill to exceed GBP 39bn
The UK National Audit Office (NAO), in its latest review report, warned that the Brexit divorce bill figure could be higher than GBP 35-39 billion (bn) estimated by the UK PM Theresa May.
China’s Envoy to the US: If US insists on initiating a trade war, China will retaliate
Reuters reports headlines from an article published by Xinhua, citing comments from China’s Ambassador to the US on the Sino-US trade dispute.
Dollar index hit 11-day high in Asia as treasury yields rise
The dollar index (DXY), which tracks the value of the greenback against the basket of currencies, rose to 83.99 in Asia - the highest level since April 9.
Key Focus ahead
Markets head towards a quiet EU calendar this Friday, with nothing relevant up on sleeves from the Euroland and UK docket while central bankers’ speeches will continue to provide some trading impetus. The Bank of England (BOE) MPC member is due to speak at 0930 GMT, followed by the European Central Bank (ECB) Governing Council member Weidmann’s speech at 11.30GMT.
The International Monetary Fund (IMF) three-day meeting commences today, with all eyes on the headlines on the trade issue and global growth forecasts.
Moving on, the US traders will remain at the mercy of the sentiment on the Wall Street and price-action around Treasury yields and US dollar amid a lack of fundamental news from the US docket. Meanwhile, Canada sees the releases of the retail sales and inflation data, followed by the second-tier Eurozone consumer confidence data.
Besides, the speech by the FOMC member Williams will remain in focus, which will wrap up a fairly quiet final trading day of the week.
EUR/USD: Bull Pennant vs Bearish yield spread
The currency pair will likely remain rangebound today as the data calendar is light. The breakout (bearish/bullish) could happen next week if the ECB signals a significant change in the monetary policy.
GBP/USD looking down the barrel at 1.40 as soft data weighs
The week is almost over and the pair can breathe a sigh of relief, with little else on the economic calendar outside of a speech from BoE MPC Member Michael Saunders at 09:30 GMT, who will be speaking at the University of Strathclyde.
US stock market had its first loss of the week as technology companies and consumer products went south.
Gold: Bull breakout remains elusive as Treasury yields spike
Gold (XAU/USD) faded spike to $1,354 yesterday as the rise in the treasury yields put a bid under the US dollar.
Aso-Mnuchin talks to be based on focus on multilateral framework: Japan MOF - Reuters
Aso and Mnuchin are scheduled to meet for bilateral talks on Friday on the sidelines of the G20 finance leaders' gathering.
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