ForexLive European FX news wrap: Dollar gains on the day as yields climb higher

Author: Justin Low | Category: News

Forex news from the European trading session - 9 January 2018

Economic data:

Central bank/Government:

Others:

Markets:

  • JPY leads on the day, CHF lags behind
  • European equities are firmer on the day (again) with all major indices gaining
  • Gold is down 0.38% to $1,315.50
  • WTI crude is up by 0.39% to $61.97
  • US 10-year yields is up by 1bps to 2.49%
  • Bitcoin is down 1.1% to $14,770; Ethereum is up by 4.6% to $1,215

It was quite an interesting European trading session with good opportunities to be had all around. The underlying theme of the session was US dollar strength but the Japanese yen remains the leader on the major bloc following the BOJ announcement that it will "taper" its bond purchases.

USD/JPY fell to 112.50 in Asian trading on the announcement, but recovered in European trading up to 112.94 before surrendering gains again - the pair is now trading at 112.66. Look out, as there is a large option expiry in the pair at 113.00.

The NZD and CAD were mostly unchanged on the day against the USD, with the NZD boosted by AUD/NZD selling - limiting its losses on the day. Meanwhile, the AUD had a good start to the day on the back of stronger than expected building approvals data here. AUD/USD was trading near 0.7850 before the wave of dollar strength and AUD/NZD selling sent the aussie lower on the day.

The sterling, euro, and swissie had a similar trading pattern today as they all fell against the dollar and the yen on the day. It's mostly one-way traffic for the three currencies, but the GBP managed to recoup some losses against the USD after falling to a low of 1.3514 earlier. The pair is still staying above the support levels I mentioned here, which may help it stay afloat in the near-term. GBP/USD is now trading at 1.3540.

There was also action in the CNY, as the PBOC moved to suspend the "counter-cyclical factor" in the daily CNY fixing - which resulted in the CNY being sold late in Asian trading today.

Meanwhile, US Treasury yields are getting somewhat of a boost following the BOJ announcement - which helped to boost JGB yields as well. US 10-year yields touched above 2.50% for the first time since Trump's tax reform became official - and more importantly, the latest move higher had very little to do with tax reforms (which was the catalyst in sending yields higher both times in 2017).