Japanese yen leads the charge
The dollar is the weakest performing major currency on the day as worries triggered by falling/flattening Treasury yields is not aiding the greenback as December begins. The 2-5 Treasury yields spread inverted for the first time since 2007 and that is prompting worries about a possible recession as well.
Meanwhile, the Japanese yen is pushing ahead on the day as Treasury yields have dipped but also on the fact that equities sentiment is soft with the Nikkei earlier closing 2.4% lower and US equity futures also trading lower by around 0.6% currently, just off the lows.
Despite the change in risk tones from overnight, the aussie and kiwi are still posting decent gains on the day as the two currencies are riding on the fact that the PBOC strengthened the yuan by the most since June 2017 earlier today.
I would expect European equities to open with softer tones later but with Chinese stocks paring losses ahead of the close now, the negative tones should be matching what we're seeing in US equity futures and not any overwhelming decline like the Nikkei.
That should keep the yen underpinned alongside lower Treasury yields in the session ahead but unless things get worse for risk sentiment, the gains will be rather contained ahead of US trading.
