Forex news from the European morning session - 17 March 2021
Headlines:
- Treasury yields continue to climb ahead of the Fed
- Japan reportedly making final preparations to end Tokyo state of emergency
- Eurozone February final core CPI +1.1% vs +1.1% y/y prelim
- IEA says that a new oil 'supercycle' seems unlikely
- Germany reports 13,435 new coronavirus cases, 249 deaths in latest update today
Markets:
- GBP leads, AUD lags on the day
- European equities a little lower; E-minis down 0.4%
- US 10-year yields up 4.9 bps to 1.667%
- Gold down 0.1% to $1,730.01
- WTI down 0.7% to $64.37
- Bitcoin down 2.7% to $54,880
It was an extremely quiet and tepid session as the market observed a lull awaiting the Fed, before a push higher in yields in the last two hours produced some action as we start to move towards North American trading today.
Treasury yields climbed, with 10-year yields extending to near 1.67% - its highest level in 13 months - with 30-year yields exceeding the highs from March last year at 2.41%.
That saw US futures fall as the dollar kept more bid across the board, though the greenback's gains are still relatively modest on the day thus far.
EUR/USD traded more sideways around 1.1900-10 before easing to 1.1890 while AUD/USD kept lower around 0.7725-35 before slipping to a low of 0.7712 currently.
USD/JPY kept a more modest advance, holding above 109.00 and keeping near the highs now close to 109.20 as Treasury yields keep higher on the day.
It looks like the bond market is starting to position itself for the Fed already, so that could make for a 'sell the rumour, buy the fact' play in some part. So, look out for that.
But if the Fed doesn't throw a bone to the market again, it is tough to see how Treasuries are going to hold up in the bigger picture once the post-Fed dust settles.
