We’re all bond traders now. US 10-year note yields are edging higher in quiet afternoon trade, now around 3.745% from 3.70% at their lows earlier after the soft housing data.
EUR/USD has been driven largely by yield differentials in recent weeks as the market tries to out-guess the ECB and Fed and price in their next move months before they actually make it…The market is a discounting mechanism and we’ve been discounting to a faretheewell for most of the month of December.We’re now around 1.4350 from 1.4366 highs earlier this afternoon. If yields continue to back up, we could see the buck recover some of its losses into the close.
USD/JPY is getting a boost from the firmer yield picture, as well, now at 91.57.
