After the US CPI data showed signs of inflation pressures easing slightly, it seemed quite straightforward that market players went with selling the dollar as yields dropped and risk trades rallied. But the bond market seemed to have other ideas yesterday as yields pulled back up and that is causing a bit of a rethink ahead of the weekend.

10-year Treasury yields moved up to contest the 100-day moving average once again as bonds were offered and that saw gains in equities tempered while dollar weakness was also more measured, all things considered.


As yields propped higher, USD/JPY even recovered from a low of 131.73 to trade at around 133.15 at the moment. The high today hit 133.49 and that nearly halves the drop from the US CPI data on Wednesday. Either way, the pair remains caught between key technical levels as outlined here so nothing much has changed.

But essentially, the bond market is in charge right now. That will determine the trading bias as we look to close out the week.

For now, US futures are calmer and so are dollar pairs in general. The greenback is a little mixed but it doesn't look like traders are getting too carried away after the early technical push after the US CPI data. There won't be much else to influence proceedings before the weekend so the look and feel in the bond market might be the key driver for dollar and risk sentiment in the sessions ahead.