Stocks are giving back gains as Treasury yields continued to push higher. The US dollar is heating up as USD/JPY trades at the best levels since 2002.
The catalyst today is likely the bond market as US 10-year yields are now up 8.3 bps to 3.038%, which is the highest since May 11.
The latest leg of worries has spilled over into the commodity currencies. WTI crude oil traded to $120.99 early in Asia but has fallen to $117.85, down about $1 on the day. USD/CAD fell to 1.2536 but has rebounded to 1.2576 with most of the gains in the past few minutes.
It's a similar story in other commodity currencies as NZD/USD falls to a session low and AUD/USD is a few pips away.
Sentiment is fragile at the moment and this Friday's US CPI report is a big risk. Signs of accelerating inflation will add to calls for another 50 bps hike in September and fears that the terminal top could be above 4%.
