- Dollar sluggish as risk tones improve
- Dip buyers start to stand their ground
- 10-year Treasury yields extend climb, touches 1.90% for the first time in two years
- German 10-year bund yields climb back above 0% for the first time since May 2019
- US MBA mortgage applications w.e. 14 January +2.3% vs +1.4% prior
- Germany December final CPI +5.3% vs +5.3% y/y prelim
- UK December CPI +5.4% vs +5.2% y/y expected
- Beijing reports 5 more positive COVID-19 cases today
- PBOC alters monthly LPR release time to 0915 local time on the 20th of each month
- China drafting rules to ease property developers' use of escrow funds - report
- AUD leads, USD lags on the day
- European equities slightly higher; S&P 500 futures up 0.3%
- US 10-year yields up 1.5 bps to 1.883%
- Gold up 0.2% to $1,817.49
- WTI up 1.1% to $86.40
- Bitcoin down 0.9% to $42,001
The session started off with a more dour risk mood as equities slumped while bond yields continued to surge higher. 10-year Treasury yields hit 1.90% for the first time in two years and 10-year German bund yields also turned positive for the first time since 2019.
That saw tech stocks hit hard with Nasdaq futures down 1% and European stocks opening up the day with modest losses. The yen was also the lead gainer in the FX space at the time, with the dollar holding fairly mixed.
But that all turned around as dip buyers in equities stepped in and bought things up. The mood shift saw US futures quickly bid to flat levels, before turning more positive now ahead of US trading. That comes despite bond yields holding higher on the day.
In turn, that spurred a more risk-on shift in FX as well with the dollar and yen both losing ground.
EUR/USD moved up from 1.1330 to 1.1350 while GBP/USD gained from 1.3600 to 1.3640 on the session. Meanwhile, USD/JPY moved up from 114.25 to 114.40-50 levels currently.
Commodity currencies are the biggest beneficiaries with AUD/USD moving up from 0.7180 to 0.7215 and NZD/USD from 0.6780 to 0.6800. USD/CAD also crept lower from 1.2500 to 1.2470 and is contesting a break below its 200-day moving average.
Elsewhere, oil continues to stay perky with WTI crude holding above $86 but backing off a high of $87.08 earlier in the day.
It's all about the shift in the risk mood so far today as equities look to make a comeback. We'll see if that can stay the course as Wall Street enters the fray.