Markets:
- Gold down $1 to $1971
- US 10-year yields down 2 bps to 4.81%
- WTI crude oil down $1.75 to $83.75
- S&P 500 up 0.7%
- AUD leads, EUR lags
The euro and sterling charts are a mirror image of yesterday as the dollar rebouned on rising yields and soft eurozone PMIs. EUR/USD fell 75 pips to just below 1.06 after testing 1.0700 early. It was a four-week high followed by a much lower close. It was much the same in cable but without the one-month high as October’s peak at 1.2325 held before the selling hit.
The outside day yesterday in the 10-year was validated by a further fall in yields to 4.82 though early on that wasn’t the case as yields bounced. An early concession ahead of the 2-year auction didn’t last long as the market eventually sorted it out and the $51 billion sale went off right on the screws, leading to some relief. Five-year and seven-year notes are still to come this week.
The yen tracked back up to the 150.00 barrier after yesterday’s retracement. There is talk of fresh stimulus in Japan and that could give the BOJ cover to raise rates but no one is holding their breath.
More materially, China opened up the stimulus taps in a move that led to Aussie outperformance and big gains in US-listed Chinese shares. AUD/USD climbed for the second day though the pair remains perilously close to the range bottom.
USD/CAD rose as oil prices declined but all eyes remain on the middle