Forex today: yields at four-year highs, dollar firmed up on 91 handle
Forex today was lacking data from both the European and US sessions and was less volatile while traders await the outcome of the ECB on Thursday.
The dollar was bid on the basis that US yields climbed higher in both the twos and tens and focus remained on US stocks once again.
The DXY traded at the higher end of the 90.7500-91.2610range for the best part of the US session while both US 10's (2.99% - 3.03%) and 2's (2.48%-2.50%) made fresh highs, hitting the highest levels since 2008. Eyes are now looking towards the 10's to break into 2011 levels at 3.05%. Meanwhile, the Fed fund futures yields are still pricing in more than a 90% chance that the next rate hike will be in June. Next week's Fed meeting now has a 5% probability of a rate hike, according to Bloomberg.
As for other currencies, the single unit started out the US session around 1.2210 and dropped to 1.2168 the session low as yields sharpened and the dollar spiked and German and as the US spread widens. EUR/USD ended the session below the 100-D SMA at 1.2214 and just shy of the 28th Feb low as traders await the ECB.
Sterling was again trading like May 10th BoE will be a disappointment to the bulls. GBP/USD was in a consolidation of the recent sell-off from 1.4376 to below the 50-D SMA and ascending trendline support from mid-Nov 2017 to recent trade. The pound closed the NY session around 1.3930 and lower by 0.35% having traded in the 1.3997-1.3924 range and below the Asian 1.40 level that had been me on the back of M&M headlines, (Shire is willing to back $64bln Takeda bid).
The cross ended the US session down as well, pressured by dollar flows ahead of the ECB meeting. The cross dropped by 0.14% between a range of 0.8746-0.8732 and closed at 0.8740. The BoE is a coin toss next month and the euro has been able to garner some pre-ECB/BoE meetings strength of late.
The yen was taking the spotlight with its piercing of the cloud top and bringing the 110 into question. USD/JPY climbed from 109.00 to 109.47 and to the highest level since early Feb. The move came towards the end of the session as US stocks solidified the correction and inched a little further higher into the close after a poor start in the open. At the same time, the 2yr yield rose from 2.49% to 2.50% and the highest since 2008.
As for the antipodeans, the Kiwi was beaten upon a strong dollar and made a low of 0.7057 from a high of 0.7087 in European trade. AUD/USD traders were picking up a deflated pair after the Aussie holidays at 0.7562 to 0.7586 until supply came in from London traders that sent the pair down to 0.7551, ( lowest since 13 December), in NY before a drift high to 0.7572 the high as stocks turned around.
Key notes from US session
Wall Street stocks rebound led by Dow Jones and Boeing earnings