Gold bullion likes the sound of falling US yields overnight and it didn’t take much other than additional US time zone liquidity for gold to kick into a higher gear and catch up with the significant moves in the currency and bond market since quarter-end.

And for the gold purists, they were on this move like butter on bread as trading gold from longs on the back of softer US yields and the potential for more details on US President Biden’s US$3 trillion infrastructure spending plan flat out made sense.

But I suspect we have likely overshot a bit or two as this looks to be entirely technically driven and not supported by huge volumes after the break of $1750.

Euro in no-man’s land

The Euro is finding itself in no man’s territory, struggling to crack that 1.20 juggernaut that everyone is waiting for the break to provide a more definitive buy signal.

I think the Euro is finding the going a bit laborious in the face of tapering talk from Banque du France Governor Francois Villeroy de Galhau who said the ECB could “possibly exit PEPP by March 2022”.

On the other hand, solid data and a global “risk-on” mood have helped buttress AUD and NZD at their recent highs.

While USDJPY is a little lower this morning, most likely on lower US Treasury yields rather than finding and echo in some upbeat news on the Japanese economy.

Asia currencies

It’s a bit of a different story on EM Asia FX, with the softer global yields allowing local currencies more room to breathe. The Yuan shows the way overnight, and we should expect the FX beneficiaries of lower real yields and softer rates volatility to be felt across the board in Asia FX.

The ringgit should continue to benefit from falling US yields and higher and stable crude prices as a temporary realigning of the commodity currency stars should support sentiment.

Market analysis from Stephen Innes, Chief Global Market Strategist at Axi