Soaring US yields provided the game-changer for the US dollar momentum overnight. And the US dollar certainly took kindly to St. Louis Fed President James, who on the eve of the FOMC minutes says he expects a “roaring” US economy that could even outpace China.
USDJPY soared to 106, and after the US dollar rally took a bit of a hiatus in the London morning, as New York walked in after the long weekend, they started selling US Treasuries furiously dragging the greenback to new highs of the day. There is a sharp sell-off in EURUSD, accordingly.
Expect the USD move to continue as rates seem to have more room to run.
Oblivious to higher US yields and Asia FX risk taking a step back after media reports saying that China is looking at ways to “hurt US defence contractors” by limiting its exports of rare earth minerals – used in components of high-tech devices.
The Malaysian ringgit was on full steam ahead mode on soaring oil prices while getting support from stock and bond market inflows as Malaysia capital markets start to shine again as MCO gets lifted.
However, today I expect higher US yields to weigh on the sentiment which should encourage some MYR’s profit-taking.
More woes for gold?
Much of the gold market current woes are attributable to rising US yields.
With the pace of US vaccinations accelerating, continued signs of recovery are beginning to give the bond market jitters about inflation/taper and issuance profile for the rest of the year.
Forex market analysis and insights from Stephen Innes, Chief Global Market Strategist at Axi