Dollar Holds Firmer Even As Reflation Trade Pauses To Breathe
Equities look warmer as tensions intensify after the bond market rout yesterday. Treasuries may find a slight relief for now, but sentiment remains at the edge of a knife as we turn to North American trading.
The dollar strengthened yesterday on higher yields and maintains that momentum in today’s trading so far, gaining modest ground across the board.
EUR / USD is holding near lows around 1.2065 as GBP / USD looks to break below short-term support from its current 100-hour moving average:
Elsewhere, commodity currencies are also grappling with the drop in AUD / USD to 0.7740 from 0.7770; However, the USD / CAD is only slightly higher at 1.2706 (still testing its 200-hour moving average) as the loonie hangs amid rising oil prices.
This is still the reflation theme and the bond market remains the key point to watch in trading this week. Breakevens are at their highest since 2014 but real yields remain rather depressed, even if they are at least above -1% currently: