Asia Pacific Market Open – US Bond Yields, US Dollar, IMF, USD/JPY, Brexit
- General risk aversion reversed course as US government bond yields tumbled after holiday
- The US Dollar[1] pared gains as AUD/USD[2] and NZD/USD[3] rose. GBP[4] higher on Brexit latest
- IMF GFSR can echo concerns from world economic outlook, interrupting gains in stocks next
We just released our 4Q forecasts for currencies like the US Dollar in the DailyFX Trading Guides page[5]
Tuesday’s trading session could have been divided into two parts, during the first half there was a decline in market sentiment[6]. That seemed to have been a response to the IMF cutting global growth and increased US-China trade war fears. The US Dollar rallied on safe haven bids as Asia Pacific markets mostly traded lower while pro-risk currencies such as the Australian and New Zealand Dollars gained.
Then, as US bond market liquidity returned following the Christopher Columbus holiday, this trading dynamic quickly reversed course. The 10-year yield declined after briefly touching its highest since 2011 as stocks traded higher. Though the S&P 500[7] ended the day 0.14% lower, it pared most of its losses. After spending most of last week falling on rising Fed rate hike bets, the move may have been corrective.
We do have key US economic event risk approaching over the next coming days (PPI, CPI data). The markets could have pre-positioned themselves for disappointments there. With that in mind, the anti-risk Japanese Yen[8] was little changed while
