Talking Points:
- Capital flight out of US financial markets seems to be the common theme on the day, with the US Dollar falling alongside US Treasuries and all three major US stock indices.
- Concerns are cropping up about the rise of interest rates, which could choke off growth in all corners of the globe.
- Retail traders[1] remain net-long EUR/USD[2] and GBP/USD[3], but sentiment has turned 'mixed' after changes in positioning over the past 24-hours.
Looking for longer-term forecasts on the US Dollar? Check out the DailyFX Trading Guides[4].
The US Dollar (via the DXY[5] Index) has turned lower back below a key level toyed with over the past four months, as it appears a new theme (or, at least, unseen in many months) has emerged among market participants: sell USA. There are a few reasons why this type of trading environment is rare.
Perhaps the notable shift in tone has been around the relationship between the US Dollar and US Treasury yields. Despite the fact that 2-, 10-, and 30-year yields are all pushing to the topside again - hitting fresh 2018 highs and multi-year highs in the process - the US Dollar is dipping lower.
Otherwise, when the US Dollar isn't being propelled higher by rising yields, it typically means that risk aversion is afoot; the greenback takes on the role of a safe haven. But that't not transpiring either, given that US stocks are on pace for their worst week in six months and the buck continues to slide.
An environment characterized by all three assets sliding - bonds, currency, and stocks - is usually one
