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Global Yields Heating Up

Today we start with the fairly dramatic rally in long term bond yields across the globe. In recent weeks, we had focused on US rates, and the impact higher US10 year yield had on the dollar. The rest of the world has kept up and it is no longer simply a US centric story.

Granted, the charts above are on a different scale, but the story is still reasonable. There is clearly a global repricing of long term interest rates and that will have an effect on FX rates.

What does this mean for FX markets? Probably more uncertainty and ultimately more volatility. While we have seen fairly tight ranges this year, a breakout of significant levels could lead to bigger moves. The USD Index did rally through the past week, but appears to have resumed its downtrend as commodity prices increased and inflation fears have emerged.

This general move lower in the dollar can be seen in the individual pairs below that have managed to sustain momentum the past few sessions:

The one outlier, seen below, USDJPY is probably higher in sympathy with risk-on or global reflation expectations.

The week ahead doesn’t give us a ton of data. Thursday could be interesting with jobless claims, PCE and US GDP reports due. The calendar below can be configured to choose individual dates or ranges.

Real Time Economic Calendar provided by
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