The bond market is experiencing a decline, causing USD/JPY to break last week’s highs and rise to 148.97. This increase is likely due to the market’s cautious approach to intervention. The rise in US long-dated yields contributed to a significant boost in the US dollar and a decrease in EUR/USD. However, EUR/USD experienced a slight rebound after falling to 1.0575 but remained close to the figure. Comments from Lagarde emphasized the ongoing economic slowdown and the probability of lower rates in the future. Cable also saw a decline, but to a lesser extent than EUR/USD. Economic news did not have a significant impact on the market, as the bond market was mainly influenced by the rise in bund yields and the subsequent increase in US 10s and 30s. Despite fluctuations in the oil market, CAD managed to make gains against the US dollar, benefiting from oil prices remaining around $90. Looking ahead, AUD weakened due to Chinese property pressure, with the focus remaining on that sector in the coming hours.
In summary, the bond market’s decline has prompted the rise of USD/JPY and a general increase in the US dollar. This, in turn, led to a decrease in EUR/USD, although it experienced a slight rebound later. Lagarde’s comments further highlighted the economic slowdown and the potential for lower rates. Cable and CAD also saw declines but to a lesser extent, while economic news did not significantly impact the market. Furthermore, AUD weakened due to Chinese property pressure, and the sector will continue to be closely monitored.
