Yen is currently trading as the strongest one for today thanks to risk aversion. US treasury yields are another another day of strong rally. At the time of writing, 30-year yield is up 0.046 at 3.365. 10-year yield is up 0.045 at 3.206. It feels like there is no way back after 10 year yield took out 3.115 key resistance yesterday.
Stocks, however, suffer steep selloff as reaction to surging yields. DOW is currently down -1.02% at 26555. S&P 500 down -0.8% and NASDAQ down -1.51%. In Europe, CAC led the decline by losing -1.47%, DAX was down -0.35% and FTSE down -1.22%.
It should also be noted that 10 year JGB yield rose 0.0178 to 0.159. German 10 year yield rose 0.056 to 0.533. UK 10 year gilt yield rose 0.0917 to 1.535. So JPY, EUR and GBP are not too bothered by the strength in US yields today.
Sterling follows as the second strongest one as lifted by Brexit hope again. The key is that Prime Minister Theresa May’s new Irish proposal, without details yet, seemed to be welcomed by EU as a “step in the right direction”. Also, EU chief negotiator Michel Barnier is reported to be looking at some more improvements in the offer to overcome the remaining obstacles ahead of Oct 17-18 EU summit. Barnier was reported affirming that EU is “definitely engaging with Britain” even though he insisted on the so called “sound backstop solution” on Irish border.
New Zealand and Australian Dollar are rather pathetic as suffering from both risk aversion as well as monetary policy divergence. Canadian Dollar dives in delayed reaction to poor Ivey PMI, which tumbled from 61.9 to just 50.3 in September.