Forex news from the European trading session - 12 March 2021
Headlines:
- Nasdaq futures slump 2% as the wild ride continues
- RKI head says Germany is at the beginning of the third coronavirus wave
- Italy reportedly set to return to lockdown until after Easter
- ECB's Villeroy: There is no risk of inflation overheating in Europe
- 10-year Treasury yields jump higher to hit 1.60% again
- UK January visible trade balance -£9.8 billion vs -£12.5 billion expected
- UK January monthly GDP -2.9% vs -4.9% m/m expected
- Germany February final CPI +1.3% vs +1.3% y/y prelim
- Germany reports 12,834 new coronavirus cases, 252 deaths in latest update today
Markets:
- USD leads, NZD lags on the day
- European equities lower; S&P 500 futures down 0.4%
- US 10-year yields up 6 bps to 1.597%
- Gold down 1.1% to $1,704.50
- WTI down 0.3% to $65.85
- Bitcoin down 2.1% to $56,390
Treasuries are stealing the spotlight once again in the market today, as yields shoot higher and retest the highs seen at the end of last week and on Monday this week.
10-year Treasury yields started the session around 1.54% but quickly jumped to 1.60% and the pace of the move reverberated across the market, sending tech stocks sliding.
Nasdaq futures slumped from flat levels to a 2% loss while European equities also stuck with a more tepid mood as the bond market volatility knocked down risk sentiment.
As such, the dollar gained strongly across the board with EUR/USD falling from 1.1970 to 1.1910 - breaking its 200-hour moving average before catching a modest bounce at its 100-hour moving average at the lows to around 1.1920-30 currently.
USD/JPY kept a steady advance from 108.70 to 109.17, close to its highest levels since June last year before gains ease up a little ahead of North American trading.
Meanwhile, GBP/USD maintained a gradual decline all the way from 1.3975 to 1.3880 on the session before hugging the 1.3900 level now close to key near-term levels.
The antipodeans had a rough time in general with AUD/USD falling from 0.7780 to 0.7730 and is holding closer to the lows around its 200-hour moving average now.
As Treasury yields moved higher, precious metals suffered with gold slumping by over 1% in a drop below key near-term levels while silver dropped 2% in similar fashion.
All eyes turn towards the Fed next week and the key question is if policymakers won't forcefully push back against the bond market, will they at least go with an SLR extension?
Odds are, they might but that is pretty much the bare minimum needed to try and keep the peace in this market - when everything seems to be revolving around bonds/yields.
