Stocks were battered yesterday while Treasury yields climbed, as the dollar continues its ascend with EUR/USD breaking below parity to its lowest levels since 2002. The fact that China continues to advocate for a weaker yuan, seeing USD/CNY surge higher is also providing an added tailwind for the greenback this week.
For some context, USD/CNY has now broken higher to 6.85 upon the PBOC setting a weaker yuan after the break above 6.80 at the end of last week. The next key target will be the 7.00 mark and that sort of gives you an idea of how much more backing the dollar has from said tailwind at the moment.
So far today, the changes are light as narrow ranges are holding mostly. But make no mistake, the dollar is in control. Commodity currencies may be holding slightly higher but the moves are relatively light and after having seen equities fall sharply yesterday, the overall mood remains rather tentative at best.
S&P 50 futures are down 6 points now, or 0.1%, after a bit of a breather earlier on. Meanwhile, 10-year Treasury yields are keeping back above 3% and that will be a crucial level to watch this week for the bond market:
