The dollar is holding steadier across the board as we look towards European morning trade today. Despite the modest US jobs report on Friday, market participants are not really running with a much more bullish dollar.
I would argue that is evidently noticeable in USD/JPY, who is still keeping below 116.00 as 10-year Treasury yields are at the highest since March last year and looking to get back to pre-pandemic highs.
As such, the push and pull here will be a key theme to watch this week. That said, I'd expect the dollar to at least stay supported even if we do see some waves of weakness in the meantime.
Meanwhile, equities saw a bit of a rougher start to the new year. The wages data from Friday's report reaffirms stronger price pressures and that is bolstering the Fed narrative. As mentioned before, stocks may yet see the need to take some steam off but expect dip buyers to emerge strongly in the event of any major pullback.
Looking ahead on the week, keep an eye on bond yields once again. The 10-year Treasury yields chart is still one to watch as it is testing the March 2021 high of 1.774%. A break above that and 1.80% could trigger further reverberations across the market.
0900 GMT - SNB total sight deposits w.e. 7 January
0930 GMT - Eurozone January Sentix investor confidence
1000 GMT - Eurozone November unemployment rate
That's all for the session ahead. I wish you all the best of days to come and good luck with your trading! Stay safe out there.
