Higher yields mean more interest in the underlying currency so let's see how today's 10-year auction goes.
That resistance on the dollar index futures just above 93.00 will be the test:
92.65 up 0.14 (0.15%)
From Marc to Market:
Overview: The US dollar continues to pare its recent losses and is firm against most major currencies in what has the feel of a risk-off day. The other funding currencies, yen and Swiss franc, are steady, while the euro is heavy but holding up better than the Scandis and dollar-bloc currencies. Emerging market currencies are also lower, and the JP Morgan EM FX index is off for the third consecutive session. The Chinese yuan's insignificant gain of less than 0.15% puts it on the top of the emerging market currency complex. After rising nearly five basis points yesterday, the US 10-year yield has come back a couple of basis points softer at 1.35%, while European yields are narrowly mixed. Asia Pacific yields rose in what looked like a catch-up move. Although Japan's Topix set a new 31-year high today, the MSCI Asia Pacific Index snapped an eight-day advance today. It has risen 11 of the past 12 sessions, during which time it rose nearly 9%. The Dow Jones Stoxx 600 is off for a second day, and the 1% loss it is nursing near midday in Europe, is its largest loss in nearly three weeks. US futures point to a heavy opening after yesterday's losses by the S&P 500 and Dow Industrials. Gold is consolidating near yesterday's trough. It fell 1.6% yesterday, the biggest drop in a month, and is struggling to re-establish a foothold above $1800. Oil is also steadying today. October WTI fell by about 2.4% since the US employment report. It is trading a little above $69.00 near midday in Europe. Today, China's iron ore futures contract rose about 0.5% to end a six-day, 12% slide. Copper is heavy for a second session. It fell 1.1% yesterday and is down a little more today. The CRB Index fell 1% yesterday, its biggest loss in two weeks.
Asia PacificJapan's Q2 GDP was revised higher. The quarterly rate increased to 0.5% from 0.3%, and the annualized rate rose to 1.9% from 1.3%. The upward revision was more than expected and largely resulted from more government spending (1.3% vs. 0.5%) and capex (2.3% vs.1.7%). Consumption rose by 0.9% rather than 0.8%. Inventories and net exports each took 0.3% from GDP. And frustratingly, the GDP deflator was revised to -1.1% from -0.7%, leaving this measure of deflation at its strongest pace in a decade. Meanwhile, regardless of the outcome of the LDP leadership contest later this month, a substantial fiscal package will be unveiled. Such expectations appear to be helping lift Japanese stocks. The Topix is at levels not seen in 30 years, and the Nikkei is up over 6% in the past five sessions.China is expected to report CPI and PPI figures tomorrow. Both are expected to have held steady at 1.0% and 9.0%, respectively. China has auctioned some of its strategic holdings of industrial metals to end-users to help ease the pressure on prices. However, the mild CPI pressure gives the PBOC room to ease financial conditions in the face of an economy that is struggling to sustain forward momentum....
....MUCH MORE
