The Dollar Remains Under Pressure Even As Bond Yields Rise

Only the yen is having difficulty gaining on the beleaguered US dollar.  Rising yields in the US and Europe have sapped many of the emerging market currencies. Today, the freely accessible currencies like the South African rand, the Mexican peso, and the Turkish lira are among the weakest.  

Rising yields in the US and Europe have sapped many of the emerging market currencies. Today, the freely accessible currencies like the South African rand, the Mexican peso, and the Turkish lira are among the weakest.   Central European currencies are faring better.  Benchmark 10-year yields are higher across the board.  The US 10-year is near 1.44%, up 13 bp in the past week.  European yields are mostly 3-5 bp higher to bring the five-day increase to mostly 7-9 bp, though the UK yields have risen nearly 17 bp.  However, Australian and New Zealand yields jumped 12 and 18 bp today alone to bring the five-day rise to 36 bp and 38 bp, respectively.  The rising yields did not deter equity buying today after US indices traded higher yesterday, which was the first session in five that the S&P and Nasdaq both closed higher.  Asia Pacific bourses advanced, led by South Korea's Kospi's 3%+ rally.   Even Hong Kong's Hang Seng managed to recoup a little more than a third lost on news of the stamp tax increase yesterday.   European shares are slightly firmer, lead by energy and financials.  The Dow Jones Stoxx 600 is posting its first back-to-back gain in a week and a half.  US shares are narrowly mixed.  The rally in commodities continues, with copper (JJC) and aluminum (JJU) prices at new 11-year highs.  April WTI rose to a new high near $63.80 before consolidating.  Gold is heavy and has struggled to sustain a foothold above $1800 (GLD).  

Asia Pacific

Japan's cabinet approved the bill ratifying membership into the Regional Comprehensive Economic Partnership that includes 15 countries, including China, Australia, and South Korea, and  The largest free-trade agreement in the world will eliminate tariffs on more than 90% of goods trade and provides common rules for investment and intellectual property rights, and e-commerce.  India, which was initially part of the negotiations, and special allowances are made for its potential return. Still, there are numerous questions, and the agreement has not prevented Beijing from punishing Australia for its foreign policy.  

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Read more by Marc on his site Marc to Market.

Disclaimer: Opinions expressed are solely of the author’s, based on current ...

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