ForexLive European FX news wrap: Dollar eases on yuan rebound, yields stay elevated

Headlines:

Markets:

• JPY leads, USD lags on the day
• European equities marginally lower; S&P 500 futures up 0.2%
• US 10-year yields up 3.8 bps to 4.295%
• Gold up 0.4% to $1,898.15
• WTI crude up 1.0% to $80.20
• Bitcoin down 1.5% to $28,511

The session started with a more tentative mood before Treasury yields raced higher with 10-year yields touching above 4.30% for the first time since October last year. That didn’t quite faze broader markets though, but we have come to see that change whenever we get to US trading in the past week or so.

The dollar is slightly lower on the day after a more mixed showing earlier. It comes amid a rebound in the Chinese yuan after Beijing is reportedly calling for state banks to step up their game in defending the currency this week. USD/CNH fell from 7.34 to 7.30 and that led a turnaround in the aussie initially, which has been trading lower since earlier today after a poor Australia jobs report.

AUD/USD bounced back from around 0.6395 to 0.6430 levels now before the rest of the major currencies bloc also advanced slightly against the dollar. USD/JPY in particular is seeing a fall from 146.30 earlier in the session to 145.85 currently. That comes despite higher yields on the day.

Meanwhile, EUR/USD is up 0.2% to 1.0895 while GBP/USD is also seen up 0.2% to 1.2755 currently.

In the equities space, there is a bit of a calmer mood with US futures up slightly. But as we have seen before, this isn’t evidence of anything as there can be some heavy selling hitting in Wall Street (yesterday being a case in point).

For now, I’d say the bond market is at the wheel but don’t rule out the impact of China headlines and also potential Japan intervention in the yen.