Concerns about the US credit market have eased further since the weekend, prompting a hawkish repricing in the Fed curve and justifying a stronger dollar. EUR/USD may slip all the way to 1.160 in the next few days, but it may require a hot US CPI print to extend the drop. Elsewhere, Japan’s new PM Takaichi was confirmed by parliament this morning
ile stocks continue to hit new highs, the worldwide sell-off in long-term government bonds is gathering pace. Rates actually rose more in nearly every G10 country than they did in the US last week, which certainly contributed to dollar weakness.
The dollar dropped for the second day in a row on Wednesday. This came after U.S. inflation data raised hopes for a Federal Reserve rate cut next month, and President Donald Trump's push for lower rates added more pressure on the dollar.
The Australian dollar has extended its gains on Wednesday. In the European session, AUD/USD is trading at 0.6551, up 0.33% on the day. The Aussie is trading at its highest levels since July 28, as the US dollar is showing signs of weakness against the major crurrencies.
German 30-year yields are on the rise, with the curve hinting at more to come. German fiscal plans and Dutch pension fund reform are factors in play. The US is in a similar mode, with fiscal and CPI data followed by upward pressure on long yields
After touching $4,000, a cascade of Saturday buying took the second largest crypto to $4,350 highs.
Ether is now consolidating around the $4,200 key handle – A consolidation at its highs is a more bullish sign, however for the Crypto Market to run higher, Participants will now look at the leading Crypto.
The US imposed steel and aluminium tariffs which sparked a response from the EU. The emerging trade tensions saw Asian equity markets close lower.
A potential ceasefire in Ukraine added support to European equities despite rising trade tensions between the EU and the US with the EU announcing retaliatory tariffs.
A weak than expected US CPI print saw the sell off in bonds continue in the US and oil prices rise.
Metals prices lifted over concerns of tariffs and tight supply.
The 25% steel and aluminium tariffs have hit the UK too today but the UK government is reportedly working hard to receive a carve-out from the tariff action. UK Business and Trade Secretary Jonathan Reynolds held a call with Commerce Secretary Howard Lutnick on Sunday about a possible carve-out and PM Starmer brought up the subject when he met President Trump last month.
