Dollar Sentiment Stabilizes, Amid Firmer Yields, EUR & GBP Weaker

MNI (Australia): USD sentiment has stabilized as the Asia Pac morning session has progressed. From lows of 1232.31, the BBDXY is back to 1234.2, little changed versus Friday closing levels.

• US yields have recouped some of Friday's losses, mostly at the front end (US 2yr +6bps, back near 4.60%). There haven't been any obvious fresh catalysts for the rebound and the move may be positioning related, but it appears to be helping the USD.
• Most of the headlines so far have focused on renewed fighting in Gaza, ships attacked in the red sea over the weekend and China protests over a US warship in contested waters in the South China Sea.
• US equity futures are weaker, but only modestly.
• Despite the US yield rebound, JPY is still outperforming, last near 146.55/60. This is up from earlier lows (146.23), but still below last Friday closing levels and sub uptrend support (above 146.70).
• AUD/USD is also outperforming modestly, last near 0.6680 but away from session highs. Earlier there was mixed data but it was second tier. NZD/USD is back to flat near 0.6210.
• GBP/USD is down 0.25%, underperforming (last near 1.2675/80), however we remain well above support at 1.2591 (Nov 27 low). EUR/USD is off 0.10%, last at 1.0875.