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Mixed Performance in G10 Amid Significantly Lower US Yields

FOREX
  • Despite the significantly lower yields in the US, the USD index trades close to unchanged as we approach the APAC crossover, with G10 currencies exhibiting mixed performance across Wednesday’s session.
  • The key outperformer has been the Australian dollar with a number of factors working in favour of the AUD on Wednesday. Primarily, the outperformance of major equity indices has underpinned the Aussie’s resilience. Additionally, the break lower in EURAUD is also adding to the theme, there a multi-year uptrendline drawn off the 2022 low that is being tested in AUD’s favour today.
  • While this could also be weighing on the broad single currency, it is worth noting that there were muted volumes across EUR given the European holidays, leaving EURJPY (-0.70%) pullback of the sharp Tuesday rally to lead the Euro’s decline.
  • A brief EURUSD rally on treasury refunding headlines faded ahead of the Fed and with the FOMC changing very little and appearing to maintain its tightening bias, EURUSD made fresh lows for the week at 1.0517 in the aftermath of the Fed decision. However, the extension lower for US yields eventually filtered through into the greenback weakening which saw EURUSD rise back to 1.0565, but remains moderately lower on the day.
  • The lower yields and higher equities benefitted some major EM currencies substantially, with the likes of USDMXN and USDBRL falling an impressive 1.35%.
  • The action continues on Thursday with the Bank of England rate decision before focus turns to the US employment report on Friday.
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