Rising U.S. Tsy Yields Boost Greenback, Yen Retreats After BoJ Disappoints Hawks

The gauge of U.S. dollar strength (DXY) took a sudden upswing in sync with a jump in U.S. Tsy yields, with U.S. participants set to return to the market after a holiday. The moves have been attributed to continued hawkish chatter surrounding the most probable trajectory of Fed tightening.

• Firmer U.S. Tsy yields sapped strength from Antipodean currencies, key regional risk proxies. AUD/USD and NZD/USD each printed a fresh one-week low, with the former diving through the $0.7200 mark in the process. With the sudden upswing in U.S. Tsy yields pulling the rug from beneath the Antipodeans, they both gave up gains registered against JPY in the wake of the BoJ's monetary policy decision.
• The yen took a hit after the BoJ showed no appetite for tightening policy, even as RTRS last week reported that the Bank were debating how to begin communicating an eventual rate hike. Policymakers tipped hat to rising price pressures through expected upgrades to inflation forecasts & their assessment of risks to the price outlook, but they stopped short of offering any indications that they could start paring back stimulus anytime soon.
• Today's data highlights include UK jobs market data, German ZEW Survey, U.S. Empire Manufacturing Survey & Canadian housing starts. Speeches are due from ECB's Villeroy & Riksbank's Ingves, with BoJ Gov Kuroda set to hold a press conference.