Dollar index is down almost 0.6% on the day, biggest drop in over a month
This comes after news here that Chinese officials who are reviewing the country's FX holdings have made a recommendation to slow down or halt purchases of US Treasuries altogether.
The move here hints that China is looking to diversify their FX reserves away from the US dollar.
The dollar is getting beaten down against all major currencies, with the sterling clawing back all its losses against the greenback and cable is now higher on the day.
Meanwhile, US Treasuries are the biggest loser in the bond market and that helped propel US 10-year yields to an intra-day high of 2.59% earlier.
While everyone is looking at currencies and bonds, gold is also one of the bigger winners here as prices jumped up from $1,314.29 to a high $1,327.77 before retreating a little in the last hour. That was the highest level since September last year.
Before we get too carried away, do remember that the news released by Bloomberg is citing people familiar with the matter, as we await official sources to confirm the news. Whether or not the Chinese government will actually follow through in reducing or halting purchases of US Treasuries is still not certain yet - but the market has already had its say.
If China does move to diversify its reserves away from the dollar, the reaction here is no doubt the right one over the longer-term. The next question then would be, which currency instead would benefit from China's move here?
