The bond market is in the driver's seat and traders don't seem to want to wait around for the Fed next week. 10-year Treasury yields have now dropped to its lowest since June last year and 2-year yields are threatening an even bigger level on the charts now:
Things are certainly heating up on the week and the action here is reverberating to broader markets. USD/JPY is now down another 1% to clip the 141.00 mark, with eyes on the December low at 140.24 and the 140.00 level next. The latter is a crucial psychological level to watch, so do be mindful about that.
Meanwhile, US futures are weighed lower as well with S&P 500 futures now down 0.5%.
That is pretty much how things are playing out now ahead of European trading. Looking to the session ahead, there won't be much on the agenda to impact the ongoing proceedings. We do have UK monthly GDP data but that's a minor release, all things considered.
As such, trading sentiment is going to continue to center around the flows in the bonds and how that plays to broader market sentiment. With Treasuries staying bid again, the dollar might be weighed down at the balance. But with risk also leaning towards the softer side, it might not extend towards the antipodeans.
Those will be some key considerations before we get to the US CPI report later in the day.
0600 GMT - UK July monthly GDP figures
1100 GMT - US MBA mortgage applications w.e. 6 September
That's all for the session ahead. I wish you all the best of days to come and good luck with your trading! Stay safe out there.
