The dollar showed much resilience in trading yesterday, despite setbacks from a softer PPI report and weekly jobless claims data. A strong bid in the 30-year Treasury auction perhaps underscored some of the bigger flows in markets, with traders shifting their allocation from Europe to the US. The political developments in Europe since last weekend is arguably the main reason for that.
If so, that will keep the euro in focus again in the day ahead. The fallout in the single currency is still one of the more notable developments in FX this week. EUR/USD erased its Wednesday gains entirely in trading yesterday and is now poised for back-to-back weekly declines for the first time since March. Besides that, EUR/GBP also continues to linger near two-year lows at 0.8420 currently.
Looking at the measure of risks surrounding the euro and regional bonds, the 10-year yields spread between Italian bonds and German bunds is still holding higher this week.
It's not exactly widening too much but it does underscore some anxiety towards European assets at the moment.
So, that will continue to draw the attention of markets before the weekend. That considering there is little else on the agenda in European trading today.
0645 GMT - France May final CPI figures
0900 GMT - Eurozone April trade balance data
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.
