The bond market's at the wheel but things aren't as straightforward as it would seem. Markets are coming around to the idea that inflation pressures may be stickier and that central banks will keep up the aggression over the next few months. In particular, the pricing for the ECB and Fed are shifting and that is reverberating across broader markets.
That said, stocks are still putting on a fight with European equities showing much resilience and US equities also holding on as the S&P 500 defended its 200-day moving average again yesterday. Is it just a matter of time though? So far today, yields are lower and that is weighing back on the dollar as it fails to break key levels in the day before.
USD/JPY is still keeping just below key resistance levels outlined here, with GBP/USD also holding on at key support levels as highlighted yesterday here. Meanwhile, large option expiries today may keep EUR/USD underpinned just above 1.0600 ahead of US trading but just be wary that the US ISM services index has the potential to shake things up before the weekend.
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