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2025-10-30 21:41:05
[Dollar Surge: Soaring Bond Yields Overshadow Trade Sentiment] ⑴ Marc Chandler, Global Head of FX at Bannockburn, pointed out that the sharp rise in US Treasury yields provided direct support for the dollar. After Chairman Powell hinted that a December rate cut was not a given, 10-year Treasury bonds were sold off, with yields jumping 10 basis points. ⑵ Chandler stated that while there were positive developments from the US-China trade talks overnight, the foreign exchange market reacted tepidly. "It's hard to tell whether trade news or the Fed's tightening stance is driving the market," he said, adding that the market had already priced in optimism regarding the agreement's prospects. ⑶ Institutional data showed that the dollar index jumped 0.6% to 105.8 on Wednesday, a new eight-week high. The euro fell below 1.08 against the dollar, the yen depreciated below 151, and the US Treasury yield curve steepened by 5 basis points (2s10s). ⑷ Swap contracts showed that investors cut their probability of another December rate cut from 74% to 48%. The repricing of short-term interest rate expectations led to a $320 million inflow into dollar-only ETFs in a single day, the largest inflow in two weeks. (5) As expected, the Bank of Japan kept its interest rate unchanged at -0.1%. After the USD/JPY pair rose above 151, the one-week risk reversal indicator in the options market showed that bullish demand for the USD had risen to a one-month high, and short-term positions were biased towards continuing to go long.
