- The US 10-year Treasury yield plunges to 3.55%
- Japanese yen soars on safe-haven demand.
- US dollar trading defensively, down across the board.
USDCAD snapshot open 1.3765-69, overnight range 1.3714-1.3824, close 1.3824, WTI $75.34, Gold $1887.96
The Canadian dollar rallied along with the rest of the G-10 majors in a nervous and choppy overnight session. The currency opened with a 0.52% gain compared to Friday which was the poorest performance of any major G-10 currency. The Japanese yen took first place, gaining 2.7%.
Contagion fears rippled across the globe on Friday due to the failure of Silicon Valley Bank. It didn’t help that, at the time US Treasury Secretary Janet Yellen proclaimed that there would not be a bail-out. That changed over the weekend.
Sunday, the Fed, Treasury, and Federal Deposit Insurance Corporation announced that effective today, all depositors could get their money on March 13.
Asia equity indexes closed with lower led by a 1.11% drop in the Nikkei 225 index while Chinese indexes rallied. European bourses opened poorly and have fallen sharply since. The German Dax is down 2.66% while the UK FTSE 100 has dropped 2.21%. S&P 500 futures are flipping between gains and losses.
The US 10-year yield dropped from 4.01% March 9 to 3.55% today due to safe-haven demand.
EURUSD churned in a 1.0644-1.0736 range as EUR and US interest rate differentials narrowed due to the downgrading of US rate hike expectations. The ECB is still expected to hike rates 50 bps on Thursday and with the Fed now expected to pause, should underpin the single currency. EURUSD is supported at 1.0520.
GBPUSD whipped about in a 1.2042-1.2140 band and is trading at 1.2068 in NY. The focus is squarely on the US and developments stateside will dictate GBPUSD direction. The currency is also supported by the downgrading of forecasts for the US terminal rate.
USDJPY plunged to 132.97 from 135.05 on the back of the sharp drop in the 10-year Treasury yield, broad US dollar weakness and safe-haven demand for yen.
AUDUSD rallied from 0.6582 in Asia to 0.6677 in Europe, then retreated to 0.6640 in NY due to narrowing AUD-US interest rate differentials.
There are no US economic releases of note today.
