US dollar climbs in early trade as yields tick up

The US dollar is on the front foot in early New York trade. The pound is at a session low against the dollar, down 14 pips to 1.3343 after rising as high as 1.3394 at the start of European trade.

AUD and NZD are also sliding after the RBA cut rates earlier and indicated there was a discussion about cutting by 50 bps. That has both as laggards today.

The big concern today is sovereign yields after Japanese 30-year yields went parabolic following a poor 20-year auction. The moves comes after Japan PM took an austere tone.

“Our country’s fiscal situation is undoubtedly extremely poor,” he said, “worse than Greece’s.”

You’re not supposed to say the quiet part out loud, particularly when your borrowing costs have been marching steadily higher.

That’s leading to some USD safe-haven buying but eyes are also on Treasury yields US 30s fell as low as 4.89% earlier but have crept back to 4.96% and are trading at a session high. There has been demand recent on every tick to 5% but at some point you run out of buyers, particularly with the President trying to coax Congress towards an even-larger deficit.

This article was written by Adam Button at www.forexlive.com.