By Christopher Vecchio, Currency Analyst for DailyFX.com
The commodity currencies, already bolstered by supportive words from the Reserve Bank of Australia, have been bolstered further by hopeful commentary out of Europe, which has lifted risk-appetite across the board. Despite a sharp retort from the European Central bank itself yesterday, rumors continue to swirl that a bond-buying program to cap sovereign bond yields will be announced nonetheless. Accordingly, the Euro has surged back to its highest level in two-weeks against the US Dollar while the Australian and New Zealand Dollar threaten to break short-term bearish patterns, lining up the Federal Open Market Committee August Meeting Minutes as a potential make or break event for the risk landscape this week.
The continued flow of rumors have benefited peripheral European bond markets, though it appears that much of the news has been priced in over the past several weeks, given the lack of enthusiasm today. The Italian 2-year note yield has dropped to 2.871% (-11.3-bps) while the Spanish 2-year note yield has slid to 3.269% (-16.2-bps). Likewise, the Italian 10-year note yield has eased to 5.664% (-8.4-bps) while the Spanish 10-year note yield has dropped to 6.148% (-7.5-bps); lower yields imply higher prices.
The commodity currencies, already bolstered by supportive words from the Reserve Bank of Australia, have been bolstered further by hopeful commentary out of Europe, which has lifted risk-appetite across the board. Despite a sharp retort from the European Central bank itself yesterday, rumors continue to swirl that a bond-buying program to cap sovereign bond yields will be announced nonetheless. Accordingly, the Euro has surged back to its highest level in two-weeks against the US Dollar while the Australian and New Zealand Dollar threaten to break short-term bearish patterns, lining up the Federal Open Market Committee August Meeting Minutes as a potential make or break event for the risk landscape this week.
The continued flow of rumors have benefited peripheral European bond markets, though it appears that much of the news has been priced in over the past several weeks, given the lack of enthusiasm today. The Italian 2-year note yield has dropped to 2.871% (-11.3-bps) while the Spanish 2-year note yield has slid to 3.269% (-16.2-bps). Likewise, the Italian 10-year note yield has eased to 5.664% (-8.4-bps) while the Spanish 10-year note yield has dropped to 6.148% (-7.5-bps); lower yields imply higher prices.
