US yields took a round trip to the topside over the past week and are now staging a temporary pullback. However, irrespective of the direction in rates markets, several EM currencies have remained under pressure against the USD. The risk is that while US 10s stay above the 2.60/70% area, the effects of higher yields in the US continue to undermine high yielders elsewhere. NZD/JPY is another case in point as the market is likely bracing for further weakness.
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