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Forex Flash: 10-year US treasury profile – RBS

The market continues to see a near-term range of 1.70% to 2.11% for 10-year US Treasuries. Overall, “the key support remains at 2.11%, and first resistance is 1.90%-1.93%. We advise to watch for ascending bear channel lines (1.93% in 10-years and 3.10% in bonds) – breaks of which could extend the rally while a close above 2.11% in 10-years opens up 2.30%.”

Treasury yields cheapened overnight as 10-years and 30-years backed away from near term resistance at 1.93% and 3.15%, respectively. Asian stocks were mixed with Australia +0.8% as RBA governor Stevens said that "it's fair to say easing is more likely" while "there is a good deal of interest rate stimulus in the pipeline." In Europe, solid German IFO helped equities rally across the board as Bund yields sold off. The Metals market initially rebounded though is now again trading negatively, continuing the trend after the last couple of sessions.

Moreover, “Our overnight Treasury flows saw light volume with bank buying in 10-years, bank paying in 10-years, and a money manager buying 10-yeas and 30-years. Overnight Treasury broker volume was 94% of the 10-day average.” they add.

Euro finds no relief

The euro fell to a fresh 6-week low versus the dollar as investors found another reason to sell the shared currency. The ECB reported the repayment of the second 3-year LTRO was €61.1 billion below the €122.5 expected, smashing the euro that couldn't even find relief in better-than-expected readings from the German IFO series.
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Forex: GBP/USD consolidates around 1.5250

After two attempts of recovery were capped by the 1.5315/17 zone, GBP/USD was confined to a phase of consolidation. With the downside contained by the 1.5240 zone, the pair has spent the last hours hovering inside a narrow range around 1.5250/60 where it trades virtually unchanged since opening.
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