US treasury yields remain elevated after reaching their highest level since 2007 as markets await a key speech from Fed Chairman Jerome Powell on Friday in Jackson Hole. The move came despite no real market data or Fed speakers, with much of the move coming at the longer end of the curve. Higher US yields boosted their Japanese equivalent with the yield on Japan’s 10-year JGB climbing to a new nine year high, helping the currency to gain a touch against the US dollar. Despite the rally in US yields, the greenback was not able to benefit with the dollar index slipping, pushing EURUSD through the psychological 1.09 level. The pound also rallied against the under-fire greenback with GBPUSD moving to the top of its recent range, however the pair continues to be capped at its 50-day MA. Currency markets remain muted ahead of the Fed’s annual economic symposium which kicks off on Thursday and will address the theme of “Structural Shifts in the Global Economy.”
China continues to dominate headlines, escalating its defense of its currency, pushing up funding costs to squeeze short positions and setting another new record with a stronger than expected fix for the yuan. The currency has been under pressure for some time now as the economy continues to struggle and the PBoC has cut rates whilst the Fed hikes – widening the yield differential and pushing the yuan lower.