Forex today saw the U.S dollar trade on the defensive in Asia despite new multi-year highs in the US treasury yields. The 10-year US Treasury yield rose to 3.252 percent – the highest level since May 2011. Meanwhile, the yield on the 30-year note rose to a fresh four-year high of 3.4302 percent in Asia. On Monday, a senior U.S. Treasury official expressed concern at the fall in the yuan, adding that it was unclear whether Treasury Secretary Steven Mnuchin would meet with any Chinese officials this week. On Wall Street, the tech-heavy Nasdaq had fallen for the third straight day on Monday and growth stocks were pressured by worries rising bond yields might ultimately hobble the economy. The S&P 500 lost 0.04 percent and the Nasdaq Composite 0.67 percent, while the Dow rose 0.15 percent as defensive stocks found buyers.
Looking ahead, Italy headlines remain a drag on the EUR. The widening of the Italy-German yield differential could weigh over the common currency. Further, the uptick in the treasury yields could add extra bearish pressure around the common currency. The JPY crosses could rise if the European stocks turn a blind eye towards the IMF’s downward revision of global growth forecasts and focus on increasing calls for stronger stimulus measures in the world’s second-largest economy.