Friday was a remarkably dim day for the dollar, and yet apart from 'flows' it was no easy task to pinpoint an exact trigger for it. During the early afternoon there were some large sell orders for the greenback, especially against the euro – the single currency almost touched 1.32 at one point, after declining to 1.3050 earlier. Sterling did even better, with cable climbing from under 1.57 to above 1.5850. The dollar index, which had seemed rather comfortable above 80 over recent days, suddenly and rather inexplicably found itself below that level. Interestingly, bond yields were under continued assault, with 10yr bund yields up above 2.0% for the first time in a few weeks and the 10yr gilt yield climbing to 2.43% - just two weeks ago, it was trading below 2.0%. US treasury yields also rose, not helped by news that one-year inflation expectations in the latest University of Michigan survey had jumped to 4% from 3.3% in the latest month. Stocks remained well-bid while Brent crude rose above USD 124.
- Keep a close eye on Spain
- Fiscal compact resistance
- Brazilian fragility
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