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Markets Quiet in Early Session as EU Woes Recede; Yields, Data in Focus

Markets Quiet in Early Session as EU Woes Recede; Yields, Data in Focus

David Liu, Technical Strategist

Weekend Developments

  • US 10 yields rally to 4 month high, other yields tracking
  • Current Greek Finance Minister Venizelos unopposed in PASOK leadership election
  • IMF: Greek setback could require additional bonded debt restructuring
  • ISDA CDS auction to be held on March 19th, 2012
  • Former East German pro-democracy activist Joachim Gauck elected as new president

With increasingly upbeat data from the United States signaling a possible recovery in the world’s largest economy, the FX markets are seeing a fundamental shift away from being more risk-driven to being data-driven. Recent US dollar performance against all majors especially the yen can be traced to higher yields on US treasuries, spurring increased purchases of US dollars on the open market to fund buys of US government issued debt.

Weekend_03182012_Markets-Look-Beyond-Debt-Yields_body_Picture_4.png, Markets Quiet in Early Session as EU Woes Recede; Yields, Data in Focus

Data Bloomberg

While the docket for US events will remain relatively light for this week, markets will look to the European calendar of events for indications of possible improvements in the European economies, including German producer prices. The Reserve Bank of Australia and Bank of England are also expected to release minutes of their respective rate decision meetings from last week. At the time of writing, FX continues to drift in both directions in pre-Asia trading with no major developments over the weekend.

Weekend_03182012_Markets-Look-Beyond-Debt-Yields_body_Picture_5.png, Markets Quiet in Early Session as EU Woes Recede; Yields, Data in Focus

-By David Liu, DailyFX Research

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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