We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
More View more
Real Time News
  • #JapaneseYen remains very fundamentally driven. #Brexit has for the moment replaced #USChinaTrade as the key risk appetite trip switch. However #USDJPY technicals are interesting too, with the pair at the top of a band it hasn't liked to be above lately. https://www.dailyfx.com/forex/technical/home/analysis/usd-jpy/2019/10/21/Japanese-Yen-Holds-Dollar-Bulls-Near-Top-of-Key-Trading-Band-.html?utm_source=Twitter&utm_medium=Cottle&utm_campaign=twr
  • LIVE IN 30 MIN: Join Currency Analyst @ZabelinDimitri as he previews the upcoming week’s main political themes and discusses their impact on the financial markets. Register here: https://www.dailyfx.com/webinars/146770987?utm_source=Twitter&utm_medium=DFXGeneric&utm_campaign=twr
  • RT @scheplick: This week, there were massive protests in: Hong Kong Chile Lebanon Ecuador Haiti Indonesia Spain Libya Iraq France Englan…
  • RT @next_china: China Banks Unexpectedly Keep Loan Prime Rate Steady in October https://t.co/gEsDu1ADAH
  • Commodities Update: As of 02:00, these are your best and worst performers based on the London trading schedule: Silver: 0.03% Gold: 0.00% Oil - US Crude: -0.06% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/rwBMrPXH58
  • #BRL, #COP and the #CLP are expected to be the most active Latin American currencies vs USD with 1-week implied volatilities at 13.40, 10.47 and 9.34 respectively
  • Forex Update: As of 02:00, these are your best and worst performers based on the London trading schedule: 🇳🇿NZD: 0.21% 🇦🇺AUD: 0.06% 🇨🇦CAD: -0.05% 🇪🇺EUR: -0.11% 🇨🇭CHF: -0.12% 🇬🇧GBP: -0.39% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/cJ8uz0usDy
  • How will #Brexit affect the US? Economist @julianHjessop gives his take, only on Global Markets Decoded #podcast. Missed the episode? Get your read here: https://t.co/9SFO9wikRI https://t.co/zQ4Bijk6Up
  • The $USD might be in the process of reversing its two-year uptrend, but technical positioning cautions eager sellers against over-committing. Get your $DXY market update from @IlyaSpivak here: https://t.co/RrifbHfNut https://t.co/VMPintsxrU
  • LIVE NOW: Join Senior Strategist @IlyaSpivak as he discusses the outlook for the financial markets in the week ahead! Register here: https://www.dailyfx.com/webinars/889679267?utm_source=Twitter&utm_medium=DFXGeneric&utm_campaign=twr
US-German Yield Spread Falls, Potentially Benefiting EURUSD

US-German Yield Spread Falls, Potentially Benefiting EURUSD

2019-05-30 12:30:00
Martin Essex, MSTA, Analyst and Editor

Government bond yields, news and analysis:

  • Safe-haven Government bonds are proving attractive to investors as they worry about a possible worldwide recession.
  • However, the spread – or difference in yield – between US Treasuries and German Bunds is falling, and that could help the Euro against the Dollar as it reduces the attraction of US assets compared with German assets to global investors.

Yield spread between Treasuries and Bunds falls back

Government bonds issued by top-rated countries like the US and Germany are proving attractive to global investors spooked by fears that the US-China trade war could weaken the world economy and perhaps even lead to recession.

However, in recent days, buying of US Treasuries has lowered the yield on them by more than demand for German debt has reduced the yield on Bunds. That means Treasuries are now relatively less attractive against Bunds than they were – a development that could help EURUSD as more global investors buy the Euros needed to acquire German debt rather than the Dollars needed to buy Treasuries.

Currently, 10-year Bund yields are close to their record lows while 10-year Treasury yields are not far from two-year lows. However, the yield spread has narrowed sharply as the following chart shows.

US-German 10-Year Yield Spread Chart, Daily Timeframe (March 22 – May 30, 2019)

Latest US-German yield spread chart.

Source: Investing.com (you can click on it for a larger image)

A Brief History of Trade Wars

There are several caveats to this. First, US yields remain much higher than German yields so Treasuries remain more attractive than Bunds in absolute terms. Second, the return on Bunds remains negative – and indeed more negative than it was. Thirdly, the US Dollar is sometimes seen as a safe haven itself so the USD could benefit from the same risk aversion that is prompting the move from stocks to bonds.

Moreover, from a technical perspective, EURUSD remains in a downtrend and could fall further, as my colleague Justin McQueen points out here.

Nonetheless, at the margin, the latest move in the yield spread could at least slow its decline.

Resources to help you trade the forex markets:

Whether you are a new or an experienced trader, at DailyFX we have many resources to help you:

--- Written by Martin Essex, Analyst and Editor

Feel free to contact me via the comments section below, via email at martin.essex@ig.com or on Twitter @MartinSEssex

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


News & Analysis at your fingertips.