Morning Commentary & Currency Insights – January 10, 2018

Despite rising U.S. bond yields hitting fresh highs the U.S. dollar has sold off overnight after Bloomberg headlines reported Chinese officials view U.S. Treasuries as less attractive.  As the world’s largest foreign exchange reserve holder any negative change in policy regarding U.S Treasury purchases could be a massive blow to the U.S. dollar but it is unclear whether these recommendations have been acted upon.  Yen has been the big winner gaining 150 points against its U.S. counterpart while euro is testing 1.2000 again and Sterling is lagging on mediocre data and continued Brexit malaise.

USD/CAD is marginally lower despite Oil trading above $63 as the market appears content with current levels until next week’s BoC.  Given the ramifications surrounding the Chinese revelation any pronounced dollar weakness in the remaining G7 currency bloc will spill over into USD/CAD so the continued bias will be to sell rallies.