Risk Trends Continue to Dictate Price Action in Currency Market

The USD has continued and looks to remain inversely correlated to commodity and stock markets (ie risk appetite). Yesterday's U.S. Treasury's $19 billion auction of 10-year paper was OK, though the 3.99% award rate was high and illustrates that higher yields are being needed to get the paper sold in the current environment. The higher yield backdrop raises concerns about the impact of higher mortgage rates to America's soft recovery, which in turn keeps the U.S. currency on a downer, in addition to Russia's active stance to wind down dollar reserves. The AUD and NZD were strong performers in Asia, aided by better than expected employment data out of Australia in addition to firm commodity prices. The Kiwi also benefited after the RBNZ kept rates steady at 2.50% rather than cutting 25bp as expected (though the statement remain dovish). Reports of rising demand for oil in China also fed risk appetite trades, being exhibitive of improving global economic conditions. Ahead Thursday, markets will look to the $11 billion 30-year bond sale after a poor 10-year sale yesterday. The U.S. has some interesting data on retail sales, initial jobless claims, and business inventories. The European calendar is relatively quiet, with only the ECB monthly report (likely to repeat president Trichet's statement from last week) and the BoE inflation expectations survey and Swedish May CPI.
source: http://www.dailyfx.com/