• Dollar holds tentatively lower so far on the day
• The bond market continues to hold all the cards
• Saxony September CPI +5.4% vs +6.8% y/y prior
• Bavaria September CPI +4.1% vs +5.9% y/y prior
• Spain September preliminary CPI +3.5% vs +3.5% y/y expected
• Economic institutes forecast 0.6% GDP contraction for Germany this year
• China to introduce tax exemptions and cuts for affordable housing

Markets:

• AUD leads, USD lags on the day
• European equities mixed; S&P 500 futures down 0.1%
• US 10-year yields up 3.7 bps to 4.647%
• Gold flat at $1,875.15
• WTI crude down 0.4% to $93.28
• Bitcoin up 0.8% to $26,446

The two main outperformers this week are the laggards today, that being the dollar and oil.

The latter raced higher in Asia trading to $95 but is marked down by 0.4% now to $93.27 while the greenback is down across the board as it gives back some of the gains this week.

EUR/USD tested waters below 1.0500 for the first time since January before bouncing up to 1.0540 levels while USD/JPY is still caught out by intervention fears, down 0.2% to 149.30 currently.

All of this comes despite higher Treasury yields on the day, with 10-year yields in the US touching above 4.64%. And that is still keeping equities rather nervous, with some selling pressure in Europe which was met by dip buyers – who seem to be keeping things interesting ahead of month-end and quarter-end.

In terms of data, we got Spanish and German inflation numbers. The former continues to reaffirm stickier price pressures while the latter is showing a decent drop, which fits expectations. That being said, the monthly readings are still rising and alongside higher oil prices, that just means the ECB cannot quite breathe easy just yet.

This article was written by Justin Low at www.forexlive.com.