• Dollar in charge as higher yields come back into focus
• RBA leaves the cash rate unchanged at 4.10%
• The full statement of the September RBA monetary policy meeting decision
• ECB’s Lane: August inflation data is welcome but we need to see that continue
• ECB consumer survey shows rising inflation expectations
• UK August final services PMI 49.5 vs 48.7 prelim
• Eurozone August final services PMI 47.9 vs 48.3 prelim
• Eurozone July PPI -0.5% vs -0.6% m/m expected
• China reportedly set to launch new state-backed fund to boost chip industry

Markets:

• USD leads, AUD lags on the day
• European equities lower; S&P 500 futures down 0.2%
• US 10-year yields up 5.5 bps to 4.228%
• Gold down 0.4% to $1,930.52
• WTI crude down 0.3% to $85.26
• Bitcoin down 0.4% to $25,738

The return of the bond market, or more specifically Treasuries, from the long weekend was the key driver across broader markets today. Higher yields are once again the talk of the day, carrying over the sudden turn in the mood on Friday after the US jobs report.

That is helping to bid up the dollar while weighing on the general risk mood. The greenback was bid across the board and all through European trading, continuing the momentum from Friday.

EUR/USD moved down from 1.0780 to 1.0730, its lowest levels since June, while GBP/USD also declined from 1.2620 to 1.2530 before holding around 1.2540-50 levels now. Amid higher bond yields, USD/JPY is trading up near the highs for the year in a push back above the 147.00 mark.

Meanwhile, the antipodeans are the ones beaten down the most due to a couple of factors at play today. At first, China worries weighed on the aussie with AUD/USD down to around 0.6425. Then, the RBA left the cash rate unchanged for a third straight meeting and the extended pause alongside a bid in the dollar carried AUD/USD all the way down to 0.6360 and is trading thereabouts now.

NZD/USD is also down over 1% to 0.5865 currently, as a more cautious risk mood is also not helping with sentiment for commodity currencies.

Things were shaping up much rougher for stocks early in Europe but they have pared losses a fair bit. That said, with the bond market at the wheel, higher yields could yet bite at equities again later in US trading.

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