Asian markets were mixed on Thursday, supported by positive earnings on Wall Street which increased investor optimism. The Dow snapped its five-day losing streak on Wednesday after the latest earnings reports, but traders remained concerned about the rising 10-year U.S. Treasury yields which reached a new high of 3.035 yesterday. A spike above 3.041 would bring the bond yield to levels not hit since July 2011. As of 1:23 p.m. HK/SIN the Shanghai Composite and the Nikkei 225 were posting gains while all other key Asian indexes were in the red. Many major Asian companies are expected to release their earnings today which may reverse the early losses.
The rising U.S. Treasury yields further supported the dollar during Thursday’s Asian trading session. The dollar index crossed the 91 marker, just about breaking above the range it’s been locked into since January, and setting itself up for a potential surge higher. The dollar index was trading at 91.15 .DXY, down modestly from the 91.173 .DXY hit earlier in the morning. As traders become comfortable with the dollar fluctuations prompted by the bond yield surge, they will likely begin to focus on fundamentals again. Of specific interest is today’s European Central Bank monetary policy decision which will be released at 11:45 a.m. GMT. Analysts primarily expect the bank to keep its policy unchanged but will be looking for hits to the ECB’s plan for when it will begin to scale back its current stimulus program.
The dollar tested a 2 ½ month high against the yen, trading at 109.49 before retreating to 109.32 in the early afternoon. Traders are watching the pair closely to see if it’ll test the 110 level which will be a key technical indicator. The dollar has gained 2.8 percent against the yen in April, and is currently poised for the largest monthly gain since November 2016.