US Treasury yields broke down sharply Friday, confirming a near-term, potentially medium-term, turn in trend; and, as BofAML's Macneil Curry notes, this Treasury turn should prove to be a headwind for select USD pairs, (although BofAML remains bigger picture USD bulls); particularly USDJPY. However, the weakness in the Canadian USD - which was the only currency not to rally against the greenback on Friday - suggests the downtrend in the Loonie has significant legs. Precious metals - most notably silver - could also benefit from the Treasury trend change.
Via BofAML's Macneil Curry,
US 5yr yields rollover
[5]
US Treasury yields have topped and turned trend, with 5yr yields doing so in particularly dramatic fashion. The bullish reversal from 4.5yr trendline support says 5yr yields should fall another 10bps/15bps in the In the sessions ahead, with worst case potential for a re-test of long term pivot resistance at 1.22%/1.25%.
$/¥ is topping out
[6]
With Treasury yields rolling over, $/¥ is set to do the same. A break of 103.74 would confirm the bearish turn in trend. While the Head & Shoulders Top targets the 102 area, CFTC positioning and the completing 5 wave advance from Feb’12 and Oct’13 says weakness can extend to the 200d (now 99.70) and below.
$/CAD: the exception to the rule
[7]
Friday saw the US $ fall against all major currencies EXCEPT THE CANADIAN $. Indeed, $/CAD has now reached levels not seen since 2009. While we could see a near term pause or correction, weekly charts say that this trend has significant room to run, with the multi-year Head and Shoulders base targeting 1.1666/1.1841
Silver squeeze
[8]
With the US Treasury market turning and the US $ near term vulnerable, precious metals should benefit. Silver is particularly worthy of note as a break of 20.51/20.62 resistance would complete a near term base and turn higher opening further gains towards the Oct-30 high at 23.09