2026-02-09 13:46:00
The US dollar is under broad pressure to start the week.
Last week saw a series of misses on US jobs data including:
- ADP
- ISM services
- Challenger job cuts
- Initial jobless claims
This week includes an unusual Wednesday non-farm payrolls release and the market looks to be fleeing US dollars ahead of it. The consensus is +70K but there is also an expectation of large downward benchmark revisions to 2025 jobs data could see all of last year’s jobs gains wiped out.
The broad USD selling right now has the euro at a session high, up 81 pips to 1.1899. The Japanese election results are in focus and that’s led to some threats of intervention from MoF officials. Still, the 116 pips drop in USD/JPY to 156.02 is in line with the broad USD decline.
EUR/USD 1 hour
One report that I’m surprised hasn’t gotten more attention is a Bloomberg report says that China urges banks to curb exposure to US Treasuries.
Officials urged banks to limit purchases of US government bonds and
instructed those with high exposure to pare down their positions, the
people said.
The report cites concerns over concentration risks and market volatility for the move but you have to believe that politics is playing a big part. Despite that news, US 10-year yields are only up 1.8 bps to 4.22%.
Ian Lyngen, fixed income analyst at BMO brushed aside the concerns, similar to the market.
The prospects for foreign diversification away from Treasuries have been on the market’s radar for some time, and as a result, it was unsurprising to see that the news was worth no more than 3-4 basis points higher in 10- and 30-year rates. While there is certainly scope for the “Sell America” sentiment to persist, we maintain that the peak bond-bearish risk associated with foreign divestment from US Treasuries was left in 2025. Our take is that the de-risking headlines will once again devolve into a background consideration as the market refocuses on the traditional fundamental drivers of the US rates market.
Another factor worth highlighting is the increasing short positioning in the US dollar. IMM data relased Friday showed the speculative dollar short position more than doubling last week to $16.82 billion from $7.98 billion previously.
