China is playing a part on the U.S. yield side, too, as investors grow increasingly concerned about China cashing in some of its massive Treasury holdings to fund dollar selling by state banks, which has been propping up the yuan.
Meanwhile, the U.S. currency is set for a fifth straight winning week, drawing strength both from Chinese economic woes – which boost its appeal as a haven, and from robust domestic data – which boosts the case for yet another hike by the Fed.
One potential monkey wrench for the dollar, however, may be lurking in Japan. The dollar-yen rate has reached the heady levels that last September spurred the first yen-buying intervention by Japanese officials in a generation.
And while officials in Tokyo have been relatively quiet so far, traders are treading carefully.
A light calendar in Europe today argues for Asia to grab most of the attention, but British retail sales will certainly be watched as the market grapples with how much more the Bank of England has to do in its battle with inflation.
ECB chief economist Philip Lane offers some insight into the thinking of the bloc’s monetary policy makers in a podcast, followed about an hour later by euro zone inflation data.
/cloudfront-us-east-2.images.arcpublishing.com/reuters/WCFEHS3L4ZI3FPBR2XF3C4VDLQ.jpg "China sets sombre tone with property turmoil 40")
