Currency and interest rate markets are the focus leading into the NA open. Suddenly volatility has surged higher, with G10 FX vol up to 6-month highs, the USD having rallied substantially against EUR, GBP and JPY over the last several months, the U.S. 2-yearup to 0.56% and the 10-year back up above 2.5%. The focus is the U.S. interest rate cycle and the fine balancing act the Fed will have to perform to move towards tightening, while not disrupting financial markets. Today focus is market developments, particularly in bond and currency markets, with some potential for some reaction to the release of the Kansas City Fed’s LMCI and Ben Bernanke’s speech.
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