Forex Today: Rising US bond yields lift the dollar

Here is what you need to know on Tuesday, October 11:

Following a three-day weekend, US bond markets reopened and the yield on the 10-year reference climbed higher toward 4%, providing a boost to the dollar early Tuesday. Moreover, the risk-averse market atmosphere allows the greenback to continue to outperform its rivals with the US Dollar Index trading at its highest level in more than ten days above 113.20. The NFIB Business Optimism Index and the IBD/TIPP Economic Optimism Index will be featured in the US economic docket but the market mood is likely to continue to influence major currency pairs' action. Investors will also keep a close eye on speeches by central bankers.

Although trading conditions remained thin on Monday, Wall Street's main indexes ended up closing in negative territory ahead of key third-quarter earnings figures from big financial institutions, including JPMorgan, Citi and Wells Fargo. US stock index futures were last seen losing between 0.3% and 0.4%, reflecting investors' cautious stance.

During the Asian trading hours, the data from Australia revealed that business confidence deteriorated in September while business conditions improved modestly. After having suffered heavy losses on Monday, AUD/USD continued to push lower and was last seen trading at its lowest level since April 2020 at 0.6260, losing over 0.6% on a daily basis.

Reports suggesting that Germany was open to the idea of joint EU debt to tackle the energy crisis in the euro area helped the shared currency show some resilience against the dollar in the second half of the day on Monday. With German officials rejecting these reports, EUR/USD turned south and registered daily losses. At the time of press, the pair is moving sideways at around 0.9700.

The Bank of England (BOE) continues to introduce additional measures to improve market conditions but the British pound is having a difficult time finding demand. Meanwhile, the data published by the UK's Office for National Statistics revealed earlier in the day that the ILO Unemployment Rate declined to 3.5% in three months to August from 3.6%. The Claimant Count Rate remained unchanged at 3.9% as expected and the Average Earnings Including Bonus rose by 5%, up from 5.5% in July. GBP/USD was last seen losing 0.5% on the day at 1.1000.

BOE announces temporary pause to corporate bond sale operations this week.

USD/JPY continues to trade above 145.50 and stays near the level that triggered an intervention by the Bank of Japan (BoJ) back in late September. Japanese Prime Minister Fumio Kishida said earlier in the day that the BoJ needs to maintain its loose policy until wages rise and called on companies to raise pay alongside prices.

The bearish momentum surrounding gold continued to strengthen after the precious metal broke below $1,700 at the beginning of the week. XAU/USD lost 1.5% on Monday and was last seen moving sideways in a narrow channel slightly below $1,670.

Bitcoin lost nearly 2% on Monday and came within a touching distance of $19,000 early Tuesday. Ethereum broke below $1,300 and was last seen losing 0.6% on the day at $1,280.