The safe haven currency slipped in the early week trading period. Meanwhile, the Australian dollar tried to be stronger to cut the decline which occured last week. 

When this news was released, the AUD / USD pair was traded around the level of 0.7283 or 0.37 percent stronger than the daily open price. The risk – off setiment is also fading. 

It is in line with the declining panic action of the market due to the Evergrande crisis. This is a good situation for the high-risk profile currency such as the CAD, AUD, and NZD. 

Previously, the risk of Evergrande default was touted to have a systemic impact on global financial markets. It is because of several predictions made by the market participants. 

Why Market Is Not Panic Again

But after the Chinese government injected the liquidity of 100 billion Yuan ($15.47 billion), the market panic began to recede. Plus, there has not been a serious tone of concern from evergrande bond holders.

It is especially those who are in fact large corporations in the European region and the United Stages. This thing rises a prediction that the Evergrande bankruptcy will not have a serious impact. 

The fading of risk-off sentiment earlier in the week certainly suppressed safe haven currency movements. In addition to the US dollar, the yen also experienced significant weakness this morning. 

The movement of the PAIR USD / JPY itself is observed to be in the range of 110.54. That was weakening by 0.18 percent on a daily basis.

The USD Weakening Is Temporary

Aside from that condition, most analysts predicted that the USD weakening is just temporary. It is because the tapering step by the Fed will be profitable for the US dollar in a middle-term. 

The greenback is likely to be caught up in the tug-of-war between the more hawkish FOMC and waning concerns surrounding Evergrande. That company is still highlighted. 

Nevertheless, the analysts expect the USD to remain inclined towards strengthening in the near term. The Yield Curve Control policy implemented by the Central Bank of Japan (BoJ) Showed a progress. 

It has pushed the yield of its government bonds at a near-zero range. Meanwhile, the United States Treasury bond yields recently rocketed to a three-month high of 1.537%. 

The Obligation Is Supported by the Hawkish Rhetoric 

The yield on 10-year German government bonds also soared to a record high since early July at -0.191%, whereas last week it still occupied the range of -0.340%.

The Bond yields were mainly lifted by the hawkish rhetoric of the American Federal Reserve officials. The Fed last week signaled the possibility of a tapering start in November.

Meanwhile , a rate hike will be next year. Global yields are also increasing as the attitude of a number of major central banks changes in a more hawkish direction, including the Bank of England (BoE).

The main impact of the higher treasury yield to the currency has been making the progress for the USD/JPY. However, 111 will be a difficult limit to be passed. 

Powell’s Testimony Will Be the Next Focus

Market participants will next focus on the testimony of Fed Chairman Jerome Powell and US Treasury Secretary Janet Yellen before the Congress later tonight. 

The Powell's draft speech contained a statement that inflationary pressures could last longer than the previous expectations, further strengthening the Fed's hawkish stance as well. 

However, the market will also observe the other comments made during the question-and-answer session regarding the current economic situation and the upcoming policy outlook.

On the other hand, the Japanese yen is likely to weaken ahead of tomorrow's Liberal Democratic Party (LDP) presidential election. Considering that the LDP is the party that controls a majority of seats in Parliament.