Global bond prices are falling pushing up yields, and the main beneficiary is the euro.

The decline in the Bund has been notable, the move has driven the euro to dollar exchange rate towards the 1.14 mark.

We could well see 1.15 tested if the current direction continues.

“The rout in global bonds continues and has spilled into pressure on the rand and other local markets. EUR/ZAR has been the main mover, up to 13.65,” says John Cairns at RMB.

USD/ZAR has however failed to advance thanks to the general weakness being seen in the USD across the board.

“Reflecting the pressure, domestic FRAs are now pricing three to four rate hikes from the SARB over the next year,” says Cairns.

Traders have pushed US Treasury yields to their ninth session of gains, with the 10-year rising to 2.24%.

German bund yields have been even more aggressive, rising from 0.05% a few weeks ago to 0.61% this morning.

RMB suggest that the markets are due some consolidation, particularly with Brent having stabilised at US$67/bbl.

However, ultimately, it probably comes down to tomorrow’s US payrolls figure — a strong read would certainly cause some panic.

EUR/USD has pushed to 1.1350 as the German-US yield gap closes. Technically, a break above 1.14 could get the move accelerating.

“Given the push in bond yields, the EUR/USD move is being reflected in EUR/ZAR upside rather than USD/ZAR downside. Expect this to remain the case as long as yields keep rising,” says Cairns.