Investors were spooked during the overseas session over the latest Chinese credit tightening fears, which prompted wide-spread caution; however this may support the Yuan exchange rate.
China and Japan – the two biggest foreign holders of Treasuries – reduced their positions of US government debt in January as demand for American financial assets fell to a six-month low.
China has been a net seller of Treasuries for three months in a row – the longest stretch since late 2007.
Though the selling by China and Japan may not be permanent, as the US economy rebounds from a recession, the sentiment remained bearish overnight.
Concerns continued to linger too over government debt of European Union countries such as Greece, putting pressure on the Euro exchange rate.
Learn more with the FX Report.