Daily Report: Dollar Sharply Lower after Solid 2-Year Notes Demand, More Bond Auctions ahead.  The U.S Dollar is trading sharply lower this week, with particular weakness in USD/JPY. The dollar weakness is primarily coming from falling treasury yields. Yesterday’s auction of $35b 2-year notes in US attracted solid demand, with bid-to-cover ratios at 3.71 times, highest in more than two years and versus 3.51 times over the last four sales. Traders will be keeping an eye on today’s $35b auction in five year notes and tomorrow’s $29b in seven year notes with speculations on strong demand too. Investors are buying bonds and selling dollars ahead of these two auctions on anticipation of some down side in yields. Meanwhile, technically, yield on 10 year and 30 year bonds also show sign that last week’s recovery was over and yields might dip ahead in near term, thus, giving some pressure on the greenback.

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