Mon, Apr 22, 2019 @ 14:59 GMT
Dollar followed US stocks and yields higher overnight but it's losing momentum in Asian session. 30 year yield was back above 3.0 handle and closed at 3.014, up 0.025. 10 year yield also reached as high as 2.390 before closing at 2.376, up 0.024. 10 year yield is now close to 2.391 near term structure resistance. Meanwhile, Dollar index staged a solid rebound and is back above 99, comparing to last week's low at 98.54. But it will take a break of 99.46 resistance in the Dollar index to confirm near term reversal. In other markets, Gold dipped to as low as 1221 yesterday and is staying soft at around 1227. WTI crude oil's rebound from 43.76 lost steam after failing to take out 47.01 near term resistance.
US treasury yields tumbled sharply as markets corrected the post election rally. Surge in yields since November was driven by anticipation of Donald Trump's policies of higher spending, lower taxes and higher debt. Markets seemed to turn cautious as Trump prepares to take office later in the month. 10 year yield dropped to 2.368 comparing to December's high at 2.621. 30 year yield also dropped to close below 3.000 handle at 2.962, comparing to December's high at 3.196. The development dragged Dollar broadly lower with the dollar index hitting as low as 101.30. The developments confirmed that yields and Dollar turned into a correction phase which could last for the the rest of the month. It's doubtful whether a strong non-farm payroll report could trigger sustainable comeback in the Dollar in near term. In other markets, gold rode on Dollar weakness and reached as high as 1185.9. DJIA continued to stay in tight range below 20000 handle.
Euro recovers broadly today as markets are looking past the political turmoil in Spain, with focus back on ECB and economic outlook. European markets, except Spain, are steady with Germany on holiday. At the same time, thousands of people protest in Barcelona against police violence during the referendum on Catalonia independence on Sunday. The European parliament will be holding a special session on the issue tomorrow and European commission spokesman Margaritis Schinas urged that "violence can never be an instrument in politics". Elsewhere, Sterling is trading as one of the weakest one today after shockingly bad construction data. Dollar stays firm but struggles to find follow through buying.
The forex markets opened the week relatively quietly with the exception of Australian Dollar. Aussie dives broadly after weak retail sales data and stays weak ahead of RBA rate decision. Meanwhile, Yen follows as the second weakest as Tankan survey showed less than expected improvements in sentiments. On the other hand, Euro is paring some of last week's loss. Focus will turn to French elections in April. Dollar is trading mixed ahead of a string of important economic data. That starts with ISM manufacturing today, ISM services on Wednesday and non-farm payroll on Friday. Fed will also release March FOMC meeting minutes this week.
New Zealand Dollar weakens after RBNZ left the Official Cash Rate (OCR) unchanged at 1.75%. More importantly, the central bank adopted a more dovish outlook for the OCR. RBNZ now forecast interest rate to stay at around 1.8% through June 2019 and move up to 2.0% in 2020. The markets were nearly pricing in full chance of a rate hike by November this year. But after the release, such pricing dropped to around 50%. Meanwhile, RBNZ trimmed inflation forecast too. Inflation is projected to be at 1.5% this year, soften to 1.3% at the start of 2018 and then climb back to 2% by mid-2019. Technically, NZD/USD dips through 0.7240 support which now indicates near term reversal. Near term outlook in NZD/USD is now turned bearish for 55 day EMA (now at 0.7150).
Dollar stays generally weak in early US session and receives no support from another round of solid economic data. Initial jobless claims rose 5k to 239k in the week ended February 11. But that was better than expectation of 245k. Continuing claims dropped 3k to 2.08m in the week ended February 4. Housing starts dropped -2.6% mom to 1.25m in January, above expectation of 1.23m. Building permits rose 4.6% mom to 1.29m, above expectation of 1.23m. Meanwhile, Philly Fed survey jumped sharply to 43.3 in February. The greenback weakens against all major currencies except Aussie and Kiwi today. Meanwhile Dollar trading down versus against all others except Euro and Yen. Recent hawkish comments from Fed provide little support. It seems that Dollar traders are more worried about the uncertainties over fiscal policies.
Dollar is paring some gains today but it remains the strongest major currency for the week so far. While bond yields remains firm today, the greenback is losing some momentum. Euro and Sterling are trading firmer while commodity currencies remain weak. Released from US, initial jobless claims rose 12k to 272k in the week ended September 23, above expectation of 269k. Continuing claims dropped -45k to 1.93m in the week ended September 16. Trade deficit narrowed to USD -62.9b in August. Wholesale inventories rose 1.0% in August. Q2 GDP was revised up to 3.1% with price index unchanged at 1.0%.
Dollar traders broadly higher today and remains as the strongest major currency for the week. The greenback is boosted by news that US President Donald Trump's administration is finally moving a procedural step on the tax plan. Optimism was also seen in the stocks markets as DOW, S&P 500 and NASDAQ all extended the record runs. Elsewhere, Sterling remains the weakest one for the week as troubled by political uncertainties in UK, and weak economic data. Nonetheless, Australian Dollar is sold off sharply in Asian session after RBA board member Ian Harper said he won't rule out a rate cut.
Dollar trades mixed in early US session despite positive job data. Initial jobless claims dropped 12k to 234k in the week ended February 4, below expectation of 250k. Four week moving average dropped to 244.25, lowest since 1973. Continuing claims rose 15k to 2.08m in the week ended January 28. Also released in US session, Dollar index is hovering in tight range around 100.32 at the time of writing. Near term outlook is mixed. On the negative side, it's still struggling below 55 day EMA (now at 100.65). On the positive side, daily MACD crossed above signal line. We'd maintain that there is prospect of a rebound after getting firm support from 100 handle.
Risk appetite continued in the market as US equities extended record run. DJIA finally took out 20000 handle to close at 20068.52, up 155.80 pts or 0.78%. S&P 500 closed up 18.3 pts, or 0.80%, at 2298.37. NASDAQ ended at 5656.34, up 55.38 pts or 0.99%. All three indices closed at new historical highs. Positive sentiments carried on in Asian session with Nikkei up 1.8% to above 19400 Notable strength was also seen in treasury yields. 10 year yield gained 0.052 to close at 2.523 while 30 year yield rose 0.052 to 3.108. However, the greenback continued to lag behind with Dollar index dipping through 100 handle to as low as 99.79. The index is trying to regain 100 handle at the time of writing but lacks momentum so far. In the currency markets, dollar remains the weakest major currency this week while Sterling is the strongest.
The reversal in treasury yield dragged down the greenback again overnight. 10 year yield closed down -0.052 to 2.450 while 30 yield yield dropped -0040 to close at 3.051. The dollar index is now back at 100.50 after hitting as high as 101.76 earlier this week. Dollar is now trading as the third weakest major currency. The Japanese yen remains the weakest one on strong risk appetite. New Zealand dollar followed after weaker than expected economic data. On the other hand, Swiss Franc is the strongest major currency this week, partly due to political uncertainties in Eurozone and UK. In other markets, Gold rides on renewed weakness in dollar and is back pressing 1240. WTI crude oil is extending recent sideway trading.
Sterling comes under much selling pressure today after disappointing data. Retail sales unexpectedly dropped -0.3% mom in January versus expectation of 1.0% rise. The pound is set to end the week as the weakest major currency after a string of weak data. That includes the CPI miss released on Tuesday and wage growth miss released on Wednesday. These data dampened speculations of a BoE rate hike by year end. In addition to that, the impact of Sterling's depreciation since last year's Brexit referendum appears to be fading. And there are a lot of uncertainties ahead as prime minister Theresa May would trigger Article 50 for Brexit by the end of next month.
Dollar weakens overnight on report that Senate Republicans are considering to delay corporate tax cut by a year. The greenback pared back some of this week's gains and turned mixed for the week. EUR/USD led the way down yesterday but breaking 1.1574 support. But equivalent move was not seen in other dollar pairs. USD/CHF was held below 1.0037 near term resistance. USD/JPY also failed to sustain above 114.44/9 zone. And even AUD/USD is held above 0.7624 support. Dollar is still waiting for inspiration for a firm breakout from consolidations. Meanwhile, Sterling and Yen remains the strongest one for the week so far.
US equities surged to new record highs again while treasury yields jumped as tax plan and Fed chair position continued to be the theme that drove the markets. The developments also took Dollar generally higher. DOW closed up 167.80 pts or 0.72% at 23441.76, hitting all time high. S&P 500 and NASDAQ gained 0.16% and 0.18% too but lagged DOW in the record runs. 10 year yield jumped 0.030 to close at 2.406, above 2.396 key resistance, which is see as a bullish signal. TNX could now be heading to retest 2.621 high made back in December.
US stocks extended the record run overnight as Trump trade remained in force. DJIA closed up 142.79 pts or 0.70% at 20412.16. S&P 500 rose 12.15 pts, or 0.52% to end at 2328.25. NASDAQ gained 29.83 pts or 0.52% to 5763.96. All three indices closed at record highs. Treasury yields also increased mildly but stayed in familiar range. 10 year yield rose 0.025 to end at 2.434. Dollar followed higher with the index hitting 101.11 and breached 101.02 resistance. But there is no sustainable momentum above this resistance yet. In the currency markets, Yen remains the weakest major currency on risk appetite. Euro follows as the second weakest on worries over political situations in Europe. The economic calendar is very busy today but main focus will be on Fed chair Janet Yellen's semiannual testimony to the Senate.
Geopolitical tensions somewhat took a back seat last week. The headlines were filled by news of UK snap election, French election, and to a lesser extent US tax reform. Sterling ended the week as the strongest major currency after boosted by the news of snap election and prospect of a "softer" Brexit. Euro survived the terrorist attack in Paris and French election uncertainties to end as the second strongest one. Dollar ended the week mixed as markets seemed not too convinced by news of Trump administration's tax reform. Meanwhile, Canadian Dollar ended as the weakest one as dragged down by WTI crude oil's sharp fall and break of 50 handle. The result of French election on Sunday will be the first market mover this week.
Dollar remains generally weak today after a rather weak recovery attempt. And, much better than expected ADP job data seems providing little inspiration. FOMC rate decision will be the main focus today but would likely be a non-event. Firstly, there practically no chance for Fed to adjust monetary policy at today's meeting. Secondly, after some hawkish Fedspeaks back in January, there were a little speculation of a March hike. And Fed could make use of today's statement to signal this.
Dollar's rally extends in early US session after stronger than expected data. GDP grew a solid 3.0% annualized in Q3, beating expectation of 2.6%. More importantly, taking into consideration of the impacts of the hurricanes, growth was just 0.1% below prior quarter's 3.1% annualized. That's very impressive. Meanwhile, GDP price index rose 2.2%, much higher than prior quarter's 1.0% and expectation of 1.8%. barring any disastrous developments ahead, a December rate hike now seems more likely than ever. And indeed, based on yesterday's pricing, fed fund futures were already indicating 95.2% chance of another 25bps hike in federal funds rate to 1.25-1.50%.
Dollar trades mixed in early US session as Fed chair Janet Yellen sounds balanced in her prepared speech for the testimony to Congress. The greenback is trying to rebound against Euro at the time of writing. Though, that's mainly due to Euro's own weakness after yesterday's rally. And the greenback is staying weak against Yen and Aussie. Sterling rebounds today on better than expected job data and is firm against Dollar too. Canadian Dollar is treading water as markets await BoC rate decision.
Dollar is trading mixed in spite of up beat US economic data and hawkish Fedspeaks. Empire state manufacturing index jumped to 30.2 in October, up from 24.4 and beat expectation of 20.7. That's also the highest level in three years. Boston Fed President Eric Rosengren sounded rather hawkish in an interview. He mentioned that Fed will need to hike interest rate December, and then three to four times "over the course of next year". He pointed out that unemployment rate, current at 4.2%, could drop below 4% when the economy is overheating. And in that case, Fed "might have to overshoot" interest rate to a level higher than expected in a healthy economy.
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