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Intermarket:
• SP Futures 4126 (-0.48%)
• EUSTXX 3914 (-0.20%)
• Crude Oil 65.35 (+0.11%)
• US 10YR 1.62% (+0.00%)
• EurUsd 1.2124 (-0.17%)
• UsdJpy 108.87 (+0.23%)
• DAX 15074 (-0.10%)
Relatively upbeat Fed rhetoric and a record high of 8.12 million US job openings in March failed to support risk appetite, as focus remains on the commodity boom and inflation expectations. Equities declined further during Asia trade, following the 2nd day of losses on Wall Street. VIX surged to the highest level in 11 weeks. UST bonds remained pressured with the 10-year bond yield up to 1.62% ahead of today’s CPI print. There is a US$41bn new 10-year bond auction today. Aussie feeling the weight of the risk-off move moreso than other currencies.
Meanwhile, fuel shortages across the US East Coast and South were reported due to the Colonial Pipeline cyberattack.
Ether continues to advance in crypto space, overcoming the 4k mark and again widened its performance gap over bitcoin. The SEC continues to warn investors of the risks of cryptocurrency trading.
Looking Ahead: Focus today will be on US CPI , but we also get UK Q1 GDP, Fed’s Clarida, Rosengren, Bostic and Harker. BOE’s Bailey also speaks today.
Matters that Matter:
• White House says it takes possibility of inflation seriously
• Pipeline outage causes U.S. gasoline supply crunch, panic buying
• U.S. Senate Democrats set to advance sweeping election law changes
• UK cautious about sustainability of post-Brexit N.Ireland trade rules
• Australia PM, seeking to secure economic revival, flags prolonged budget deficits
• Taiwan warns on rising COVID-19 risk, stocks tank
• 35 killed in Gaza, 5 in Israel, as violence escalates
Majors 1-Day View:
USDJPY
Prices posted the 2nd little changed close in a row on Tuesday, with trading still contained within Friday’s range. As such, trend signals are weak and only a break of Friday’s range would strengthen signals. However, short-term momentum would suggest the potential for intraday longs from close to 108.50s. Support further down is at 108.00, 107.64. Resistance remains at 109.00 and 109.40-50. USD dynamics and risk appetite are the key drivers alongside US CPI today.
EURUSD
For the 2nd day in a row, sellers returned from close to key resistance at 1.2178, prices declining past Tuesday’s low, testing Friday’s Marabuzo line during Asia trade. This pullback is still seen as corrective, although it may extend past 1.2111 towards key support zones 1.2060-80 and 1.2011. As such, short-term shorts around yesterday’s top seem viable intraday. USD dynamics remain the key driver alongside US CPI today.
AUDUSD
Prices posted a lower daily high & low on Tuesday, and selling continued into today’s Asia trade with losses of over ½ Big Fig. With the developing trend of lower daily highs & lows, signals remain in a bearish stance and we prefer to sell into rallies towards yesterday’s lows at .7819. Supports are at .7750-60, .7720s, .7700. Risk appetite, USD dynamics and commodity prices are the key drivers.
GBPUSD
Prices posted the 4th higher daily high in a row on Tuesday, but after Monday’s range expansion, trading was confined to a narrow range and the day ended with little net movement overall. The bias remains positive however, and we prefer to buy on dips towards 1.4090/4100. Resistance levels are at 1.4177 and 1.4239. Supports are 1.3990/1.4010 and 1.3900/20. Hawkish BOE tilt and USD dynamics are the key drivers.
USDCAD
Prices posted an “inside day” on Tuesday, with a lower high but also a higher low compared to Monday as buyers defended the 1.2077 zone. As such, trend signals have weakened into Wednesday, but the bearish bias has not changed. As such, we prefer to sell into rallies towards Friday’s high in the 1.2170/90 zone. Support is found at 1.2077, then 2015 lows at 1.1937. Hawkish BOC and USD dynamics are the key drivers.
FX Relative ATR Grid
Comment: volatility contracted on everything except selected CHF pairs yesterday, as markets digested the range expansion from Monday, and await US inflation data today.
FX Relative Strength Grid
Comment: the strongest trends are currently GBP (bullish), CAD (bullish), JPY (bearish), USD (bearish). The strongest momentum was seen yesterday in GBP (bullish), JPY (bearish).