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Intermarket:
• SP Futures 4135 (+0.07%)
• EUSTXX 3928 (+0.28%)
• Crude Oil 60.65 (+0.79%)
• US 10YR 1.62% (-3.10%)
• EurUsd 1.1960 (+0.11%)
• UsdJpy 108.90 (-0.14%)
• DAX 15286 (+0.18%)
US equities continue their “melt-up” on low volumes, while EU equities remain rangebound. The picture remains supportive even as J&J headlines hit the market yesterday. The SP500 gained 0.33% (with Pfizer and Moderna advancing while J&J fell), and VIX also slipped further towards complacent territory. UST bonds rose amid a strong 30-year bond auction, and the 10yr yield is softer today. USD is weak, Oil is up, Bitcoin reached fresh highs above $63K ahead of Coinbase’s IPO. Nothing new from RBNZ overnight either.
Traders were evidently expecting more than 2.6% annualized inflation yesterday, as USD has remained soft ever since. With Fedspeakers adamant about looking past short-term inflation spikes and giving more weight to vaccine deployment, yesterday’s price action can be understood.
Looking Ahead: US earnings season kicks off today with JPM, GS and WF, where any Archegos-related news will be closely watched. We also get Fed’s Beige Book. ECB’s Lagarde, Panetta, Guindos, BOE’s Haskel, and Fed’s Powell, Clarida, Kaplan, Bostic and Williams are also speaking today.
Matters that Matter:
• US pauses use of J&J vaccine over rare blood clots, rollout delayed in Europe
• Surprise drop in Japan machinery orders stokes recovery fears
• Australian consumer sentiment jumps to 11-year high in April
• RBNZ stands pat as expected; to assess impact of travel resumption, property curbs
Majors 1-Day View:
USDJPY
- Prices posted a 2nd lower daily high In a row on Tuesday, with further losses in Asia trade. As such, signals remain bearish into Wednesday.
- Stops triggered sub-109.00
- Lower yields & vaccine issues weigh on USD
- Large opex between 108.95-109.25 to offer resistance today.
EURUSD
• Prices posted the 6th higher daily high & low in a row on Tuesday, approaching a key resistance zone at 1.1970/80. As, such, signals remain cautiously bullish for today.
• Lower US yields & vaccine issues weigh on USD.
• Resistance 1.1980/90, support 1.1870.
AUDUSD
• Prices have remained contained within a broad .7580-.7660 range for the past 12 sessions. As such, directional signals are weak. Prices posted a bullish reversal on Tuesday, so signals are cautiously bullish into today.
• Little overall direction in past 2 weeks.
• USD moves key.
GBPUSD
• Prices posted an “inside day” on Tuesday alongside a little changed close. As such, signals are weak but with buyers returning to market during Asia trade, on balance there is a slight bullish bias for today.
• Pound resilient on vaccine rollout.
• Key levels: 1.3690, 1.3800.
FX Relative ATR Grid
Comment: Volatility levels increased on Tuesday, particularly on GBP and USD. As such, that is where the better trading opportunities should be today.
FX Relative Strength Grid
Comment: the strongest trends are currently CHF (bullish), GBP (bearish), USD (bearish). The strongest momentum was seen yesterday in JPY (bearish), CHF (bullish), USD (bearish).