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Intermarket:
• SP Futures 4126 (+0.20%)
• EUSTXX 3921 (-0.18%)
• Crude Oil 63.05 (-0.16%)
• US 10YR 1.63% (-0.32%)
• EurUsd 1.1975 (-0.03%)
• UsdJpy 108.87 (-0.04%)
• DAX 15214 (-0.09%)
Risk appetite is soft going into the European session. Strong US earnings from Goldman Sachs and JP Morgan didn’t help risk appetite: the retreat in tech stocks (including the Coinbase IPO) led the SP 500 lower and VIX rose slightly. Fed Chair Powell opined that “we will reach the time at which we will taper asset purchases well before we consider rating interest rates”. However, the 10-year yield still rose slightly to 1.63. Oil remains supported after US reported a 5.9 million barrel drop in commercial inventories. The total inventory drawdown in the past three weeks now amount to about 10 million barrels and stockpiles in the US are now at their lowest since Feb’21.
Some focus still on the J&J vaccine pause as CDC advisory panel have put off vote on how to proceed, though White House adamant pause will not impact vaccine goal.
ECB speakers yesterday including Lagarde continued their dovish tone.
Looking Ahead: we get German CPI, US’ initial jobless claims, retail sales and NAHB housing market index. Fed’s Daly and Mester are also speaking today.
Matters that Matter:
• FED: U.S. economy gaining momentum
• US health panel agreed they wanted more data before voting to resume vaccinations with Johnson & Johnson’s Covid-19 jab
• U.S. Senate Democrats plan to advance infrastructure bill to gauge bipartisan support
• U.S. set to slap new sanctions on Russia, expected to target Russian sovereign debt -sources
• Japan state-backed funds consider offer for Toshiba -report
• Australian jobs machine hits overdrive, but gains are all part-time employment.
• AU Mar Employment 70.7k, 35.0k f’cast, 88.7k prev; Unemployment 5.6%, 5.7% f’cast, 5.8% prev
• New Zealand Mar REINZ House Sales Y/Y +31.2% from 14.6%
Majors 1-Day View:
USDJPY
- Prices posted the 3rd lower daily high & low in a row on Wednesday, but buyers returned to the market and the day closed little changed. As such, signals are not strong for Thursday but until the trend of lower daily highs is broken, signals remain bearish on balance.
- Offers reported at 109.00, also large expiries there today/tom.
- Lower yields still weigh ahead of US data dump
- Bidding interest reported on dips towards 108.80s.
EURUSD
• Prices posted the 7th higher daily high & low on Wednesday, prices approaching the key resistance level at 1.2000. While the trend of higher lows remains intact, there is some divergence in momentum appearing and caution is advised. We prefer to sell into rallies today.
• Ahead of US data dump, yields are soggy and consolidation likely.
• Barrier reported at 1.2000, offers ahead of it.
• Support 1.1970s
AUDUSD
• Prices posted fresh 2-week highs on Wednesday, interrupting the sequence of lower weekly highs. However, sellers returned to market during Asia trade alongside a bearish divergence in momentum. As such, we suggest selling into rallies towards .7730s intraday, or buying on a dip towards .7680/90.
• Commodities lifting AUD, job data less influential.
• Support at .7710s, then .7650s.
GBPUSD
• Prices posted the 2nd higher daily low in a row on Wednesday, but sellers returned at 1.3800. As such, signals for Thursday are more mixed and we prefer to sell rallies towards 1.3800 or sell through 1.3744.
• Pound caught in broad 1.3670-1.3920 range.
• USD dynamics to dominate.
FX Relative ATR Grid
Comment: Volatility levels soared in Comm-dolls especially on Wednesday, following large gains in Crude Oil. NZD remains the leader in terms of volatility.
FX Relative Strength Grid
Comment: the strongest trends are currently NZD (bullish), GBP (bearish), USD (bearish). The strongest momentum was seen yesterday in NZD (bullish), USD (bearish), JPY (bearish).