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Intermarket:
• SP Futures 4065 (+0.02%)
• EUSTXX 3916 (-0.10%)
• Crude Oil 59.60 (+0.46%)
• US 10YR 1.66% (-3.72%)
• EurUsd 1.1872 (-0.02%)
• UsdJpy 109.77 (+0.03%)
• DAX 15221 (-0.08%)
Risk appetite is weaker into today’s European Open after mixed performance in Asia. This follows a late selloff posted in Tuesday’s US session. US 10-year is unchanged, at 1.66%. US Dollar little changed. Oil stronger, Gold softer. Main driver of FX flows was USDJPY after stop-loss selling yesterday.
In the US, focus will shift to President Biden’s speech today on infrastructure plans (17.45 GMT), and FOMC minutes (18.00 GMT) which should illustrate how committed the FOMC is to keeping interest rates low. If the minutes bring forward market expectations of interest rates hikes then the US dollar could strengthen, putting downward pressure on commodity prices.
Focus in Europe remains on mixed coronavirus trends with lockdowns still in place, even though vaccine progress is expected. UK will begin rollout of Moderna coronavirus vaccine today starting in Wales. AstraZeneca still under scrutiny regarding blood clot incidents, with most countries adopting age limitations for it’s use.
Matters that Matter:
• TSC Yellen: more work needed to secure economic recovery
• U.S. must invest heavily to stay No. 1 economy – White House CEA Rouse
• Cryptocurrency inflows hit all-time high in Q1
• Japan PM Suga signals chance of calling snap election – Asahi
•PBOC in favour of establishing yuan futures market
• Australia calls for release of 3.1 mln vaccine doses, if EU not blocking exports
• AU PMIs beat expectations
• Biden to speak about infrastructure plans today at 17.45 GMT
• FOMC Minutes at 18.00 GMT
Majors 1-Day View:
USDJPY
- Tuesday posted the 4th lower daily high in a row with losses of ½ Big Fig. However, short-term momentum is showing signs of divergence as we are nearing prior week lows. As such, a more cautious stance is suggested and we prefer to sell into a rally at 110.00 or buy on a dip to 109.30s.
- Resistance and offers reported at 110.00
- Support & option related defence at 109.00
- CVC $20Bln bid for Toshiba may influence FX
EURUSD
• Prices posted the 4th higher daily high in a row, with gains of 3/4 Big Fig. As such, signals remain positive for today.
• Divergence in COVID-19 handling between EU and US/UK still weighing on EUR.
• FOMC Minutes to impact US yields and USD direction.
• Support 1.1780s, resistance 1.1900-10.
AUDUSD
• Prices have remained contained within a broad .7580-.7660 range for the past 9 sessions. As such, directional signals are weak. Prices posted a fresh 10-day high in Asia trade, but sellers returned to the market and a divergence in short-term momentum suggests further downside potential in the short-term.
• Stops triggered above .7665, market now lower.
• Risk assets and US yields key to direction.
GBPUSD
• Prices posted a bearish engulfing at the daily level on Tuesday, reversing Monday’s bullish signals. As such, signals are now bearish for Wednesday.
• New UK regulator can curb big tech’s influence over news publishers
• Key levels: 1.3671 and 1.3955.
FX Relative ATR Grid
Comment: Volatility picked up yesterday as participants returned from the long weekend. GBP was the clear leader in terms of range expansion.
FX Relative Strength Grid
Comment: the strongest trends are currently CHF (bullish), JPY (bearish). The strongest momentum was seen yesterday in GBP (bearish), JPY (bearish), CHF (bullish).