FOREX: Asia FX Wrap - Market Very Quick To Resell The USD
The BBDXY has had a range of 1203.92 - 1207.36 in the Asia-Pac session, it is currently trading around 1204. The BBDXY has extended lower again in early Asian trading after President Trump's announcement of a ceasefire, BBDXY -0.30%. The price action overnight was very revealing and points to a market that is very quick to reinstate USD shorts with conviction high for a move lower. (Bloomberg) - The PBOC set the strongest yuan fixing since November, but it also signaled a reluctance to allow strong gains. The fixing also came in slightly above the estimate for the first time since June 13. This adds to the view that China is acceding to a sustained, gradual appreciation in its currency, as well as emphasizing the broader theme of USD weakness.”
- EUR/USD - Asian range 1.1575 - 1.1610, Asia is currently trading 1.1605. EUR support back towards 1.1450 proved solid once more and the swift turnaround in the USD has seen the EUR going into the London session above 1.1600. While the USD remains on the back foot the EUR will continue to find demand on dips.
- GBP/USD - Asian range 1.3506 - 1.3566, Asia is currently dealing around 1.3560. The GBP again found solid demand around its 1.3400 support and is now back to testing its previous highs back towards 1.3600 looking for the momentum to carry it through its weekly pivot.
- USD/CNH - Asian range 7.1704 - 7.1797, the USD/CNY fix printed 7.1656. Asia is currently dealing around 7.1780. Sellers should be around on bounces while price holds below the 7.2500 area and the PBOC manages the fix lower.
- Cross asset : SPX +0.55%, Gold $3350, US 10-Year 4.34%, BBDXY 1204, Crude oil $66.65
- Data/Events : Ger IFO
Fig 1: GBP/USD Spot Weekly Chart
Source: MNI - Market News/Bloomberg Finance L.P
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JGB TECHS: (M5) Rallies off Lows
- RES 3: 147.74 - High Jan 15 and bull trigger (cont)
- RES 2: 146.53 - High Aug 6
- RES 1: 141.48/142.95 - High May 2 / High Apr 7
- PRICE: 139.40 @ 15:42 GMT May 23
- SUP 1: 138.54 - Low May 22
- SUP 2: 136.57 - 1.382 proj of the Jan 28 - Feb 20 - Feb 26 bear leg
- SUP 3: 134.89 - 2.000 proj of the Jan 28 - Feb 20 - Feb 26 bear leg
JGBs have rallied off recent lows and for now, however a bearish theme remains intact following the reversal that started Apr 7. A continuation lower would signal scope for an extension towards 136.57, a Fibonacci projection. On the upside, a reversal higher would instead refocus attention on 142.95, the Apr 7 high. The first important resistance to watch is 141.48, the May 2 high. A break of this level would be viewed as an early bullish signal.
US FISCAL: Total Tariff Income Jumping In May As New Rates Hit
Treasury reported a record $16.5B in customs/excise taxes on May 22, reflecting the large increase in tariff rates that went into effect in April.
- Today's report is important because it represents the largest tariff collections of the month which are typically on a due date around the 22nd, when most corporate importers make their payments.
- Thursday's one-day collection is a record, and the month has already set a new record. Tariff revenues have totaled $22.3B so far in May, and are came in at $17.4B in April (after averaging $8.1B/month in 2024).
- For the fiscal year as a whole so far, customs duties have totaled just under $93B, per the Treasury Daily Statement.
US FISCAL: Extraordinary Measures Continue To Dissipate Alongside Treasury Cash
Treasury's latest estimate of the size of "extraordinary measures" available to use "in order to prevent the United States from defaulting on its obligations as Congress deliberate[s] on increasing the debt limit" is down to $67B on May 21 (of an available $299B), vs $82B a week earlier.
- The amount hit the 2nd lowest level since the debt limit impasse started, at $46B, on May 20 (the low was $34B on Feb 24).
- With $476B in cash in the Treasury General Account on May 21, that left the total resources available to Treasury at $543B, the least since April 14 - the day before the annual April 15 tax deadline.
- Treasury Sec Bessent warned Congress earlier this month that "there is a reasonable probability that the federal government's cash and extraordinary measures will be exhausted in August while Congress is scheduled to be in recess. Therefore, I respectfully urge Congress to increase or suspend the debt limit by mid-July".
