FOREX: EURJPY Sharply Higher as Tariff Announcements Awaited
Apr-02 17:42
- A combination of EUR strength and USD weakness continues to play out across the US trading session, as the clocks ticks down headed into Trump's Rose Garden appearance at 1600ET/2100BST. The original EUR buying phase followed the Bloomberg report that the EU are planning emergency measures to guard the economy against Trump's tariffs, possibly bolstered by the rally through 1.0850 resistance and the weekly high.
- That report, twinned with headlines that Canada and Mexico are working to enhance their trade deal goes to show that tariffed countries are seemingly looking to take sharp action to both combat Trump's tariffs, as well as enhance cooperation to dampen the blow to economic growth that could follow the immediate installation of reciprocal tariffs today.
- Risk in general has also been significantly supported in anticipation of the tariff event, spurred on by reports suggesting that President Donald Trump has told his inner circle that Elon Musk will be stepping back in the coming weeks. Major US benchmarks latched on to the potential for a less strict regime at DOGE, and rallied over 2% from the lows in sympathy.
- This dynamic also weighed heavily on the Japanese yen, prompting USDJPY to rally back above 150.00 and EURJPY extend session gains to around 1%.
- For EURJPY, the trend structure in remains bullish and recent weakness appears corrective. The pullback has allowed an overbought condition to unwind. On the topside, attention is on 164.08, the Jan 24 high. A clear break of this hurdle would strengthen a bullish condition and open 164.90, the Dec 30 ‘24 high.
- Despite the softer USD and the renewed optimism for equities, the Mexican peso has underperformed since the US cash open, now 0.40% lower against the greenback. Standing out is the move for EURMXN, where the 1.4% advance (at peak) saw us breach the March highs, placing the cross at the highest level since November 06.
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PIPELINE: $2.5B Sumitomo Mitsui 4Pt Debt Launched, $3B KFW Expected Tuesday
Mar-03 17:42
- Date $MM Issuer (Priced *, Launch #)
- 03/03 $2.5B #Sumitomo Mitsui $500M 3Y +60, $500M 5Y +75, $1B 5Y SOFR+99, $500M 10Y +90
- 03/03 $1.25B #Virginia Electric $625M 10Y +100, $625M 30Y +120
- 03/03 $1B Alumina PtyLtd 5NC2, 7.5NC3
- 03/03 $Benchmark Synopsys 2Y +60, 3Y +70, 5Y +85, 7Y +95, 10Y +100, 30Y +125
- 03/03 $Benchmark America Honda 3Y +85a, 3Y SOFR, 5Y +100a, 10Y +120a
- 03/03 $Benchmark Duke Energy 2Y +60a, 10Y +110a, 30Y +130a
- 03/03 $Benchmark Columbia Pipelines 10Y +125, 30Y +148
- 03/03 $Benchmark PayPal 3Y +50, 3Y SOFR+67, 10Y +92
- 03/03 $Benchmark MPLX 10Y +155a, 30Y +185a
- 03/03 $Benchmark Tampa Electric 10Y +125a
- 03/03 $Benchmark Nucor 5Y +70, 10Y +95
- 03/03 $Benchmark CME Group 5Y +70a
- 03/03 $Benchmark Humana 10Y +138, 30Y +160
- 03/03 $Benchmark Synchrony Financial 6NC5 +145
- Expected Tuesday:
- 03/04 $3B KFW WNG 2028 +31a
- 03/04 03/03 $750M Chord Enery 8NC3
US STOCKS: Early Equities Roundup: Moderately Weaker/Off Early Highs
Mar-03 17:19
- Stocks are trading moderately weaker ahead midday Monday, consolidating after this morning's data, higher than expected ISM Prices Paid while ISM Mfg, Orders and Employment figures were lower than expected as Treasuries reversed early losses to new session highs.
- Currently, the DJIA trades down 39.5 points (-0.09%) at 43802.42, S&P E-Minis down 1 points (-0.02%) at 5962.5, Nasdaq down 53.4 points (-0.3%) at 18795.89.
- Information Technology and Energy sectors underperformed in the first half, semiconductor makers weighing on the former: Nvidia -4.75% (reportedly as "Singapore is investigating whether Dell Technologies Inc. and Super Micro Computer Inc. servers shipped to Malaysia housed Nvidia Corp. chips barred from China" Bloomberg reprted). Meanwhile, Enphase Energy declined -3.49%, First Solar -3.31% and Broadcom -2.71%.
- Leading laggers in the Energy sector included APA Corp -2.46%, Valero Energy -2.03%, Marathon Petroleum -1.97% and EOG Resources -1.84%.
- On the positive side, Real Estate and Health Care sectors outperformed in the first half, investment trusts buoyed the former with Weyerhaeuser +3.29%, Ventas +1.95% and Host Hotels & Resorts +1.58%. Viatris +4.39%, Teleflex +2.98% and Medtronic +2.48% supported the Health Care sector.
- Expected earnings announcements for Tuesday include Target Corp and AutoZone Inc before the open while Crowdstrike Holdings and Ross Stores report after the close.
FOREX: EURUSD Approaching Significant Cluster of Resistance
Mar-03 17:17
- Data today has supported both legs of the bullish EURUSD trade. Eurozone flash readings of CPI and core CPI coming in a tenth above consensus estimates boosted an already buoyant Euro, and the more constructive price action for European equities exacerbated the risk-on momentum. Furthermore, weaker growth/employment metrics in the US ISM manufacturing survey have added to the positive sentiment for EURUSD.
- Today’s 1.15% advance has swiftly erased the majority of the three session decline seen late last week, and in the process we are flirting once again with the 1.05 handle. This leaves spot just 30 pips away from a cluster of resistance, a collection of daily highs between 1.0520/33 which will provide the key focus ahead.
- A clear break of 1.0533 (Jan 27 high) would highlight an important technical break and provide the foundation for a stronger bullish short-term theme, opening 1.0630, the Dec 6 high.
- Given the significance of this area, options markets may be underestimating the potential range for EURUSD this week, especially considering we have ongoing tariff developments, discussions on Russia/Ukraine, the ECB meeting and US employment data. Pricing for a EURUSD straddle expiring on Friday incorporates a move of just +/- 85 pips from current spot levels.
