FOREX: Greenback Shoots Higher as Tariff Headlines Spur Volatility
Feb-27 18:21
- The USD index gapped higher on Thursday as President Trump announced that the proposed tariffs scheduled to go into effect on March 04 will be implemented as scheduled. The announcement came just one after the US president hinted that the Canada and Mexico tariffs could be delayed again, indicating that they were scheduled for April 2.
- Furthermore, details that China will be charged an additional 10% Tariff from March 04 has weighed on global sentiment, while impacting the Chinese Yuan negatively.
- USDCNH has risen 0.4% and USDCAD remains 0.6% higher on the session, both notably underperforming the advance for the USD index, which currently stands at 0.78% as we approach the APAC crossover.
- The lingering global concerns from US trade policy developments have weighed on risk sensitive currencies in G10, with both AUD and NZD the weakest in G10, declining close to 1%. For AUDUSD, the pair has pulled further away from 0.6400 resistance, and has substantially narrowed the gap to 0.6231, the Feb 10 low.
- Amid the firmer stance on tariffs, and the subsequent pessimism for major equity benchmarks, EURUSD (-0.70%) has moved sharply lower to a fresh weekly low of 1.0400 in recent trade. Trump’s comments yesterday on the imminent details for EU tariffs will be lingering, helping EURUSD to extend its pullback from a key resistance zone between 1.0525/33 that has been building in significance in recent sessions.
- The Feb 19 low at 1.0401 represents initial support, which has been tested. A break below here would signal a potential reversal threat, opening 1.0373 and 1.0317 as initial targets below.
- Despite the headlines, USDMXN remains in a familiar holding pattern, continuing to respect the short-term technical parameters of 20.30-20.55. President Sheinbaum saying there have been no conflicts that could derail a possible deal ahead of the deadline next week appears to be helping the peso resilience.
- German, France and Italy inflation data back in focus tomorrow, ahead of US PCE and Canada GDP.
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PIPELINE: Corporate Bond Issuance Update: $3B American Express 3Pt Launched
Jan-28 18:17
- Date $MM Issuer (Priced *, Launch #)
- 01/28 $3B #American Express $1.45B 6NC5 +75, $300M 6NC5 SOFR+102, $$1.25B 11NC10 +90
- 01/28 $2B Carnival Corp 8NC3
- 01/28 $2B #Arab Republic of Egypt $1.25B 5Y 8.625%a, $750M 8Y 9.45%
- 01/28 $1.75B #Capital One 11NC10 +162
- 01/28 $750M *Ziraat Bank 5Y 7.375%
- 01/28 $500M #Aircastle 5Y +108
- 01/28 $Benchmark Toronto-Dominion Bank 3Y +62, 3Y SOFR+82, 7Y +87
- 01/28 $Benchmark JPMorgan PerpNC5 6.5%
- 01/28 $Benchmark ForteBank 5Y 8%a
BONDS: MNI Europe Pi: German Contracts Remain Structurally Short/Flat (1/2)
Jan-28 18:16
From our Europe Pi Positioning Analysis (PDF Here)
- German contracts are in flat/short structural positioning.
- Bobl remains in short territory (though previously was "very short"), joining Buxl with the "short" designation.
- Bund has bucked the wider trend, moving to flat from short, while Schatz remains flat. The most recent week saw shorts set and longs reduced.
US TSYS/SUPPLY: Review 7Y Auction: Second Consecutive Stop
Jan-28 18:07
- Tsys futures paring losses (TYH5 currently 108-30.5 last, -6.5) after the $44B 7Y note auction (91282CMC2) stops 0.8bp through with 4.457% high yield vs. WI of 4.465%; bid-to-cover 2.64x vs. 2.76x prior.
- Peripheral stats: Indirect take-up falls back to 67.08% vs. 87.88% in December; Direct take-up rebounds off lat month's record low of 2.84% to 23.06%; Dealers take 9.86% vs. 9.27% prior.
- The next 7Y Treasury auction is tentatively scheduled for February 26
