FOREX: Greenback Sold on Weak US Data, Safe Havens Outperform
Jun-04 16:46
- Weaker-than-expected ADP employment data in the US set a negative tone for the US dollar on Wednesday, sentiment that was exacerbated by a soft ISM services print. With an associated move lower for US yields, notorious safe havens such as JPY and CHF are outperforming on Tuesday.
- USDJPY sits 0.85% lower on the session, having had a punchy 165 pip turnaround from the overnight highs. A bear cycle for the pair remains in play and sights remain on the next important support at 142.12, the May 27 low. Clearance of this level would confirm a resumption of the bear leg and open 139.89, the Apr 22 low. In similar vein, USDCHF (-0.76%) has gravitated back below the 0.82 handle, although spot remains just shy of the week’s lows at 0.8157.
- A moderately hawkish lean to the BOC decision is providing an additional tailwind for the Canadian dollar, with communications keeping the door open to a cut but not emphatically (Macklem's opening statement: "We also discussed the path ahead for the policy interest rate. Here, there was more diversity of views.”)
- USDCAD reaches fresh cycle lows below 1.3675, keeping bearish technical conditions firmly intact for the pair. Sights are on 1.3643 next, the Oct 9 low/Sep high. Below here, attention will be on 1.3579, the 1.5 Fibonacci projection of the Feb 3 - 14 - Mar 4 price swing, before the September lows at 1.3420 will garner attention.
- EURUSD regained the 1.14 handle amid the broad dollar weakness, but remains below the week’s best levels ahead of the ECB meeting on Thursday, where a 25bp rate cut is widely expected and forecast revisions will be of particular interest. Attention will then swiftly turn to Friday’s release of US employment data.
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US TSYS/SUPPLY: WI 3Y Holding Steady
May-05 16:45
- WI holding steady ahead of the $58B 3Y note auction (91282CND9) cut-off at 1300ET.
- 3Y WI is currently at 3.825%, 4.1bp cheap to last month's tail: 3.784% high yield vs. 3.760% WI
FED: US TSY 3Y AUCTION: NON-COMP BIDS $111 MLN FROM $58.000 BLN TOTAL
May-05 16:45
- US TSY 3Y AUCTION: NON-COMP BIDS $111 MLN FROM $58.000 BLN TOTAL
US TSY OPTIONS: BLOCK: Jun'25 10Y Calls
May-05 16:43
- 8,500 TYM5 112.5 calls, 14 ref 111-01 at 1236:36ET
