FOREX: US Dollar Extending Intra-Day Reversal Lower
- The intra-day reversal lower for the greenback is extending, as the USD index now trades through last Friday’s lows, roughly 1% below the earlier session highs. Lower oil prices and resilient equity benchmarks are assisting the renewed USD weakness, despite the plethora of headlines crossing surrounding Iran’s launch of missile attacks towards a US air base in Qatar.
- The likes of GBPUSD (+0.50%) and EURUSD (+0.36%) are leading the charge within the G10 complex. For EURUSD, the bullish trend remains firmly in place and scope remains seen for a climb towards 1.1696, a Fibonacci projection. Recovering global sentiment has tilted the likes of AUD and NZD back to unchanged on the day after being the standout laggards earlier on Monday.
- Euro resilience has also been notable against the crosses with the likes of EURAUD and EURNZD holding onto 0.5% gains on the session.
- JPY volatility has not disappointed, although the Japanese currency has followed the broader dollar trend rather than being impacted by safe haven flows. Initially, USDJPY rose as high as 148.03, which may have been exacerbated by positioning dynamics. However, since then, the pair tracks around 180 pips lower, and is edging towards the overnight lows at the 146.00 handle. Below here, support to watch lies at 145.08, the 50-day EMA.
- The main beneficiary on Monday has been the Swiss Franc, as USDCHF falls 0.67% and edges back towards 0.8100, while CHFJPY has appreciated 0.76%. Earlier in the session spot printed up to 180.88, record highs for the cross.
- Focus on the data calendar tomorrow will be on German IFO, Canada CPI and US consumer confidence. Fed Chair Powell will also deliver his congressional testimony.
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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".
