FOREX: USD Backtracks Thurs Gains, But Conviction Looks Light
May-09 15:53
- Having rallied against all others on Thursday, the dollar backtracked for much of Friday trade, despite various White House cabinet members talking up the possibility of further trade deals from various countries in the very short-term.
- Markets are also on watch for any news stemming from the beginning of the US-China trade talks over the weekend. While no major breakthroughs are expected, markets were on alert after Trump posited that 80% China tariffs "seems right", although the final decision will be with his Treasury Secretary. Tariffs at 80% are still uncomfortably close to the levels the Chinese believe are effectively a trade embargo - and will still severely limited crossborder flows.
- As such, equities were sold on Trump's thought, which fed into renewed pressure on USD/JPY, confirming recent gains as corrective in nature. The 50-day EMA, at 146.22, remains intact for now. A clear break of this EMA would highlight a possible reversal. Moving average studies are in a bear-mode position and continue to highlight a dominant downtrend.
- Focus for next week rests on the April US CPI print - at which inflation is expected to hold steady at 2.4% for the headline Y/Y. A higher print would justify the cautious approach to the last FOMC rate decision, on which most Fed members seemed to affirm their preference for a gradual approach to policy in speeches Friday.
- GBP was among the better performers Friday, aiding GBP/USD to a near 100 pip bounce off the overnight low. Volumes were atypically light, with cumulative activity near 30% short of recent averages - meaning the recovery may be built on only light conviction. As such, attention remains on the recent breach of support at 1.3249, the 20-day EMA. This signals scope for a deeper correction. Note too that a minor head and shoulders formation has developed on the daily chart.
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US 10YR FUTURE TECHS: (M5) Monitoring Trendline Support
Apr-09 15:51
- RES 4: 114-10 High Apr 7 and the bull trigger
- RES 3: 113-09+ 76.4% retracement of the Apr 7 - 9 sell-off
- RES 2: 112-21+ 61.8% retracement of the Apr 7 - 9 sell-off
- RES 1: 112-08 High Apr 7
- PRICE: 110-26+ @ 15:50 BST Apr 9
- SUP 1: 110-01 Intraday low
- SUP 2: 109-29 Trendline support drawn from the Jan 13 low
- SUP 3: 109-13+ Low Feb 24
- SUP 4: 108-26+ 76.4% of the Jan 13 - Apr 7 bull cycle
A sharp sell-off in Treasury futures this week has resulted in a breach of both the 20- and 50-day EMAs. Attention is on trendline support at 109-29, drawn from the Jan 13 low. A clear break of this support would strengthen a bearish threat. Note that the steep sell-off could still be a corrective pullback that has allowed an oversold trend condition to unwind. Initial resistance to watch is 112-08, yesterday’s high. A break would highlight a possible early reversal.
US STOCKS: Early Equities Roundup: Off Lows Despite Retaliatory Tariff Volley
Apr-09 15:40
- Stocks have see-sawed off early overnight lows ahead midday despite China (84%) and the EU (E21B) announcing retaliatory tariffs against the US Wednesday morning. Currently, the DJIA trades down 3.06 points (-0.01%) at 37632.5, S&P E-Minis down 0.25 points (-0.01%) at 5020.25, Nasdaq up 126.9 points (0.8%) at 15391.6.
- Information Technology and Consumer Discretionary sectors outperformed in the first half, hardware and semiconductor makers buoyed the tech sector: Advanced Micro Devices +5.28%, Intel Corp +4.69%, Apple +3.90%, Skyworks Solutions +3.68% and Teradyne +3.05%.
- The Consumer Discretionary sector was supported by: Tesla +3.51%, Wynn Resorts +2.81%, Expedia Group +1.87%, Chipotle Mexican Grill +1.78% and MGM Resorts International +1.61%
- On the flipside, Utilities and Health Care sectors underperformed, alternative energy providers weighing on the former: Entergy Corp -3.52%, Evergy -3.32%, NiSource -2.91%, Duke Energy -2.72% and NextEra Energy -2.71%.
- Meanwhile, pharmaceuticals weighed on the Health Care sector: Bristol-Myers Squibb -5.73%, AbbVie -5.68%, Incyte Corp -4.88%, Regeneron Pharmaceuticals -4.77% and Eli Lilly -4.53%.
- Reminder, banks kick off the latest earnings cycle this Friday with Bank of New York Mellon, Wells Fargo & Co, JPMorgan Chase and Morgan Stanley reporting.
FED: US TSY 17W BILL AUCTION: HIGH 4.250%(ALLOT 3.28%)
Apr-09 15:32
- US TSY 17W BILL AUCTION: HIGH 4.250%(ALLOT 3.28%)
- US TSY 17W BILL AUCTION: DEALERS TAKE 43.15% OF COMPETITIVES
- US TSY 17W BILL AUCTION: DIRECTS TAKE 4.04% OF COMPETITIVES
- US TSY 17W BILL AUCTION: INDIRECTS TAKE 52.81% OF COMPETITIVES
- US TSY 17W BILL AUCTION: BID/CVR 2.71
