FOREX: USD Dip Holds Through London Close
May-21 15:58
- The USD dip persisted into the Wednesday close, with the USD Index slipping to the lowest level since early May. Moves began in earnest at the NY crossover, as a re-steepening of the US curve and run lower in US equity futures triggered another phase of the 'Sell the US' theme in global markets.
- UK CPI data came in well ahead of expectations, with tax changes for transport and the timing of Easter driving price gains well ahead of both market and BoE expectations. GBP/USD rallied in response, with the pair hitting a new multi-year high at 1.3469. These gains were short-lived, however, despite a further contraction of rate cut pricing across UK OIS markets.
- We note that GBP/USD has struggled to maintain gains above the 1.34 handle on several occasions already this year, as well as in 2024, 2019 and 2020. Spot gains today saw a brief print at 1.3469, but markets have already reversed ~60 pips off the high to contain the overall bullish breakout. The keeps focus on the bearish tweezer candle formation printed on April 28/29, which could mark a near-term top. 1.3342 undercuts as first support, ahead of the more meaningful 50-day EMA at 1.3137. A move through here would challenge the near-term bullish trend narrative.
- New daily lows for USD/CAD and EUR/CAD were printed through the London close, shrugging off the slippage in crude oil prices after the surprise in crude oil inventories at the weekly DoE numbers. The price action keeps the trend condition in USDCAD bearish, and confirms recent gains as corrective. Moving average studies are in a bear-mode position, highlighting the dominant downtrend that targets 1.3744, a Fibonacci retracement.
- Thursday trade should be led by prelim PMI data for May, with the core European states seen posting only minor improvements in growth prospects across the month - as firms across both manufacturing and services sectors remain under pressure from the uncertainties surrounding tariffs and global geopolitics. Weekly jobless claims data are the US calendar highlight, while the central bank speaker slate also picks up. Appearances are due from ECB's Holzmann, Vujcic, Elderson, Escriva & de Guindos, Fed's Barkin & Williams, BoE's Breeden, Pill & Dhingra as well as RBA's Hauser.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
PIPELINE: Corporate Bond Update: $5B Amex 4Pt Launched
Apr-21 15:57
Amex dropped the 6NC5 SOFR leg:
- Date $MM Issuer (Priced *, Launch #)
- 04/21 $5B #American Express $1.6B 4NC3 +98, $400M 4NC3 SOFR+126, $1.5B 6NC5 +108, $1.5B 11NC10 +128
- 04/21 $700M Excelerate Energy 5NC2
- 04/21 $2B QXO Inc. 7NC3 investor calls
FED: Citi: 125bp Cuts This Year, But Next One Pushed Back From May To June
Apr-21 15:42
Citi has pushed back its expectation for the next Fed rate cut to June, from May previously, as Fed officials "have guided against a May cut" amid government policy uncertainty.
- They still expect 125bp of cuts this year, however, which is more than the just-under-100bp currently priced by Fed funds futures. Citi: "we expect a range of data to have pushed Fed officials more dovish by June. That would include weaker "soft" data (including PMI this week) and signs that the labor market is loosening with the unemployment rate rising in the next few jobs reports."
- Citi shifted its 2025 view to 125bp of cuts immediately after the April 2 tariff announcements, from 75bp - in both cases they had seen the next cut in May.
- They note "risks are skewed to faster and/or deeper rate cuts" given that getting rates to around 3%, while close to where the FOMC sees longer-run neutral, is not "appropriately stimulative should financial conditions continue to tighten and the economy move closer to recession".
- MNI is not aware of any analysts still expecting a cut at the May FOMC at this stage (decision announced May 7), with futures-implied pricing of a 25bp reduction at around 15%.
FED: US TSY 26W BILL AUCTION: HIGH 4.050%(ALLOT 30.34%)
Apr-21 15:32
- US TSY 26W BILL AUCTION: HIGH 4.050%(ALLOT 30.34%)
- US TSY 26W BILL AUCTION: DEALERS TAKE 23.26% OF COMPETITIVES
- US TSY 26W BILL AUCTION: DIRECTS TAKE 13.40% OF COMPETITIVES
- US TSY 26W BILL AUCTION: INDIRECTS TAKE 63.34% OF COMPETITIVES
- US TSY 26W BILL AUCTION: BID/CVR 2.93
