FOREX: USD Index Fades Off High, Keeps Price Inside S/T Downtrend
May-28 09:27
- The USD Index has faded back just below the 100.00 handle to erase overnight gains and keep the price inside the downtrend drawn off the failed test of the 50-dma back in mid-May. Headlines and newsflow have been few and far between for markets, with a semblance of stability for the Japanese yield curve helping contain markets, as well as reduced newsflow on the flow of trade deals with the US.
- NZD is outperforming following the RBNZ rate decision. While the bank cut rates - as expected - by 25bps to 3.25%, the board suggested that the base rate is near the 'neutral' zone, which may limit the space for further rate cuts ahead. NZD/USD bounced well off the overnight low of 0.5924 in response, but is yet to make a test on yesterday's 0.6007 highs.
- CAD is among the poorest performers in G10, slipping despite a more favourable backdrop for oil prices. Brent crude prices are more stable above the week's lows, however slippage across core equity benchmarks is undermining the recent pick-up in short-term downward momentum for USD/CAD (evident in the 50-dma showing below the 200-dma last week).
- Month-end flows should pick up through US hours, particularly as today marks month-end value date. We see a series of sizeable option strikes set to expire at today's cut that could keep a lid on spot markets in a quiet news backdrop: EUR/USD sees $1.1300(E1.4bln), $1.1390-00(E1.4bln), while USD/JPY trades in close proximity to Y143.90-00($1.9bln).
- The Fed minutes is unlikely to garner too much market focus later today, with the release covering the most recent, relatively uneventful, rate decision. The data slate is similarly quiet, as is the speaker schedule - with only BoE's hawk Pill set to speak at 1600BST/1100ET, however he is likely to repeat comments made in recent weeks.
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ITALY T-BILL AUCTION RESULTS: 5-month BOT results
Apr-28 09:10
| Type | 5-month BOT | 5-month BOT |
| Maturity | Sep 12, 2025 | Sep 30, 2025 |
| Amount | E2bln | E2bln |
| Target | E2.0bln | E2.0bln |
| Previous | E7bln | |
| Avg yield | 2.077% | 2.069% |
| Previous | 2.268% | |
| Bid-to-cover | 1.78x | 1.78x |
| Previous | 1.48x | |
| Previous date | Mar 27, 2025 |
FOREX: USD Furtively Firmer in Low Conviction Morning
Apr-28 09:08
- The dollar is furtively firmer, but markets trade with little conviction early Monday having digested comments from US Treasury Secretary Bessent over the weekend. Bessent talked up the progress of trade talks and negotiations with other parties after a meeting with his Japanese counterpart today - and stated that "some talks are moving well, especially with Asia".
- Equity futures are firmer across Europe, but lag somewhat in the US ahead of a busy earnings week. Earnings from Microsoft, Meta Platforms, Amazon and Apple are all due - covering a large swathe of the Magnificent Seven megacaps.
- Across G10, GBP trades well, gaining moderately against all others. Nonetheless, GBP/USD remains below last week's highs - which mark first resistance at 1.3349. Clearance above here opens more challenging levels at the cycle high of 1.3424 posted on the last USD slide. UK data is few and far between this week, however local election results on Thursday will provide the latest insight into how Starmer's government is performing inside the first year.
- It's a quiet data session to begin the week, with risk events and releases picking up across the week - culminating in MNI Chicago PMI on Wednesday, and the Payrolls report following on Friday. The Fed remain inside their pre-meeting media blackout, meaning central bank speak should be muted into next week's decision. ECB's Rehn and de Guindos are set to appear.
