FOREX: USD Outperforms Safe Havens, With Up Equities On Tariff/Trade Hopes
Apr-25 04:30
The USD BBDXY index has risen in the first part of Friday trade, up 0.30%, last near 1228. We are just of recent highs and a further extension higher could see the 1234/1235 region targeted. Safe havens are underperforming today, with yen down 0.70% and to fresh lows for the week versus the USD. The dollar is benefiting from a firmer US equity futures backdrop, amid hopes of tariff de-escalation.
- US Eminis are up close to 0.45% in latest dealings, near 5535/40, earlier we made fresh highs in the index back to early April. Positive trade talk headlines from Thursday in the US around potential deals with India and positive groundwork for US- South Korea discussions has been cited, while today BBG reported that China is considering lowering tariffs on some US imports to combat rising costs. Regional Asia Pac equities are all a sea of green, with tech related countries outperforming.
- Risk sentiment remains very sensitive to any potentially positive tariff/trade related developments. US Tsy yields are little changed so far today.
- USD/JPY got to 143.80, but sits slightly lower now, last 143.60, still off 0.70% in yen terms for the session. Note the 20-day EMA rests at 144.76, in terms of further upside targets. Earlier we had a solid beat from the Tokyo April CPI, but this didn't benefit yen.
- USD/CHF is back above 0.8300, off 0.60% in CHF terms, while EUR/USD is down to 1.1330, off 0.50%.
- AUD/USD is relatively steady, last near 0.6405/10. Liquidity may be lighter today given Australian markets are out for ANZAC day. Still, the A$ is being aided by the better equity tone. NZD/USD is down slightly, last near 0.5980/85 (NZ markets are also out).
- Later on we UK retail sales, Canadian retail sales print. In the US focus will be on the final U. of Mich. sentiment reading for April.
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GOLD: Early Gains Given Back as Gold Retreats.
Mar-26 04:30
- Following the first three successive down days of the year, gold resumed its rally overnight gaining +0.30% yet couldn’t hold onto those gains in the Asian trading session .
- Whilst a short-term spike towards the middle of the Asian trading day saw gold touch US$3,027.12.00, gold fell below it’s opening level of $3,020.08 to $3,016.10
- Overnight weaker than expected US consumer confidence was a contributor to risk sentiment, which carried over into the Asian trading session. .
- The bid by South African miner Gold Fields for Australian miner Gold Road Resources has been rejected.
- All key moving averages remain upward sloping, indicating that the bullish momentum remains in place for gold as it remains above the 20-day EMA of $2,974.50
OIL: US Stock Drawdown Supports Crude In Uncertain World, EIA Data Out Later
Mar-26 04:10
Oil prices are moderately higher following data showing a large crude stock drawdown in the US last week. Markets tentatively sold off on news of a partial Ukraine-Russia ceasefire deal but the trend hasn’t continued today as Russia has conditions and US President Trump said that the Russians may be “dragging their feet” on settling an agreement. Positive risk sentiment has also supported crude today.
- WTI is up 0.3% to $69.18 after a high of $69.45 earlier. The benchmark is struggling to hold breaks above the 50-day EMA at $69.33. Brent is off its intraday peak of $73.37, but is hovering around initial resistance at $73.17 to be 0.2% higher at $73.18. The USD index is 0.1% higher.
- Oil price moves have been muted and the market is likely waiting for what US tariffs are actually imposed on April 2. It has been concerned that increased trade protectionism will reduce global demand. Trump has said that he’s likely to be more lenient than reciprocal but doesn‘t want too many exceptions. Thus uncertainty remains heightened.
- Bloomberg reported that there was a US crude inventory drawdown of 4.6mn barrels last week, according to people familiar with the API data. Products continued to decline with gasoline down 3.3mn and distillate 1.3mn. The official EIA data is out today.
- Later the Fed’s Kashkari and Musalem appear and preliminary US February durable goods data print. The ECB’s Cipollone participates in a panel and UK February CPI and the government spring budget statement are released.
US TSYS: Yesterday’s Modest Gains Reversed In Today’s Asia-Pac Session
Mar-26 04:05
In today's Asia-Pac session, TYM5 is 110-19, -0-05 from closing levels.
- Cash US tsys are ~2bps cheaper in today's Asia-Pac session after yesterday's modest gains.
- Us tsys ended in the green, recovering from early weakness, with fears over a slump in the economy underpinning a small haven bid. Bottom fishers also provided support.
- Wednesday's focus is on Durables/Cap Goods, Tsy 5Y Sale and Fed Speak: MN Fed Kashkari Fed listens event (no text, Q&A) at 1000ET, StL Fed Musalem on economy/policy (text, Q&A) at 1310ET.
