FOREX: USD Slips Off Tariff Ruling Overnight High, AUD Benefits
May-29 09:21
- European desks have been happy to fade the overnight bid in the USD so far this morning, with markets reassessing the implications of the Court of International Trade’s tariff block. Although the ban implies a smaller tariff-related hit to US growth and upside inflation risk than a day ago, it further increases US policy – and political – uncertainty.
- EURUSD had traded lower by as much as 0.7% overnight, but has pared losses to trade in only minor negative territory headed into the Ny crossover. The pair briefly pierced initial support at the 20-day EMA, bringing attention to the more important support at 1.1156, the 50-day EMA. Meanwhile, GBPUSD has also essentially fully unwound the overnight selloff.
- AUD outperforms against broader G10 FX, the primary beneficiary from the slip off overnight highs for the greenback. AUD/USD pressed toward 0.6450 this morning to challenge yesterday's highs, and while the moves may be inconsequential on the week, (AUD/USD is still hugging the 200-dma at 0.6444) the currency is looking more constructive against the likes of JPY, CHF and EUR on the daily charts - against which the underlying positivity and re-correlation with global equities is aiding prices higher.
- Having bounced off pullback lows of 1.7248, EUR/AUD looks to have concluded the corrective bounce, with spot now through 38.2% retracement of the strength. A further stabilisation of global trade themes or persistence of legal challenges against Trump's tariffs would affirm the AUD profile, particularly if the E-mini S&P holds a sustainable break above the 6,000 handle.
- Weekly US jobless claims and the secondary reading for the core PCE price indices are the calendar highlights Thursday. Fed's Barkin, Goolsbee, Kugler & Daly are all set to speak as well as BoE's Bailey. The Ascension day public holiday will thin out liquidity in the European session, even with most domestic markets still open.
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ITALY AUCTION RESULTS: 5/10-year BTP and CCTeu
Apr-29 09:14
| 2.95% Jul-30 BTP | 3.60% Oct-35 BTP | 1.10% Apr-33 CCTeu | |
| ISIN | IT0005637399 | IT0005648149 | IT0005620460 |
| Amount | E3.5bln | E4bln | E2bln |
| Previous | E3bln | E1.5bln | |
| Avg yield | 2.74% | 3.62% | 3.27% |
| Previous | 3.05% | 4.11% | |
| Bid-to-cover | 1.52x | 1.58x | 1.66x |
| Previous | 1.58x | 1.74x | |
| Avg Price | 101.07 | 100.09 | 100.53 |
| Pre-auction mid | 101.058 | 100.449 | |
| Prev avg price | 99.64 | 100.25 | |
| Prev mid-price | 99.585 | 100.179 | |
| Previous date | 28-Mar-25 | 28-Mar-25 |
GREECE T-BILL AUCTION RESULTS: 13-Week GTB
Apr-29 09:13
| Type | 13-week GTB |
| Maturity | Aug 1, 2025 |
| Amount | E500mln |
| Target | E500mln |
| Previous | E500mln |
| Avg yield | 1.85% |
| Previous | 2.03% |
| Bid-to-cover | 1.78x |
| Previous | 1.91x |
| Previous date | Apr 02, 2025 |
FOREX: Greenback Firmer as Trump Team Look to Shift Focus to Taxes
Apr-29 09:13
- The greenback is firmer, reversing a small part of the minor losses posted into the Monday close. Flow remains a key driver for currency markets here, with price action yesterday consistent with flow drivers marked by month-end value date on Monday. Most corporate and rebalancing flow models point to USD buying for the end of April, which may be showing through in the price action so far Tuesday, given the minimal headline flow.
- Trump's schedule is pretty contained Tuesday, keeping focus on any reports concerning the progress of trade deals - as cabinet members continue to talk up the prospects of deals with Asian nations - and in particular India - which could be the first agreements to cross the line and avoid a return of sky-high tariffs.
- Treasury Secretary Bessent - seen as the most market-friendly member of Trump's cabinet met yesterday with several senior members of Trump's economic team to make the passage of tax legislation a top priority for the party. The meeting set July 4th as a key date going forward, the date by which the team look to achieve the tax overhaul and reset the public's view that this administration has a poor grasp on the economy.
- The USD is firmer against all others in G10, but CAD also trades well following the election results that show Carney's Liberals extending their time in office. EUR/CAD is holding below the 1.5800 handle, keeping the shallow bounce theme and raising the importance of 1.5668 support ahead.
- Event risk picks up Tuesday with the publication of April economic confidence data from the Eurozone and the advance trade balance release, JOLTS job openings for March and the latest consumer confidence data from the US. Central bank speak is still contained as the Fed remain inside their pre-meeting media blackout period. ECB's Villeroy and BoE's Ramsden are set to speak, however.
