FOREX: USD Trades on Firmer Footing, JPY Volatility Stands Out
May-22 17:08
- The US Dollar has traded in a more constructive manner Thursday, with the USD index rising around 0.35% as we approach the APAC crossover. This theme has been underpinned by an eventual more stable session for treasury yields, which have had a strong reversal lower from the week’s highest levels. Nominal 30Y yields are down 9-10bp from highs, rejecting the 2023 peak around 5.15% for now.
- The most notable moves in G10 FX were once again dominated by the volatile Japanese yen, which remains sensitive to both domestic headlines and the prevailing sentiment surrounding US assets. USDJPY received an early session boost to 144.40 on headlines related to the meeting between US Tsy Secretary Bessent and Japan FinMin Kato where they discussed a shared belief that exchange rates should be market determined.
- However, this sentiment was quickly faded, and subsequent headlines from BOJ’s Noguchi on not intervening in JGB bond markets and the initial twist steepening of the treasury curve prompted an impressive USDJPY selloff to session lows of 142.81. In another impressive swing, the subsequent flattening of the US curve prompted a relief recovery back to the 144 handle where spot has been consolidating.
- Separately, EUR weakness has stood out following weaker-than-expected German and Eurozone flash services PMIs. Price action has been uninspiring, however, EURUSD is down 0.5% on Thursday, with spot gravitating towards the 1.1275 mark, but still up over a big figure on the week. Single currency weakness also stands out against sterling, as EURGBP has also fallen around half a percent to trade below 0.8400 and close in on last week’s pullback lows located at 0.8394. GBPUSD has broadly respected a 1.3400-50 range, outperforming the likes of AUD and NZD which have adjusted lower in tandem with the broader greenback strength.
- New Zealand retail sales and Japan national CPI data are due in Friday’s APAC session. This will be followed by UK and Canadian retail sales, with US new home sales highlighting the US docket.
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US TSYS/SUPPLY: Review: Treasury 2Y Note Auction Tail
Apr-22 17:04
- Tsy futures retreat slightly (TYM5 -1 at 110-25) after the latest $69B 2Y note auction (91282CMY4) tailed: 3.795% high yield vs. 3.790% WI; 2.52x bid-to-cover vs. 2.66x prior.
- Peripheral stats has Indirect take-up falls to 56.18% from 75.77% prior, directs surge to 30.08% vs. 13.58% prior, primary dealer take-up 13.74% vs. 10.65% prior.
- The next 2Y auction is tentatively scheduled for May 27.
FED: US TSY 2Y NOTE AUCTION: HIGH YLD 3.795%; ALLOTMENT 77.99%
Apr-22 17:02
- US TSY 2Y NOTE AUCTION: HIGH YLD 3.795%; ALLOTMENT 77.99%
- US TSY 2Y NOTE AUCTION: DEALERS TAKE 13.74% OF COMPETITIVES
- US TSY 2Y NOTE AUCTION: DIRECTS TAKE 30.08% OF COMPETITIVES
- US TSY 2Y NOTE AUCTION: INDIRECTS TAKE 56.18% OF COMPETITIVES
- US TSY 2Y AUCTION: BID/CVR 2.52
US: White House Press Conference Underway Shortly
Apr-22 17:01
White House Press Secretary Karoline Leavitt is shortly due to brief reporters from the White House. LIVESTREAM
- At 16:30 ET 21:30 BST, President Donald Trump will participate in a White House ‘swearing-in’ ceremony for Securities and Exchange Commission chairman Paul Atkins, who formally assumed the seat yesterday.
- Trump said in a message on Truth Social after speaking with Israeli Prime Minister Benjamin Netanyahu earlier this afternoon: "The call went very well—We are on the same side of every issue," noting that the pair discussed "numerous subjects including Trade, Iran, etc."
- The Jerusalem Post reports that Trump is expected to meet with Qatari Prime Minister Mohammed bin Abdulrahman Al Thani during his Washington visit today. Al Thani is scheduled to meet with VP JD Vance and Middle East envoy Steve Witkoff to discuss Gaza ceasefire negotiations and Iran.
- Trump appears to be backing Defense Secretary Pete Hegseth, for now, amid another escalation in the controversy over his use of non-secure messaging services. NPR reported yesterday that the White House is looking to replace him. The White House rejected that report.
- NOTUS reports that some sources “are expecting more details about Hegseth’s conduct in the past month to come out this week.”
