US Stocks Soar; Bond Yields Climb; Dollar Ends Mixed

AUD Steadies, USD/JPY Rallies; Euro Dips, GBP Up

Summary:

Wall Street stocks soared as risk sentiment improved on improved earnings reports. The DOW gained 1.4% while the S&P 500 surged 1.8%. US Treasury Bond yields rose.

The benchmark 10-year US bond rate climbed 8 basis points to 3.52%. Other global yields rose. The Dollar finished mixed. The Euro (EUR/USD) dipped to 1.1027 from 1.1043 yesterday.

Sterling (GBP/USD) though, edged higher to 1.2497 (1.2470). Risk leader, the Australian Dollar rallied to 0.6627 (0.6605). New Zealand’s Kiwi (NZD/USD) was up 0.4% to 0.6145 (0.6117).

Ahead of today’s Bank of Japan meeting, the first for incoming Governor Ueda, the USD/JPY pair rose to 133.92 from 133.50 yesterday. Rising US bond yields boosted the Greenback against the Yen.

The Dollar Index (USD/DXY), a popular measure of the Greenback’s value against a basket of 6 major currencies finished little changed, at 101.05 (101.03 yesterday).

Against the Asian and Emerging Market currencies, the US Dollar was mixed. USD/CNH (Dollar-Offshore Chinese Yuan) dipped to 6.93 from 6.94 yesterday. The USD/THB pair was flat at 34.10.

Economic data released yesterday saw Australia’s Import Prices slide -4.2% q/q against expectations of +0.4%. In Europe, Spain’s Unemployment Rate rose to 13.3%, up from a previous 12.9%.

The Advance Estimate of US GDP (q/q) fell to 1.1%, lower than expectations at 2%. The previous quarter’s GDP was adjusted down to 2.6% from 2.9%. The US Advance GDP Price Index though rose to 4% from a previous upward adjusted 3.9%, and higher than estimates of 3.7%.

Claims for Unemployment benefits from US workers fell to 230,000 from 246,000 previously. US Pending Home Sales slumped 5.2% in March, against expectations of a 0.6% gain.

USD/JPY – The Dollar rallied against the Japanese Yen to 133.92 following two days of losses. The USD/JPY pair soared to an overnight high at 134.20. In choppy trade, the overnight low recorded was 133.09. The Bank of Japan meets on policy today, the first for incoming Governor Ueda.EUR/USD – The shared currency eased modestly against the Greenback to 1.1027 from yesterday’s open at 1.1043. Overnight, the Euro slumped to a low at 1.0992 before rallying at the close. In choppy trade, the high recorded overnight was 1.1064.AUD/USD – Risk-on lifted the Aussie Battler 0.3% against the Greenback to 0.6627 from yesterday’s 0.6605. The overnight high recorded was at 0.6635 as risk appetite improved. The overnight low traded was at 0.6595.GBP/USD – Sterling grinded higher to 1.2497 from 1.2470 yesterday. The British Pound traded to an overnight high at 1.2499, just under the 1.2500 resistance level. In choppy trades of its own, the overnight low recorded was at 1.2436.

On the Lookout:

Economic data picks up today as we close the work week. Japan kicks off today’s reports with its April Tokyo Headline and Core CPI (headline f/c 3.1% from 3.3%; core f/c 3.2% from 3.2% - ACY Finlogix), Japanese March Unemployment Rate follows (f/c 2.5% from 2.6% - ACY Finlogix), Japanese March Industrial Production (m/m f/c 0.5% from 4.5% - ACY Finlogix); Japanese Retail Sales (y/y f/c 5.8% from 6.6% - ACY Finlogix.

Australia follows with its PPI (q/q f/c 0.8% from 0.7%) and Private Sector Credit (m/m f/c 0.3% from 0.3%).

The Bank of Japan is expected to keep its Policy Rate unchanged at -0.1% at the conclusion of it meeting today. Traders will focus on the remarks of new Governor Ueda.

France starts off European data with its Flash GDP (q/q f/c 0.2% from 0.1%; y/y f/c 0.3% from 0.5% - ACY Finlogix).

The UK follows with its April Nationwide Housing Prices (m/m f/c 0.4% from -0.8%; y/y f/c -3.5% from -3.1% - ACY Finlogix).

Switzerland releases its March Retail Sales (y/y f/c 0.7% from 0.3%). France releases its April Inflation Rate (y/y f/c 5.7% from 5.7% - ACY Finlogix).

Germany follows with its April Unemployment Rate (f/c 5.6% from 5.6% - ACY Finlogix), German Flash GDP (q/q f/c 0.2% from -0.4%; y/y f/c 0.3% from 0.9% - ACY Finlogix).

The Eurozone releases its Flash GDP Estimate (q/q f/c 0.2% from 0%; y/y f/c 1.4% from 1.8%), German April Inflation Rate (m/m f/c 0.6% from 0.8%; y/y f/c 7.3% from 7.4% - ACY Finlogix).

Canada kicks off North America with its March GDP estimate (m/m no f/c, previous was -0.2%).

Finally, the US releases its March Core PCE Price Index (m/m f/c 0.3% from 0.3% - ACY Finlogix), March Personal Income (m/m f/c 0.2% from 0.3% - ACY Finlogix) and March Personal Spending (m/m f/c -0.1% from 0.2% - ACY Finlogix) and Chicago April PMI (f/c 43.5 from 43.8 – ACY Finlogix).

Trading Perspective:

A huge day in terms of economic data releases will keep markets choppy.

The US Dollar closed mixed against its Rivals with the DXY (Dollar Index) sidelined.

All eyes will be focused today on the Bank of Japan’s meeting with the debut of Governor Ueda.

The BOJ press conference following the meeting will be closely scrutinized.

The volatility in the USD/JPY pair will impact the other FX pairs.

Coming on a Friday, we can expect the traditional end of week fireworks in FX land. Happy days!.

EUR/USD – The shared currency eased against the US Dollar to 1.1027 following its close at 1.1045. Traders lifted the shared currency to an overnight high at 1.1064. Look for immediate resistance today at 1.1045 followed by 1.1065 and 1.1095. Immediate support can be found at 1.0990 (overnight low traded was 1.0992). The next support level is found at 1.0960. Likely range today 1.0980-1.1050. Topside looks limited with further downside tests possible.AUD/USD – Risk-on lifted the Aussie Dollar to a 0.6627 finish, up from 0.6605 yesterday. The Aussie Battler climbed to an overnight high at 0.6635 which is today’s immediate resistance. The next resistance level can be found at 0.6665 and 0.6695. On the downside, look for immediate support at 0.6600 (overnight low was 0.6595). The next support level lies at 0.6570. Look for further choppy trade in a likely range today of 0.6575-0.6635. Sell rallies.USD/JPY – We could be in for a volatile session today. The BOJ is not expected to change its discount rate at the conclusion of its monetary policy meeting. However, markets will be looking for comments from new Governor Ueda as well as the updated BOJ economic projections. The Dollar settled at 133.92 at the close of trade. Immediate resistance lies at 134.20 (overnight high). The next resistance level is found at 134.50. Immediate support can be found at 133.60, 133.30 and 133.00. Likely range 133.00-134.30. Trade the range. (Source: Finlogix.com)GBP/USD – The British Pound edged 0.22% higher against the Greenback to 1.2497 against 1.2470 yesterday. Look for immediate resistance for Sterling at 1.2500 followed by 1.2540. On the downside, immediate support can be found at 1.2465 and 1.2435. Sterling’s topside should be limited today unless the US Dollar weakens anew. Expect another volatile session in the British currency with a likely range of 1.2420-1.2520. Look to sell rallies, tin helmets on.

Happy Friday and trading all. A top weekend ahead.

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