Aussie Soars, US Dollar Slides; JPY, EUR, GBP Rebound

Wall Street Stocks End Slightly Lower, Bond Yields Rally

Summary:

The Aussie Dollar (AUD/USD) soared 0.71% higher to 0.6707 from 0.6650 yesterday as risk appetite improved. Markets steadied following news that US regional lender First Citizens BancShares would acquire the failed Silicon Valley Bank.

A popular measure of the US Dollar’s value against a basket of 6 major currencies, the Dollar Index (DXY) slid 0.31% to 102.05 (102.25). Against the Japanese Yen, the Dollar slid to 130.85 (131.50).

Sterling rallied to 1.2342 from 1.2285 yesterday buoyed by comments from BOE Governor Andrew Bailey in a speech that interest rates may have to move higher if there were signs of persistent inflation pressure.

The Euro (EUR/USD) climbed 0.37% higher to 1.0845 in late New York from yesterday’s 1.0797. In overnight trade, the shared currency traded to an overnight and weekly high at 1.0849.

The Greenback lost ground against the Asian and EMFX currencies. The USD/SGD pair dipped 0.3% to 1.3273 (1.3285). Against the Thai Baht, the Dollar (USD/THB) slid to 34.22 from 34.30.

US Treasury Yields climbed with the benchmark 10-year rate settling at 3.57% from 3.51% yesterday. Other global bond yields rose. Germany’s 10-year Bund yield rose 6 basis points to 2.28%. The UK 10-year Gilt yield was up 9 basis points to 3.45%.

Economic data released yesterday saw Australia’s Retail Sales climb 0.2%, matching expectations. The BOJ’s Japanese Annual Core CPI fell to 2.7% from a previous 3.1%, and forecasts at 3.0%.

US Goods Trade Deficit climbed to -USD 91.6 billion from a previous -USD 91.1 billion. The US Conference Board Consumer Confidence rose to 104.2 from an upward revised 103.4. US Richmond Fed Manufacturing Index rose to -5 from a previous -16, beating estimates at -10.

• AUD/USD – The Aussie Battler soared on risk as risk on appetite combined with a broad based fall in the US Dollar. Overnight, the Aussie Battler soared to an overnight high at 0.6710 before dipping at the New York close to 0.6705. The overnight low was at 0.6654.
• EUR/USD – The shared currency rebounded against the US Dollar for the second day running, to settle at 1.0845 (1.0797 yesterday). In choppy trade, the overnight low traded was at 1.0792 while the high recorded was at 1.0849.
• USD/JPY – The Greenback slid against the Japanese Yen to 130.85 despite a rise in US bond yields. Broad based Dollar weakness outweighed other factors pressurising this currency pair. Overnight low traded was at 130.41 while the high recorded was at 131.29.
• GBP/USD – Sterling settled 0.4% higher against the US Dollar to 1.2342 from yesterday’s open at 1.2285. Hawkish comments from BOE Governor Andrew Bailey lifted the Pound. In choppy trade, the overnight high traded was at 1.2349. The low recorded was at 1.2281.

On the Lookout:

As we approach month end, expect traders to adjust their positions. Technical factors will impact the currencies. Economic data releases today will also impact FX.

Australia kicks off today’s economic calendar with its Annual February CPI report (y/y f/c 7.1% from a previous 7.4% - FX Street). Germany starts off Europe with its GFK Consumer Confidence for March (f/c -29 from a previous -30.5 – ACY Finlogix). France releases its March Consumer Confidence (f/c 81 from a previous 82 – ACY Finlogix). Switzerland is next with its March Economic Sentiment Index (f/c -8 from -12.3 – ACY Finlogix). The UK follows with its UK February Net Lending to Individuals (m/m f/c GBP 3.3 billion from GBP 4.1 billion – ACY Finlogix); UK February Consumer Credit (f/c GBP 0.52 billion from GBP 1.597 billion – ACY Finlogix). The US rounds up today’s economic data with its February Pending Home Sales report (m/m f/c -3% from 8.1%; y/y f/c -19% from -24.1% - ACY Finlogix). FOMC member Michael Barr is due to speak before the House Financial Services Committee in Washington DC.

Trading Perspective:

Ahead of the month end we can expect more volatility in FX. Technical factors will be the main influence with traders adjusting and squaring off positions. The Dollar remains on the back foot and will need some decent buying to prevent further falls. Data releases today will also impact FX.

• EUR/USD – The Euro has benefitted from the overall Dollar weakness, rallying to 1.0849 overnight highs before easing to 1.0845 in late New York. The shared currency maintains its bid heading into today’s trade. While there are no major European economic data releases, the EUR/USD pair will be driven by the Greenback. Immediate resistance today lies at 1.0850 followed by 1.0880. On the downside, look for immediate support at 1.0820 and 1.0790 (overnight low traded was at 1.0792). Likely range today 1.0780-1.0880. Trade the range.
• AUD/USD – The Aussie Dollar rebounded against the Greenback to finish at 0.6707 (0.6650). Expect more positions adjustments to impact AUD/USD trade today. Look for immediate resistance at 0.6710, 0.6740 and 0.6780 to cap. On the downside, immediate support can be found at 1.0825, 1.0795 and 1.0765. Look for another choppy session to this currency pair, Likely range today 0.6650-0.6730. Prefer to sell into Aussie Dollar strength.
• USD/JPY – Despite higher US bond yields, the Greenback slid against the Japanese Yen to 130.85 from 131.50 yesterday. For today look for immediate support at 130.40 and 130.10 to hold. On the topside, immediate resistance is found at 131.05, 131.35 and 131.75. Preference is to sell USD rallies.
• GBP/USD – The British Pound gained against the Greenback, finishing up 0.4% to 1.2342 against yesterday’s 1.2285. On the day, look for immediate resistance at 1.2350 to cap (overnight high traded was at 1.2349). The next resistance level is found at 1.2380. On the downside, look for immediate support at 1.2310 followed by 1.2280 and 1.2280. Expect more volatility in this currency pair today, likely range 1.2270-1.2370. Prefer to sell rallies.

Have a top trading day ahead all, happy Wednesday.

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