Dollar Index Breaks Below 1.02; GBP Soars to 8-Week High

Euro Rallies, German Inflation Rises; USD/JPY Eases

Summary:

The Dollar Index (DXY), which measures the value of the US currency against a basket of 6 majors, broke below the 102.00 weekly support level to 101.77.

Easing US treasury yields pressurised the Dollar. The benchmark 10-year note was last at 3.55% (3.57%). In contrast, other global rates rose, narrowing the differentials. The Eurozone 10-year bond yield closed at 2.37%, against 2.33% yesterday. The Euro (EUR/USD) rallied 0.57% to 1.0907 (1.0847).

Sterling (GBP/USD) soared 0.6% to 1.2387 against the broadly based weaker US Dollar. The British Pound hovered just under the 1.2400 resistance level, not seen since late January.

Against the Japanese Yen, the Greenback eased to 132.54 from 132.75 weighed by easier US bond yields. The Australian Dollar (AUD/USD) climbed higher to 0.6710 (0.6675).

The US Dollar settled marginally lower against the Asian and Emerging Market currencies. The USD/CNH (Dollar-Offshore Chinese Yuan) eased to 6.8740 from 6.8800. USD/SGD (Dollar-Singapore Dollar) dipped to 1.3275 (1.3295).

Economic data released yesterday saw Australia’s Annual CPI ease to 6.8% from a previous 7.4%, and lower than estimates at 7.2%. German GFK Consumer Climate dipped to -29.5, matching forecasts.

UK Mortgage Approvals climbed to 44,000 from 40,000, higher than median estimates at 41,000.

UK Net Lending to Individuals dipped to GBP 2.2 billion from a previous GBP 4.1 billion.

The Eurozone March Preliminary CPI (y/y) rose to 7.8%, up from forecasts at 7.5%, but lower than the previous 9.3%. The US Q4 Core Personal Consumption Expenditure (q/q) rose to 4.4% from 4.3%.

US Final Q4 GDP dipped to 2.6% against forecasts at 2.7%, which was the previous figure. US Weekly Jobless Claims rose to 198,000 from a previous 191,000 and estimates at 196,000.

Wall Street stocks rebounded as risk appetite increased. The Dow settled 0.45% higher to 32,845 while the S&P 500 gained 0.51% to 4,052 (3,977).

• GBP/USD – The British Pound soared against the overall weaker Greenback to 1.2387 at the close of trade in New York, and yesterday’s 1.2345. Sterling failed to break above the 1.2400 resistance level, which was last seen in January this year. Overnight low was at 1.2293.
• EUR/USD – The shared currency extended its rally against the US Dollar, settling at 1.0907, up from yesterday’s 1.0847. In choppy trade, the overnight high traded was at 1.0927 while the overnight low recorded was at 1.0823. Higher Euro area bond yields supported the Euro.
• AUD/USD – The Aussie Battler gained ground against the Greenback, rallying 0.45% to 0.6710 (0.6675). A lift in the 10-year Australian bond yield to 3.35% from 3.29% yesterday supported the Battler. Overnight high traded was at 0.6719. Overnight low was at 0.6661.
• USD/JPY – Lower US yields weighed on the Greenback versus the Japanese Yen, which closed 0.25% lower to 132.54 from 132.75 yesterday. Overnight, the USD/JPY soared to a high at 132.97 before easing at the close. The overnight low recorded was at 132.20.

On the Lookout:

Today’s economic data calendar picks up as we close the month and finish the week. New Zealand kicks off with its ANZ Consumer Confidence for March (f/c 81.5 from 79.8 – ACY Finlogix). Japan follows next with its Headline Tokyo CPI for March (y/y f/c 3.2% from 3.4% - ACY Finlogix). Japanese March Core CPI follows (y/y f/c 3.1% from 3.3% - ACY Finlogix). Japanese February Unemployment Rate follows (f/c 2.4% from 2.4% - ACY Finlogix). Japan’s February Retail Sales report (m/m f/c 0.9% from 1.9%; y/y f/c 5.8% from 6.3%), and finally Japan’s February Industrial Production (m/m f/c 2.7% from -5.3%; y/y f/c -1.9% from -3.1%). Later on in the day, Japan releases its February Housing Starts (y/y f/c -0.5% from 6.6% - ACY Finlogix). Watch for these figures, the expectations are wide compared to the previous data.

Australia follows with its Australian February Private Sector Credit (m/m f/c 0.3% from 0.4%; y/y f/c 7.6% from 8.0%), Australian February Housing Credit (m/m f/c 0.2% from 0.3% - ACY Finlogix).

China releases its NBS March Manufacturing PMI (f/c 51.5 from 52.6 – ACY Finlogix); Chinese NBS March Non-Manufacturing PMI (f/c 54.9 from 56.3 – ACY Finlogix). Germany starts off Europe with its February Retail Sales report (m/m f/c 0.5% from -0.3%; y/y f/c -5.6% from -6.9%). The UK follows with its UK Current Account (f/c -GBP 17.6 billion from a previous -GBP 19.40 billion), UK Final GDP Growth Rate (q/q f/c 0% from -0.2%; y/y f/c 0.4% from 1.9%), UK March Nationwide House Prices (m/m f/c -0.3% from -0.5%; y/y f/c -2.2% from -1.1% - ACY Finlogix). Switzerland releases its February Retail Sales (m/m f/c 0.4% from 0.6%; y/y f/c -1.8% from -2.2% - ACY Finlogix). France follows next with its Preliminary March Inflation Rate (f/c 5.5% from 6.3% - ACY Finlogix). Germany is next with its March Unemployment Rate (f/c 5.5% from 5.5% - ACY Finlogix). Italy follows with its March Preliminary Inflation Rate (y/y f/c 8.2% from 9.1%).

Canada kicks off North America with its January GDP report (m/m f/c 0.3% from -0.1%).

The US rounds up today’s busy economic calendar with its February Personal Income (m/m f/c 0.2% from 0.6%), US Q4 Core Personal Consumption Expenditures (q/q 4.4% from 4.3% - FX Street), US Weekly Jobless Claims (f/c 198K from a previous 191K – ACY Finlogix) and US Annualised Q4 GDP (f/c 2.6% from a previous 2.7% - FX Street), US Chicago March PMI (f/c 43.4 from 43.6 – ACY Finlogix), and finally US Michigan Final Consumer Sentiment (f/c 63.2 from 67 – ACY Finlogix).

Trading Perspective:

The Dollar lost ground as risk appetite improved and equities settled higher. The US 10-year treasury bond yield dipped to 3.55% from 3.57%. Which contrasted with a rise in rival global bond rates. Germany’s 10-year Bund yield rallied 4 basis points to 2.37%. With the rate differentials narrowing, the US Dollar lost ground against its Rivals.

Today’s economic calendar is a busy one and we can expect a choppy finish to the week. Position adjustments on the day should limit the US Dollar’s downside. Keep the established ranges in mind and get ready to trade the recently established ranges.

• EUR/USD – The shared currency has had a good week, rallying for the 4th day running. Broad-based US Dollar weakness and higher than expected Eurozone March Preliminary Inflation data supported the shared currency. On the day, look for immediate resistance at 1.0925 to cap any rallies. The next resistance level can be found at 1.0950 followed by 1.0980. Immediate support lies at 1.0875, 1.0855 and 1.0825. Look for further choppy trade in a likely range today of 1.0850-1.0950. Prefer to sell rallies.
• GBP/USD – Sterling soared against the Greenback to settle at 1.2387 from 1.2345, just shy of the 1.2400 resistance level. Overnight high traded was at 1.2394. The next resistance level can be found a 1.2430. On the downside, look for immediate support at 1.2350, 1.2320 and 1.2290. Look for another choppy day on the British Pound, likely range 1.2300-1.2400.
• AUD/USD – The Aussie Battler extended its rally against the US Dollar, settling 0.45% higher to 0.6710. Overnight the AUD/USD pair saw a high at 0.6719. Which puts today’s immediate resistance at 0.6720. The next resistance level is found at 0.6750 followed by 0.6780. On the downside look for immediate support at 0.6680, 0.6650 and 0.6620. Expect another roller coaster day on the Aussie, likely range 0.6650-0.6750. Sell rallies.
• USD/JPY – Against the Japanese Yen, the Greenback dipped to 132.54 from 132.75 as US bond yields eased. Look for immediate support at 132.20 (which was the overnight low traded) and 131.90 to hold. Immediate resistance can be found at 132.85 followed by 133.05 and 133.35. Look for another choppy trading session in USD/JPY today with a likely range of 132.10-133.10. Prefer to buy dips on the day.

Happy Friday and trading all, and a top weekend ahead.

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