The USD slipped from recent highs but holds at 104.75. Yields cooled, but the 2/10 yr yield curve remains inverted by 83 bp as the 2-year yield eyed 5% yesterday. US Stocks closed positive (DOW +1.05%) which has helped lift Asian markets (Nikkei +1.56%) along with a positive spin on the new Chinese economic targets that are due to be announced on Sunday. Sentiment also got a lift from “Dovish” Fedspeak from Bostic who prefers “slow & steady” 25 bp rate hikes to limit recession risks. Overnight: NAB CEO says 3 more RBA rate hikes are possible and Kashkari & Waller continued to press the Hawkish stance. Japanese Unemployment declined to 2.4% and Tokyo area CPI slipped to 3.3% from 3.4%. Chinese Services PMI beat significantly at 55.00 from 52.9 last time.
- FX – USDIndex rallied to over 105.00 to 105.13, but has cooled to 104.70 now. EUR holds over 1.0600, but declined yesterday to 1.0575 following a hot EZ CPI reading and US Claims. JPY breached 137.00 but has declined to 136.40 now and flat for the week so far. Sterling was a weak performer yesterday declining into Monday’s low at 1.1925 and remains below the key 1.2000 trading at 1.1980 now.
- Stocks – The US markets rallied yesterday (+0.73% to +1.05%). Movers – #SI -57.72%, TSLA –5.85% & CRM +11.50%. US500 +0.76% (+29.96) 3981, US500 FUTS lower at 3975 now.
- Commodities – USOil – Futures tested to $78.50 yesterday and holds at $78.00 now, and up over 3.00 for the week. Gold – rallied again yesterday from $1830 support and trades at $1843 now.
- Cryptocurrencies – BTC – tanked overnight by as much as -6% as Coinbase (-1.5%) declined payments to or from Silvergate Capital (-57.72%). Tested under $22k today to $21.85k before recovering to $22.3k now.
Today – EZ/UK/US Composite & Services PMIs, US ISM Services, Speeches from Fed’s Logan, Bostic, Bowman, Barkin & ECB’s de Guindos.
Biggest FX Mover @ (07:30 GMT) AUDUSD (+0.36%). Rallied from a test into the 0.6700 zone yesterday to 0.6760 now. Wednesday’s 0.6780 high is next key resistance. MA’s aligned higher, MACD histogram & signal line positive & rising, RSI 59.30 & rising, H1 ATR 0.00112, Daily ATR 0.00752.
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Stuart Cowell
Head Market Analyst
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