- Forex today was mixed while risk sentiment flipped from one session to the next as Wall Street sulked lead by poor performances in the Health sector.
The upbeat tones from China faded out over time, despite the upside surprises across all data which gave a temporary lift to the Aussie and some much-needed support tot he kiwi following its CPI miss that sent the bird off a cliff.
U.S. data/ yields
We had some Fed speakers that included Bullard, again, repeating that the yield curve will continue to steepen as the economy continues to grow. Then, Harker argued for sustained growth and advocated an additional hike for 2019 and then another in 2020 – The chances of a Fed rate cut by December, implied by Fed fund futures, remained at 50%. Traders were awaiting the Fed’s Beige Book as the next gauge of the U.S. regional economic conditions. However, there were little changes from the slightly moderate growth pitch in the text. As for U.S. yields, the U.S. 10yr treasury yield climbed from 2.58% to 2.61% for another high this month while the 2yr yield ranged between 2.39% and 2.43%, tailing off towards the close.
Currency action (Analysts at Westpac summed up key moves from the G10 space)
- EUR/USD probed above 1.1320 then eased back to 1.1300, a touch higher over the day. GBP/USD was quiet in the mid-1.3000s.
- USD/JPY is flat on the day near 112.00.
- AUD/USD was unable to extend its bounce on the stronger China data, slipping back to 0.7175, unchanged on the day.
- NZD/USD preserved some of yesterday’s CPI-led losses, ranging overnight between 0.6705 and 0.6745.
- AUD/NZD was stable overnight around 1.0680, following yesterday’s NZ CPI-led jump to 1.0732 – the highest since November.
Key notes from US session:
Wall Street stocks wobble but DJIA technical picture stays bullish above pivot/bullish MAs
Key events ahead:
“In Australia today the employment data will dominate. We, like the market are predicting the unemployment rate will rise marginally to 5.0%, but we expect a slightly lower than consensus +10k for employment,” analysts at ANZ bank explained.