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  • It was a relatively normal day in the land of FX, following a hawkish tilt from Powell the prior session which lent support to the dollar, weighed on EM-FX and Commodity-FX.

The greenback found reprieve from Powell’s presser on the basis that the Fed’s view is that the low inflationary spell is transitory. The DXY ranged on the bid between 97.58/85 while US yields rose, with the 10yr treasury yield climbing from 2.50% to 2.56%, and the 2yr yield rising from 2.31% to 2.35%. Analysts at Westpac noted that the chance of a Fed rate cut by December, implied by Fed fund futures, decreased from 70% to 65%.  

As for data, US durable goods orders were in focus, although were revised down in March albeit holding in positive grounds at 2.6% monthly. Today’s nonfarm payrolls will be the highlight though and likely to be the last catalyst left for the week in what is looking to be a quiet Asian session ahead.

Currency action

Meanwhile, analysts at Westpac offered a summary of the price action from overnight as follows:  

 

  • EUR/USD fell from near 1.1220 to 1.1175.  
  • USD/JPY was range-bound in the mid-111s.
  • AUD/USD fell from 0.7030 to a low of 0.6995, in line with broad USD gains in London trade.  
  • NZD fell from 0.6640 to 0.6608.  
  • AUD/NZD slipped from 1.0595 to 1.0575.

WTI  bulls capitulate

As for the commodity space, oil was a big mover:  WTI bulls capitulated, bearish continuation wedge starting to play out (long term play) – $51.64 price target

“President Trump has put pressure on Saudi Arabia to make up the shortfall, despite it being part of the production cut agreement. That agreement will be a discussed at the upcoming OPEC meeting, with the market becoming increasingly confident it will not be extended.  We see this as unlikely, with Saudi Arabia keen to avoid the mistake it made last year, when it raised output ahead of Iran sanctions, only for the US to offer waivers and oil prices subsequently collapsed,”

Analysts at ANZ Bank explained.

Key notes from U.S. session:

  • Wall Street bears taking back control following Powell’s hawkish twist to Wed’s FOMC meeting

Key events ahead:

  • Non-Farm Payrolls: ADP and ISM point in different directions