16 May: Surging US yields send the dollar higher; stocks, gold lower. Australian WPI coming up shortly. EU CPI later

By | May 16, 2018

 

Stocks fell for the first time in 8 sessions, while the US$ rose to a new 2018 high  against its major counterparts, underpinned by surging bond yields (US10Y: 3.07%) and economic data pointing to underlying strength in the US economy, increasing the chances of a fourth Fed rate hike in 2018. The DXY is now at 93.25, having been up to 93.46 during the session. The US Retail Sales Control Group were in line with expectations, up 0.4%, while the figure for March was revised higher to 0.8%. Earlier in the day, the Euro came under pressure after more soft EU data, with the GDP and Industrial Production missing expectations.

The EM selloff (ARS, TLR) is spreading, with longstanding carry trades trapped and unable to cut positions without heavy losses. The Kiwi is caught in the fallout from the EM move and today broke a multi-year uptrend support line. The other major mover on the day was Gold, which fell by 2.1% after coming under pressure from the stronger dollar and bond yields. WTI was unchanged.

Wednesday will begin with the NZ April Credit Card Spending and the Australian Q1 Wage Price Index, along with the Japanese Preliminary Q1 GDP, Capacity Utilisation and Industrial Production for March. The main event in Europe will be the German/EU CPI (German; exp 0.0%mm, 1.6%yy; HICP, exp 1.4%yy, EU exp 0.3%mm, 1.2%yy; Core, exp 0.2%mm 0.7%%yy). That aside, the ECB Non-Monetary Policy will be taking place and Mario Draghi will also be speaking. The US will look to the April Building Permits, Housing Starts, Industrial Production and Capacity Utilisation for guidance along with speeches from the Fed’s Bostic and Bullard. The SNB’s Jordan and the ECB’s Coeure are also on the agenda.

CURRENCIES
EURUSD: 1.1840
Res  1.1875  1.1900  1.1930
Sup  1.1820  1.1800  1.1780
USDJPY: 110.31
Res  110.50  111.00  110.80
Sup  110.15  110.00  109.80
GBPUSD: 1.3506
Res  1.3530  1.3550  1.3575
Sup  1.3485  1.3450  1.3425
USDCHF: 1.0009
Res  1.0040  1.0055  1.0070
Sup  0.9990  0.9975  0.9955
AUDUSD: 0.7473
Res  0.7485  0.7505  0.7525
Sup  0.7450  0.7430  0.7410
NZDUSD: 0.6861
Res  0.6900  0.6925  0.6950
Sup  0.6850  0.6825  0.6800
INDICES / COMMODITIES
S&P: 2709
Res  2720  2740  2765
Sup  2700  2680  2650
DJ30: 24662
Res  24765  24875  24975
Sup  24600  24455  24320
SPI200: 6093
Res  6110  6135  6155
Sup  6085  6070  6050
XAUUSD: 1291
Res  1295  1300  1305
Sup  1285  1280  1275
XAGUSD: 16.25
Res  16.40  16.55  16.75
Sup  16.20  16.05  15.90
WTI: 70.97
Res  71.85  73.00  74.00
Sup  70.00  69.00  68.00