23 April: Soaring US yields underpin the US$, sends stocks lower. ECB – Thursday; Flash PMIs today.

By | April 23, 2018

 

Surging Treasury yields (US 10Y @2.96%) ensured that the broad-based dollar rally continued on Friday, while at the same time putting downside pressure on stock markets and commodities. The dollar index (DXY) finished the day up 0.5% and we could see further gains this week, particularly against the Euro given the long positioning of the market. It would seem that the Euro is in danger of moving sharply lower, with the ECB meeting coming up on Thursday, where no changes to monetary policy or the wording are expected amid soft inflation and slowing growth. Sterling continued to trade in heavy fashion on Friday, after BOE Governor Mark Carney signalled that the Bank may not raise interest rates in May because economic data was “mixed”, while the commodity bloc currencies were also lower and appear set to remain so. The Aud$ has recently enjoyed the rally in the industrial metals but then suffered from disappointing employment data and, along with the Kiwi, it came under further pressure from the rising US yields on Thursday/Friday. Stocks ended Friday down by around 0.8%, as did Gold/Silver, while WTI was choppy but pretty much unchanged from the Thursday close.

It will be a busy week ahead, highlighted by Interest Rate Decisions from the ECB and the BOJ. Monday will focus on the flash PMIs, while Tuesday will get off to a busy start, with the Australian CPI, to be followed later in the day by the German IFO Business Climate/Expectations and then the US New Home Sales data. Wednesday will be quiet but Thursday, apart from the ECB, will look to the US Durable Goods Orders, while Friday will see the BOJ as well as the UK and the US Q1 Preliminary GDP and the US Personal Consumption/Expenditure. Have a good week.

CURRENCIES
EURUSD: 1.2287
Res  1.2315  1.2350  1.2375
Sup  1.2260  1.2240  1.2215
USDJPY: 107.63
Res  107.85  108.10  108.30
Sup  107.50  107.25  107.00
GBPUSD: 1.4003
Res  1.4035  1.4060  1.4090
Sup  1.4000  1.3965  1.3935
USDCHF: 0.9746
Res  0.9765  0.9800  0.9815
Sup  0.9725  0.9705  0.9690
AUDUSD: 0.7669
Res  0.7690  0.7715  0.7735
Sup  0.7655  0.7635  0.7610
NZDUSD: 0.7207
Res  0.7225  0.7245  0.7275
Sup  0.7200  0.7185  0.7155
INDICES / COMMODITIES
S&P: 2670
Res  2685  2700  2715
Sup  2660  2645  2625
DJI: 24430
Res  24600  24700  24800
Sup  24350  24200  24100
ASX SPI: 5835
Res  5850  5865  5885
Sup  5825  5810  5790
XAUUSD: 1336
Res  1345  1350  1355
Sup  1335  1330  1325
XAGUSD: 17.12
Res  17.35  17.50  17.75
Sup  17.05  16.90  16.70
WTI: 68.00
Res  68.90  69.55  70.00
Sup  67.50  67.00  66.25