It has been a good day for the US$, which has extended its broad based rally, helped along by surging US treasury yields, which saw the 10 year hit a high of 2.99%. The dollar index (DXY) had its best close since January, with speculative positions caught with the largest aggregate short dollar position since 2011. The Yen has been the weakest of the currencies, but followed closely by the Aud and the Kiwi, which have both made new 2018 lows. Stocks are mixed and have ended mostly unchanged after a choppy, sideways session, while the metals are lower, under pressure from the stronger dollar. Gold is down around 0.9%, while Silver was hit hard, losing about 3.2%. WTI had a choppy day too, initially heading lower before a sharp reversal late in the day, to finish near the high of 69.00 pb and looking as though 70+ is not so far away. Middle East tensions, this time between Saudi/Yemen underpinned the price, through the day.
In terms of data, the EU PMI manufacturing dropped to 56.0 in April, down from 56.6, missing expectations of 56.1. The EU PMI services rose to 55.0, up from 54.9 and beat expectation of 54.6 while the composite PMI was unchanged at 55.2. The German manufacturing PMI dropped to 58.1, down from 58.2 and beat expectation of 57.5. The German services PMI rose to 54.1, up from 53.9 and beat expectation of 53.7. PMI composite rose to 55.3, up from 55.1. Markit noted that “the data show the economy making a solid start to the second quarter.”
The initial focus of the day will be on the Australian Q1 CPI (exp 0.5%qq, 2.0%yy, Trimmed Mean; 0.5%qq, 1.8%yy) although there will be little else from Asia. Europe will look to the April IFO for guidance (exp Business Climate; 1.04, Current Assessment; 124, Expectations; 101.4), while the UK March Public Sector Net Borrowing Requirements is also due (exp £ 2.05 bio). The US session will see the release of the Case Shiller House Price Index (exp 6.2%), the March New Home Sales and the Feb House Price Index and finally the Richmond Fed Mfg Index. WTI traders will look out for the API Weekly Crude Oil Stock Inventory. Have a good day.
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