The US trading day started with all the major currency pairs (with the exception of the USDJPY) having less than 30 pip ranges. The day is ending with the GBPUSD, AUDUSD and NZDUSD all below 30 pips.
- The USDCAD did reach 31 pips.
- The USDJPY range was at 42 pips at the start of the US session and stayed the same through the US session.
- The EURUSD did extend from 27 pips to 40 pips.
The USDCHF was the biggest mover with a range of 63 pips as it broke to the upside and found momentum buying from traders. Although the SNB and the US Fed is set to meet this week (both expected to keep rates unchanged), there was no real news that kickstarted the rise.
However, yields did rise in the US perhaps in anticipation of a less dovish Fed (?). Technicals did play a role as well as the USDCHF’s rise based near the 200-day MA and later broke above the high from Friday/last week at 0.88524 leading to more technical buying. The run to the upside is testing the high from February at 0.8885 going into the end of day. The March high is not far away at 0.8893 (see chart below).
The run in the CHF (to the downside) was mirrored vs the other major currencies as the CHF is ending the day as the weakest of the major currencies. The CAD and the USD are ending the day as the strongest of the majors.
The new trading day will usher in the first two of what will be 5 central bank decision. Both the Bank of Japan and the Reserve Bank of Australia will announce in the new trading day.
The Bank of Japan (BOJ) is set to make a significant shift in its monetary policy, which includes ending yield curve control, stopping the purchase of risk assets, and moving away from negative interest rates. More specifically:
- A potential change includes raising the short-term policy rate target from minus 0.1% to between zero and 0.1%, moving away from the negative rate imposed since 2016 to encourage lending.
- The BOJ plans to eliminate yield curve control, a policy since September 2016, which involved buying large amounts of Japanese government bonds (JGBs) to control short-term and long-term yields. This policy led the BOJ to hold more than half of all outstanding JGBs.
- While the BOJ will continue purchasing some JGBs to prevent spikes in bond yields, it will stop its rate suppression activities and remove the 1% cap on the 10-year yield, allowing it to fluctuate with market conditions.
- The bank will also end purchases of Japanese stock exchange-traded funds (ETFs) and real estate investment trusts (REITs), which started in 2010 and significantly expanded under subsequent BOJ leadership.
Meanwhile, the RBA is expected to keep rates unchanged. The market is looking for a cut but not until September (see post here for more details and expectations).
The AUD was mostly, but modestly higher vs most of the major currencies. The JPY is ending little changed/mixed.
In the US stock market today, major indices closed higher:
- Dow Industrial Average rose 75.66 points or 0.20% at 38790.44
- S&P rose 32.33 points or 0.63% at 5149.43
- Nasdaq index rose 130.28 points or 0.82% at 16103.46.
Nvidia shares had a volatile day and closed higher by $6.18 or 0.70% but was up $45.68 points at session highs.
Other mover included:
- Apple, up 0.65%
- Alphabet +4.6%
- CrowdStrike, +1.71%
- Meta Platform, +2.66%
- Salesforce, +2.10%
- Caterpillar +1.42%
- Tesla, +6.25%
- Palo Alto Network +1.09%
In the US debt market, yields are higher with the 2 and 10 year yields moving higher for the 5th consecutive day:
- 2 year yield, 4.736%, +1.1 basis points
- 5-year yield, 4.345%, +2.1 basis points
- 10-year yield, 4.326%, +2.2 basis points
- 30 year yield, 4.450%, +2.2 basis points
Crude oil is trading up $1.14 or 1.41% at $82.19. The price is trading at the highest level since November 3rd and is above the 50% midpoint of the move down from the September 2023 high at $81.37.
Gold is up $4.24 or 0.20% at $2159.99.
Bitcoin is staying below its falling 100-hour MA currently at $68,064, but needs to get and stay below the 38.2% of the move up from the February 24 low. That retracement level comes in at $64.927 (see video on the technical driving the digital currency by clicking here).