The strongest to the weakest of the major currencies
The NZD is the strongest and the JPY is the weakest as the NA session begins. The USD is mixed with modest gains vs the EUR, GBP, JPY and CHF, and declines vs the AUD and NZD. The JPY is testing the 200 day MA again at 137.06. Earlier this month the price moved above that MA for a day, but failed the next trading day. The high price it today reached 137.168 but has moved back lower and currently trades right at 137.00.
USDJPY trades above and below the 200 day moving average
In Europe, the CPI data came in as expected this morning but still at 7% for the headline and 5.6% for the core measure. Both are still well ahead of the targets.
On the US debt ceiling talks, President Biden has truncated an overseas trip (returning on Sunday from Wednesday previously) to participate in further negotiations on raising the debt ceiling. The President and House Speaker Kevin McCarthy emerged from a crucial meeting with a cautiously optimistic tone, suggesting a possible agreement by the end of the week.
BOE Governor Andrew Bailey in a speech today said that things are looking a little more brighter than a few months ago. His comments highlight that the UK economy is expected to experience modest, but positive growth. He notes that the economy has shown greater resilience than anticipated. However, inflation has also been higher than expected. Bailey expresses confidence that inflation will fall sharply in the coming months, starting with the April data release. He emphasizes that the risks to inflation are primarily skewed to the upside. Despite these challenges, Bailey reiterates the Bank’s unwavering commitment to maintaining a 2% inflation target.
In the housing market, April’s data for housing starts and building permits is due for release at 8:30 AM. A recent decrease in mortgage rates has potentially stimulated demand, but the overall revival of housing activity remains uncertain (est for Building permtst 1.437M vs 1.430M last month and starts est 1.400M). In the weekly US mortgage market date release earlier today, there has been a decline in mortgage refinance activity, with the Refinance Index moving lower while the Purchase Index, which measures mortgage applications for home purchases, decreased from 173.7 to 165.4. The overall Mortgage Market Index also saw a decline from 227.8 to 214.9. Mortgage applications fell -5.7% compared to the previous week’s increase of 6.3% with the average 30-year mortgage rate increasing to 6.57% from the previous week’s rate of 6.48%. These figures indicate a cooling in mortgage activity for the week.
After the close in the Asian Pacific session, key data will be released. New Zealand will publish the PPI Input quarter-on-quarter, projected to be at 0.5%, and the PPI Output quarter-on-quarter, anticipated at 0.8%. Japan will release its Trade Balance figures, with an expected deficit of -1.08 trillion yen. Then, at 9:30 pm ET, Australia will report the Employment Change for the month, forecasted at 24.8 thousand jobs added, and the Unemployment Rate, expected to remain at 3.5%. Finally, at 10:00 pm, New Zealand will have its Annual Budget Release. These data releases provide insights into various aspects of the economies in the Asian Pacific region.
Oil prices are fluctuating following an unanticipated increase in U.S. crude stockpiles, contradicting expected drawdowns. However, drops in gasoline and distillates inventories indicate improving demand ahead of summer, mitigating potential losses.
U.S. stock futures showed modest gains from the futures in the premarket as investors react to the debt ceiling optimism. Also, Target earnings came in better with EPS at $2.05 vs $1.76 estimate and Revenues at $25.32 vs $25.29B est. TJX earnings were mixed (beat on EPS, short on revenues). Home Depot lowered its forecast after weak sales yesterday. Walmart is set to report its results later in the week. The gains today erase some of the declines from trading yesterday. Government bond yields rose yesterday but the yields are mostly modestly lower today. The US treasury will auction off 20 year notes later today.
A snapshot of the markets are showing:
- Gold is down $0.86 or -0.05% at $1987.
- Silver is down $0.03 or -0.13% at $23.68
- Crude oil is up $0.22 or 0.31% at $71.07
- Bitcoin is trading lower at $26,618. The high price was at $27,243. The low was at $26,550
in the premarket for US stocks, the major indices are higher after yesterday’s declines:
- Dow Industrial Average is up 125 points after yesterday’s -336.46 point decline
- S&P up 14 points after yesterday’s -26.3 point decline
- NASDAQ index is up 38 points after yesterday’s -22.16 point decline
In the European equity market, the major indices are mixed:
- German DAX +0.35%
- Frances CAC -0.04%
- UK’s FTSE 100 -0.12%
- Spain’s Ibex +0.08%
- Italy’s FTSE MIB -0.18%
In the US at that market, yields are lower:
- 2 year yield 4.067% -0.6 basis points
- 5 year yield 3.506%, -1.5 basis points
- 10 year yield 3.517%, -3.2 basis points
- 30 year yield 3.835% -3.7 basis points
In the European debt market, the benchmark 10 year yields are lower:
Europe yields are lower