Technical Analysis

As the NA session begins the AUD is the strongest and the JPY is the weakest

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As the North American session begins the AUD is the strongest and the JPY is the weakest. The USD is mixed/little changed vs the major currencies.

Once again, the low to high trading ranges coming into the US session are limited with the exception of the JPY which has an 82 pips trading range and trades near session highs after dipping earlier in the Asian Pacific session. The EURUSD range is 22 pips and that was only due to a move higher in the last hour of trading. The GBPUSD is 30 pips, USDCHF is 20 pips, USDCAD is only 13 pips, AUDUSD is 18 pips and NZDUSD is 25 pips. There is room to roam.

In Japan, helping to underscore the JPYs weakness were comments from Bank of Japan (BOJ) Governor, Kazuo Ueda, who emphasized the importance of monitoring the emergence of a positive wage-inflation cycle as a key factor in determining the timing for phasing out the central bank’s stimulus measures. Ueda highlighted this year’s wage negotiations as a critical element in deciding when to exit from the stimulus, indicating that the BOJ will closely scrutinize the outcomes of these talks along with other data before making any policy decisions. He also mentioned the possibility of tweaking negative interest rates, yield curve control (YCC), and other monetary easing tools if there is a sustained achievement of the bank’s price target.

However, Ueda’s comments suggest he is not in a hurry to implement major changes, pointing out the need for patience. Additionally, Japanese Prime Minister Kishida expressed his hope that the BOJ’s monetary policy decisions will consider the government’s policy stance, highlighting the alignment between the government and the central bank as they navigate the transition. The situation now hinges on whether the BOJ will make a decisive move in the near term or delay its decision. The BOJ next meets next week.

The US and Canada economic calendar today is void of any major economic release. The weekly oil inventory data will be released with crude oil expected to show a:

  • Build of 1.338M.
  • Gasoline stocks are expected a draw of -1.900M, and
  • Distilates are expected to be little changed with a draw of -0.150M.

The private data released late yesterday showed:

At 1 PM ET, the U.S. Treasury will auction off 30-year bonds. Yesterday the 10 year note auction was not too great with bid to cover less than the average, a positive tail of 0.9 basis points, and low international demand. On Monday, the three year note auction was met with solid demand.

Economic data out of the UK and the EU today was mixed.

GBP Goods Trade Balance:

  • Actual: -£14.5B
  • Forecast: -£14.9B
  • Previous: -£14.0B
  • Summary: BETTER (smaller deficit) than the forecast but WORSE (larger deficit) than the previous.

GBP Index of Services 3m/3m:

  • Actual: 0.0%
  • Forecast: 0.0%
  • Previous: -0.2%
  • Summary: MET the forecast and was HIGHER than the previous.

GBP Industrial Production m/m:

  • Actual: -0.2%
  • Forecast: 0.0%
  • Previous: 0.6%
  • Summary: LOWER than the forecast and LOWER than the previous.

GBP Manufacturing Production m/m:

  • Actual: 0.0%
  • Forecast: 0.0%
  • Previous: 0.8%
  • Summary: MET the forecast but was LOWER than the previous.

Italian Quarterly Unemployment Rate:

  • Actual: 7.4%
  • Forecast: 7.3%
  • Previous: 7.6%
  • Summary: HIGHER than the forecast but LOWER than the previous.

EUR Industrial Production m/m:

  • Actual: -3.2%
  • Forecast: -1.8%
  • Previous: 1.6%
  • Summary: LOWER than both the forecast and the previous.

A snapshot of the markets as the North American session begins currently shows:

  • Crude oil is trading up $1.13 or 1.46% at $78.71. At this time yesterday, the price was at $7.94
  • Gold is trading up $5.24 or 0.24% at $2162.90. At this time yesterday, the price was at $2171.81
  • Silver is trading up $0.16 or 0.68% at $24.27. At this time yesterday, the price was at $24.37
  • Bitcoin currently trades at $73,160. The price reached a new all-time high at $73,679. At this time yesterday, the price was trading at $72,146

In the premarket, the major indices are trading mostly higher. Yesterday the S&P closed at a new record high. The NASDAQ index closed around nine points shy of its all-time high closing level at 16274.94

  • Dow Industrial Average futures are implying a gain of 52.51 points. Yesterday, the index rose 235.83 points or 0.61% at 39005.50
  • S&P futures are implying a gain of 4.48 points. Yesterday, the index rose 57.35 points or 1.12% at 5.75.28
  • Nasdaq futures are unchanged. Yesterday, the index rose 246.36 points or 1.54% at 16265.64

In the European equity markets, the major indices are trading higher.

  • German DAX, +0.04%
  • France CAC , +0.54%
  • UK FTSE 100, unchanged
  • Spain’s Ibex, +1.44%
  • Italy’s FTSE MIB, +0.57% (delayed by 10 minutes).

Shares in the Asian Pacific markets were mixed:

  • Japan’s Nikkei 225, -0.26%
  • China’s Shanghai Composite Index, -0.40%
  • Hong Kong’s Hang Seng index, -0.07%.
  • Australia S&P/ASX index, +0.22%

Looking at the US debt market, yields are marginally higher after rising yesterday post the US CPI data:

  • 2-year yield 4.615%, +1.7 basis points. At this time yesterday, the yield was at 4.450%
  • 5-year yield 4.175%, +2.1 basis points. At this time yesterday, the yield was at 4.088%
  • 10-year yield 4.180% +2.5 basis points. At this time yesterday, the yield was at 4.086%
  • 30-year yield 4.339% +2.8 basis points. At this time yesterday, the yield was at 4.244%
  • The 2-10 year spread is at -44 basis points. At this time yesterday, the spread was at -46.6 basis points
  • The 2-30 year spread is at -27.8 basis points. At this time yesterday, the spread was at -30.8 basis points

European benchmark 10-year yields are minor:

This article was written by Greg Michalowski at www.forexlive.com. Source