Summary: The key Yield on US 10-year bonds slipped to a 4-week low at 1.56% (1.60% yesterday) as Fed officials continued to minimize growing inflationary concerns. Richard Clarida, Vice-President of the Fed stuck to the party line saying that the recent rise in inflation will be temporary. A favorite measured of US dollar value against one basket of 6 major currencies, the Dollar Index (USD / DXY) easy to 89.67 of 89.83. New Zealand kiwi dollar (NZD / USD) auction ended at 0.7225 (0.7218) heading to today RBNZ Interest Rate Meeting (12 noon, Sydney). the RBNZ should exit policy settings unchanged and improve their economic forecasts. Australian dollar (AUD / USD) has changed little at 0.7750 (0.7752). Elsewhere, IFO Business Climate Index in Germany climbed to 99.2 of 96.8 and surpassing the median estimates at 98.2. the euro extended its grind higher, peaking overnight at 1.22663 before settling in 1.2246 (1.2215 yesterday). Sterling stable, ending at 1.4147 of 1.4153 yesterday. Against the Yen, the Dollar easy to 108.72 of 108.82. the USD / CNH (US Dollar-Chinese Offshore Yuan) pair set to 6.4100 after trying to rape 6.4000 (low 6.3911 overnight). According to a Reuters report, Chinese state banks were seen buying Dollars around the 6.40 level. the US dollar easy to 1.3250 Singapore Dollars (1.3275 yesterday).
Other global bond rates were inferior. 10-year German Bund yield was down 3 basis points to -0.17% (-0.14%). the 10 years from the United Kingdom the rating slipped 3 basis points to 0.78%. Wall Street stocks dived. the DOW was the last to 34 325 (34 430) while the S&P 500 lost 0.33% at 4,190 (4,200).
Other data released yesterday saw Final GDP of the euro area in the first quarter slide to -1.8% of -1.7% previously, missing estimates at -1.7%. Sales diffusion index produced by the British Conference Board fell to 117.2, missing estimates at 119.0. United States House Price Index in April Pink 1.4% beat the forecast of 1.1%. US S & P / Case Shiller Composite-20 HPI Pink 13.3% from a precedent 12.0%, exceeding the expectations of 12.6%. To finish, Richmond Manufacturing Index in the United States went to 18.0 of 17.0 previously but missed forecasts at 19.0.
NZD / USD – The Kiwi maintained its offer, ending up 0.17% to 0.7225 (0.7217). NZD / USD traders were bullish on the RBNZ interest rate meeting and press conference. NZD / USD hit an overnight high at 0.7250 before leveling off at 0.7225. New Zealand’s central bank is expected to update its economic forecast.
AUD / USD – This time it was the Australian who struggled to keep up with the Kiwi, finishing little change at 0.7750. The Aussie Battler traded overnight high at 0.7776, an area of immediate resistance, before leveling off at the 0.7750 level.
EUR / USD – The single currency rallied against the greenback, reaching an overnight high at 1.22663, near 4-month highs, before falling back to 1.2245 at the end of New York. A stronger than expected IFO Business Climate Index result in Germany reflected optimism in Europe’s largest economy and supported the euro.
USD / CNH – The greenback briefly dipped below the psychological and key level of 6.40 CNH to an overnight low at 6.3911 from yesterday’s 6.4100 open. A Reuters report that Chinese state banks were buying greenbacks pushed USD / CNH above 6.40 to close at 6.4100. The 6.40 level is key right now, and it’s likely to hold up.
On the lookout: All eyes are on the RBNZ rate decision and statement, which is today’s main risk event (12pm Sydney). The New Zealand central bank could be the next to follow the Bank of Canada and cut stimulus later this year. The Kiwi maintains its submissive tone during the meeting, suggesting that speculators are currently holding long bets. The RBNZ press conference will follow at 3 p.m. in Sydney. Markets will closely follow remarks from RBNZ Governor Orr. Tin helmets.
New Zealand’s just released trade balance saw the country’s surplus increase to + NZD 388 million in April, from + NZD 39 million (revised from + NZD 33 million), exceeding the estimates at + NZD 90 million. The Kiwi is currently at 0.7224, unchanged from its close in New York.
Other data scheduled for release today is first quarter construction work in Australia (expected to rise to 2.2% from -0.9% previously). Westpac Bank also publishes its main economic index (April). Japan releases its main (final) economic index for March. Europe started with French consumer confidence in May (f / c to drop to 97 against 94) and business confidence in May (f / c to 106 against 104). The only main US report due for release is the EIA US Crude Oil Inventory Change (May).
Commercial perspective: Falling US bond yields kept the greenback under pressure against its peers. However, other World Treasury rates were also easier, but to a lesser extent. Meanwhile, the latest COT CFTC report saw speculative market positioning maintaining an overall short dollar position against ten IMM currency pairs. Among the majors, the Canadian dollar saw the strongest rise in speculative long bets against the greenback. While the overall bearish sentiment on the greenback remains intact, the speculative market is still below the US dollar. This implies consolidation at current levels. As for the Kiwi, speculative long bets on the Kiwi are in jeopardy if the RBNZ disappoints.
EUR / USD – The euro traded in a relatively narrow range between 1.2211 and 1.2266, settling at 1.2247, a gain of 0.27%. Stronger-than-expected German business confidence lifted the single currency to a 4-month high overnight. The single currency has immediate resistance at the 1.2270 / 80 level. A clear break out of this level could see 1.2310. Immediate support can be found at 1.2210 followed by 1.2180. Euro speculative net total betting increased (5,900 lots) during the week ended May 18th. Look for a probable trading range today of 1.2210-1.2270. Prefer to sell rallies given the current market positioning.
NZD / USD – The Kiwi held their offer, ending in New York at 0.7225 (0.7218 yesterday). The Bird traded overnight high at 0.7250 before slowing on the close. Immediate resistance can be found at 0.7250. The next resistance level is at 0.7280 followed by 0.7310. Immediate support lies at 0.7200 and 0.7170. Traders and investors expect the RBNZ to improve its economic forecast. The latest COT / CFTC report saw speculative long bets on Kiwi hold their positions. Look for a likely trading range between 0.7170 and 0.7270. Could be fun and games in the bird today.
AUD / USD – ended virtually flat at 0.7750 after trading in a range of 0.7733-0.7776 overnight. The Australian’s immediate resistance is at 0.7780 followed by 0.7810. Immediate support can be found at 0.7720 followed by 0.7680. The Australian long net speculative speculative total was the smallest among the majors in the last COT report. Probable range today 0.7700-0.7780.
USD / SGD – The greenback eased against the Singapore dollar to close at 1.3250 (1.3280 yesterday). The decline in the USD / Asians weighed on this currency pair. There is immediate support for USD / SGD at 1.3240 followed by 1.3210. Immediate resistance can be found at 1.3290 (high overnight at 1.2896). The next resistance level is at 1.3320. Expect USD / SGD to consolidate in a likely 1.3240-1.3290 range today. Prefer to buy lows close to recent lows at 1.3240 / 50.