- S&P index closes just below the key 4200 level
- Poll shows most analysts expect a +25bp RBNZ rate hike on May 24
- Mexico central bank leaves benchmark interest rate unchanged at 11.25%
- WTI crude oil futures settle at $71.86
- WSJ Timiraos: Outlines debt limit impasse playbook
- Senate Majority Leader Schumer: Debt talks are moving forward
- Feds Bullard: Higher rates are insurance against inflation. Leaning toward a June hike.
- US 30 year mortgage rises to 6.39% from 6.35% last week
- European stock indices close higher. German DAX closes at a new 2023 high.
- BOC Macklem. Far too early to be thinking of interest rate cuts. USDCAD tests key target.
- Politico: McCarthy says he thinks an eventual debt bill needs to be on floor next week
- US existing home sales for April 4.28M versus 4.30M estimate
- US leading index for April -0.6% vs -0.6% expected
- Fed Insider Timiraos: Fed members suggest June rate rise will be a close call
- Feds Jefferson: inflation is too high. Impact of hikes not fully felt
- Feds Logan: Data at this time does not support skipping rate hike at the next meeting
- US initial jobless claims 242K vs 254K estimate
- US May Philly Fed -10.4 versus -19.8 expected
- Canada new housing price index for April -0.1% versus -0.1% estimate
- The USD is the strongest and the GBP is the weakest as the North American session begins
- ForexLive European FX news wrap: Dollar continues to strut its stuff
Dallas Fed President Lorie Logan got the USD moving to the upside today after saying data at this time, does not support skipping a rate hike at the next meeting. That caught the attention of the market, pushed yields higher, the USD higher, gold lower, and pre-market stock gains eroded.
Feds Governor Jefferson - a short time later - was a bit more neutral admitting that inflation was still too high, but that the impact from hikes was not fully felt.
His comments helped stocks recover. With or without the Fed, the market is still encouraged - and being supported - by the AI euphoria (Nvidia which is a proxy for AI was up $15 or nearly 5% today). Yields, however, remained elevated (up 10 basis points on the day. With the 2-year still about 100 pips lower than the target Fed funds rate of 5.25%, there is room to roam to the upside without upsetting the apple cart much. The 10-year yield at 3.64% (up 6.8 basis points on the day), can also roam to the upside and not cause mass panic (for now at least).
The data releases today saw the initial jobless claims dip back down to 242K which was lower than the 254K estimate. Continuing claims also dipped a bit and are basically flat over the last few months indicating if jobs are being lost, workers are being rehired too. Existing home sales in the US were slightly weaker than expectations but with 2.9 months worth of supply, the inventory remains low (an average in a good market is 6 months). Nevertheless, Median prices dipped to $388,800 which was -1.7 from April last year. The decline represents the biggest price decline since April 2012.
The USD took it's clue from the US rate move and is ending the day as the strongest of the major currencies. It saw gains of 0.63% to 0.72% vs the EUR, GBP, JPY and CHF. It was more modestly higher vs the CAD,( +0.33%), the NZD (+0.38%) and the CAD (+0.56%). The JPY was the weakest of the majors today.
Some technical comments for some of the major currencies:
- The EURUSD fell below its 100-day MA and 50% of the range from the March 2023 low at 1.0805. The pair trades at 1.0769 heading into the close. Staying below the 1.0805 level into the new day keeps the sellers in more control. The next support comes at the 61.8% retracement 1.07367 followed by a swing area near 1.0700
- The USDJPY moved above a swing ceiling going back to December 2022 between 137.499 and 138.139. The price is currently trading at 138.70. The next target on the daily chart is at the 50% midpoint of the move down from the 2022 hi to the 2023 low (from January) at the will comes at 139.574.
- The GBPUSD is tested a swing area between 1.2386 and 1.2397 and has bounced on the 1st test. The current price trades at 1.2408. A move below 1.2386 would have traders targeting the 38.2% retracement of the range since the March low. The low comes at 1.2344
A snapshot of other markets shows:
- Gold is down $-24.40 or -1.23% at $1956.90
- Silver is down $-0.24 or -1.03% of $23.48
- Crude oil is down $0.78 at $72.05
- Bitcoin trades at $26,734 after a run back above $27,000 failed to hold support
in the US debt market:
- 2-year yield 4.255% +10 basis points
- 5-year yield 3.688% +9.4 basis points
- 10-year yield 3.649% +6.8 basis points
- 30 years 3.907% +3 basis points
a snapshot of the stock market closes shows:
- Dow Industrial Average Rose 115.14 points or 0.34% at 33535.92
- S&P index rose 39.28 points or 0.94% at 4198.06. The 4200 level is a key level for traders.
- NASDAQ index up 188.26 points or 1.51% at 12688.83.
Thank you for your support.