The USD declined today following lower-than-expected JOLTS data. The job openings totals 9.595M which was less than the 9.775M last month. The number was a two year low but still well above the pre-covid levels (between 7.0M and 7.5M roughtly). Also impacting the USD was the sharp decline in US regional bank stocks which is helping to fuel financial contagion fears. The KRE ETF of regional banks is trading down -6.37% on the day.

The news and moves come ahead of the FOMC meeting on Wednesday (2 PM ET), where the Fed is expected to raise rates by 25 bps to 5.00% -5.25% range. The Fed in their dot plot released at the last meeting forecast a terminal rate of 5.11% (which will be the midpoint of the target range on a hike of 25 basis points tomorrow).

However, with the risk of additional banking concerns, lower deposit bases, and the impact on lending (and that impact on future growth/inflation), will the Fed pass on a hike citing expectations for slower growth, or go ahead with the 25 basis points. If they do hike will they keep the door open for future rate hike's or explicitly state that it is pause time? There are a line of uncertainties and the more recent elevation of risk to the banking sector is an additional input into the Fed's decision.

Looking at some of the markets today:

  • The EURUSD moved up to retest the 1.1000 level in the early European session, but found sellers and the price rotated lower and to the lowest levels since April 21. The weaker JOLTs data turn the pair around and it moved back toward the 1.1000 area. The 200 hour moving average comes in at 1.1003 the 100 hour moving average comes in at 1.1008. The current price is trading at 1.1006 between those level. The moving averages will be the key barometer into the new trading day and also through the FOMC rate decision tomorrow.
  • The USDJPY moved lower (with the yen benefitting) from the risk-off sentiment due to banking weakness, The USDJPY moved back below the 200 day MA at 137.01 and traded down to 136.308 before stalling and rising modestly. The current price trades at 136.51 which is a few pips away from the swing high from last week at 136.553. That level will be a barometer into the new trading day. Should the price move higher, getting back above the 200 day moving average would be key. On the downside, the rising 100 hour moving average comes in at 135.69 and would be a target on further weakness.
  • The USDCHF moved higher and traded at the highest level going back to April 19 while testing the 38.2% retracement of the move down from the March 28 high at the 0.8993 level. The high came in at 0.8994 just above that retracement target. The pair tumbled after the JOLTS with the price falling to and through the 100 hour moving average currently at 0.89406, and down to test the lower 200 hour moving average 0.89247. The current price is just above that 200 hour moving average of 0.8926. Both the 100 and 200 hour moving averages will be eyed as bias defining levels for the pair in the new day.
  • The AUDUSD moved sharply to the upside today after the RBA raised rates by 25 basis points to 3.85% from 3.60% (the market was expecting no change). The AUDUSD moved up to the 61.8% retracement of the move down from the April 14 high at 0.67164, but found willing sellers against that level. The fall in stocks and a technical break below a swing area near 0.6676 and 0.66806, took the pairs price down toward the 200 hour moving average currently at 0.6652. The low reached 0.66573 before settling. The current price is trading at 0.6664. It would take a move below the 200 hour moving average to increase bearish bias in the new trading day with a 100 hour moving average at 0.66297 as the next key target. A move back above 0.6680 should appease the buyers from a technical perspective with the 50% midpoint at 0.6689 another target to get to and through to increase the bullish bias. In Australia, the

In the US the debt market, yields moved sharply lower on the banking contagion concerns

  • 2 year yield 3.986%, -15.3 basis points
  • 5 year yield 3.460% -17.3 basis points
  • 10 year yield 3.47% -14.6 basis points
  • 30 year yield 3.709% -10.8 basis points

Crude oil prices tumbled today on the fears of slower growth.

  • WTI crude futures settled down -$4 on the day at $71.66. Today's decline represented the once decline since January 4.

Gold rose sharply due to safe haven demand order by banking concerns and falling US treasury yields. The current price is trading at $35.42 up 1.78% at $2017.41.

US stocks moved lower for the 2nd consecutive day. All the major indices fell by around 1%:

  • Dow Industrial Average -1.08%
  • S&P index -1.16%
  • NASDAQ index -1.08%

Ranking the strongest to the weakest of the major currencies today, the JPY is the strongest, while the CAD is the weakest.

While the US dollar is looking lower to mixed, the greenback rose by 0.61% versus the CAD largely due to the sharply lower oil prices (that tends to weaken the CAD). The greenback fell -0.68% versus the JPY, 0.65% vs the NZD and 0.54% vs the AUD.

Forex
The strongest to the weakest of the major currencies