Forex today: market shrug off Comey news but remain cautious, dollar still firm, US yields breaking up
The FX space today in the US session was bullish on the greenback yet again that traded as high as 99.72 in the DXY, albeit down -0.04% at the time of writing below the close of 99.65. Risk appetite was damaged by the firing of Comey news as this has been seen to potentially slow down Trump's implementation of plans to make "America great again".
However, as the session got going, rates, the dollar and stocks were firm, shrugging off the N.Korea nuke test threats and the Comey news. The Republican Senator Corker said "the very best route" for Trump is to pick a new FBI director with bipartisan support in congress.
There was little data other than US Import prices that m/m arrived 0.5% v 0.2% and 0.1% previous. US Export prices m/m arrived at 0.2% v 0.1% and 0.1% previous. Fed’s Rosengren hit the wires saying that the Fed should shrink the balance sheet 'relatively soon, supporting three more rate hikes this year alongside the portfolio reduction.
The main movers on the boards were in USDJPY that has been walking higher on the 114 handle, testing 114.20 with the street looking for a potential breakout higher in US real yields. The US 10-year made a high of 2.4141 today above the close of 2.3977 and is up +0.61% at 2.4123 currently. EUR/USD is still trading with a bearish bias with failed attempts post Macron above the 1.10 handle. The range today was narrow between 1.0853 and 1.0898 vs a close of 1.0874 and is virtually flat on the day. Draghi said that the ECB will naturally exit stimulus together with the improvement in the economy and rebound in inflation. He says the easy policy is still needed. GBP/USD remains subdued below the psychological of 1.3000 level. USD/CAD was better offered to 1.3546 lows from 1.3734 the high on WTI bounce from $45.84 to $47.62bbls. As for the antipodeans, AUD/USD was making another lower low for the sixth day in a row as the worst performer in its peer group with base metals still offered. The kiwi is bid in anticipation of a hawkish RBNZ. Gold continues to fade as risk apatite firm and the VIX was testing the 2007 lows.
The day ahead:
The RBNZ will be the main event at 2100GMT: When is the RBNZ and how could it affect NZD/USD?
Key notes from the US session:
- US Dollar Index rises for the third day in a row
- GBP/USD consolidates below 1.2950 ahead of Super Thursday
- Gold Intermarket: time for a rebound, VIX testing 2007 lows and stocks overbought
- Fed's Rosengren reiterates support for three more rate hikes in 2017
- White House: Trump is considering four FBI officials to serve as interim FBI director
- WTI clinches daily highs above $47.00 post-EIA