• Dollar trims losses as the tension continues to build
• Wells Fargo reports beat on earnings, profit rise on higher rates
• JP Morgan joins in on the earnings beat
• Fed’s Bostic: Recent developments are consistent with us hiking one more time
• ECB’s Wunsch: May policy decision is between 25 bps and 50 bps rate hikes
• ECB’s Lagarde says expect euro area inflation to continue to fall
• France March final CPI +5.7% vs +5.6% y/y prelim
• Spain March final CPI +3.3% vs +3.3% y/y prelim
• Germany March wholesale price index +0.2% vs +0.1% m/m prior
• Switzerland March producer and import prices +0.2% vs -0.2% m/m prior

Markets:

• EUR leads, GBP lags on the day
• European equities higher; S&P 500 futures down 0.1%
• US 10-year yields up 0.7 bps to 3.458%
• Gold down 0.3% to $2,033.95
• WTI crude up 0.3% to $82.25
• Bitcoin up 1.6% to $30,797

It was a bit of a quiet session as markets are contemplating the reaction to the US CPI data earlier in the week. The dollar slumped in trading yesterday and was under some light pressure early on, before paring losses to sit steadier now.

As things stand, we are seeing some key technical levels being contested across multiple dollar pairs and that could still result in a break lower in the greenback before the weekend. But for now, it looks like we have to wait on the US retail sales later today.

There was just some light pushing and pulling among major currencies with EUR/USD easing from 1.1070 to 1.1045 during the session while GBP/USD fell from 1.2530 to 1.2490 as the dollar regains a bit more poise.

AUD/USD also fell from 0.6790 to 0.6765 while USD/CAD inched higher from 1.3315 to 1.3335 at the moment. As you can see, the changes are relatively light, all things considered.

In the equities space, European stocks are still pushing for further gains while strong bank earnings is helping to see US futures keep calmer, with Dow futures rising at the expense of tech stocks.

It’s over to the next big data to see if we will get the potential dollar breakdown or if the greenback is going to be making a stand ahead of the weekend.

This article was written by Justin Low at www.forexlive.com.

The rotation between value and tech stocks is taking hold as part of the initial reaction to the bank earnings in the past 20 minutes or so. Wells Fargo and JP Morgan reported hefty beats on earnings while not really showing much signs of stress or credit concerns. That will help to ease the mood further after the banking turmoil last month.

Dow futures have risen as a result, up by 0.2%, while Nasdaq futures are down by 0.5% now ahead of US trading. S&P 500 futures are caught in a bind between the two, keeping flat at the moment.

This article was written by Justin Low at www.forexlive.com.

The details for JP Morgan:

• EPS $4.10 (vs $3.38 estimate)
• Adj. revenue $39.34 billion (vs $36.83 billion estimate)
• FICC sales and trading revenue $5.70 billion (vs $5.25 billion estimate)
• Investment banking revenue $1.56 billion (vs $1.54 billion estimate)
• Equities sales and trading revenue $2.68 billion (vs $2.75 billion estimate)

Looking across, PNC also reported a strong earnings beat with the credit details (allowance for credit losses of $5.4 billion was stable) also not really indicating signs of any major worries. That should be a relief for equities, at least with regards to bank stocks, ahead of the open.

However, overall sentiment remains tepid with S&P 500 futures still down 0.1% for now.

This article was written by Justin Low at www.forexlive.com.

The banks are the first to report but I would say that perhaps there will be more scrutiny on regional banks this time around. But now we are getting the earnings report from Wells Fargo.

• EPS $1.23 (vs $1.13 estimate)
• Profit $4.99 billion (vs $3.79 billion a year ago)
• Net interest income $13.34 billion (vs $13.09 billion estimate)
• Revenue $20.73 billion (vs $20.03 billion estimate)

This article was written by Justin Low at www.forexlive.com.

• This comes as lagged price pressures fade out
• Rapid wage growth is keeping core inflation up and will remain high for some time
• This will take some time before easing slowly
• Outlook remains surrounded by considerable uncertainty
• Risks to the growth outlook are tilted to the downside

All things being equal, the ECB is likely to lean more towards a 25 bps rate hike next month. The narrative now is that price pressures are still holding up, in particular core inflation, and that is validating their decision to push with at least one more rate hike.

This article was written by Justin Low at www.forexlive.com.