Headlines:

• The bond market stays in focus after yesterday’s move
• Traders getting less certain about a Fed rate cut in June
• Swiss franc the laggard so far on the session
• Bavaria March CPI +2.3% vs +2.6% y/y prior
• Eurozone March final manufacturing PMI 46.1 vs 45.7 prelim
• UK March final manufacturing PMI 50.3 vs 49.9 prelim
• UK March Nationwide house prices +0.2% vs +0.3% m/m expected
• UK February mortgage approvals 60.38k vs 56.50k expected

Markets:

• AUD leads, CHF lags on the day
• European equities mixed; S&P 500 futures down 0.3%
• US 10-year yields up 2.8 bps to 4.357%
• Gold up 0.4% to $2,259.26
• WTI crude up 1.5%o $85.10
• Bitcoin down 6.1% to $65,495

It was mostly a slow session for major currencies but it may not stay that way when we get to US trading later. Bond yields are on the move again with 10-year Treasury yields now inching higher to test the key threshold of 4.35%. It is up to its highest levels for the year now, as the selling in bonds continue upon the turn of the month.

The dollar is yet to pick up much on that, trading more mixed and little changed on the day mostly. In FX, the Swiss franc is the only decent mover as it drops a little more. USD/CHF is at its best levels for the year in a push to 0.9090 and keeping thereabouts still.

In other markets, gold remains unperturbed as it keeps higher and looks towards $2,260 levels once more. But equities are feeling a bit of the pinch amid higher yields, with S&P 500 futures now down 0.3% on the day.

Elsewhere, Bitcoin is coming under strong pressure in a steep drop under $70,000 to $65,000 levels at the moment.

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

USD

• The Fed left interest rates unchanged as
  expected with basically no change to the statement. The Dot Plot still showed
  three rate cuts for 2024 and the economic projections were upgraded with growth
  and inflation higher and the unemployment rate lower.
• Fed Chair Powell
  maintained a neutral stance as he said that it was premature to react to the
  recent inflation data given possible bumps on the way to their 2% target.
• The US CPI and
  the US PPI beat
  expectations for the second consecutive month.
• The US Jobless Claims beat
  expectations last week.
• The US ISM
  Manufacturing PMI beat expectations by a big margin with
  the prices component continuing to increase.
• The US Consumer
  Confidence missed expectations although the labour
  market details improved.
• The market now sees basically a 50/50 chance of a
  cut in June.

AUD

• The
  RBA left interest rates unchanged as expected at the last meeting and
  finally dropped the tightening bias.
• The
  last Monthly CPI report came in line with
  expectations although the underlying inflation measure increased from the prior
  month.
• The
  latest labour market report missed expectations by a big
  margin.
• The
  wage price index surprised to the upside as wage
  growth in Australia remains strong.
• The
  latest Australian PMIs showed the Manufacturing PMI falling
  further into contraction while the Services PMI continue to increase and remain
  in expansion.
• The
  market expects the first rate cut in August.

AUDUSD Technical
Analysis – Daily Timeframe

On the daily chart, we can see that AUDUSD broke
again below the key 0.65 support zone and
it’s now looking towards the 0.6443 low. That’s where we can expect the buyers
to step in with a defined risk below the level to position for a rally back
into the 0.6623 level. The sellers, on the other hand, will want to see the
price breaking lower to increase the bearish bets into the 0.63 handle.

AUDUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the pair seems
to be trading inside a falling channel. If we get a bigger pullback from the
current levels, we can expect the sellers to lean on the upper bound of the
channel to position for a drop into the lows with a better risk to reward
setup. The buyers, on the other hand, will need the price to break above the
upper bound of the channel to invalidate the bearish setup and trigger a rally
into the 0.6623 level.

AUDUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see more
closely the recent price action with the pair now getting rejected from the
resistance zone. The sellers might pile in around these levels already if we
get strong US data or wait for a pullback into the top trendline in case the
data misses estimates.

Upcoming Events

Today we have the US Job Openings and tomorrow the
US ADP and the US ISM Services PMI. On Thursday, we get the latest US Jobless
Claims figures while on Friday we conclude with the US NFP report.

This article was written by FL Contributors at www.forexlive.com.

The market pricing is showing that the odds of a June move have been reduced to ~62% now. That is down from ~68% at the end of last week here. And according to the CME Fedwatch tool, a 25 bps rate cut is now paired with just a ~56% probability. If anything, it suggests that we are looking at more of a coin flip ahead of the next big set of data points in the next two weeks.

Bond traders are also starting to act up as already seen yesterday. I shared some technical levels to be mindful of here and we are starting to see that come into play. 10-year yields are now up 2 bps today to 4.349% and is knocking on the door of the recent 4.35% ceiling.

It isn’t exactly reverberating across broader markets just yet but if the key level breaks, I reckon traders will start to pay more attention. Watch this space.

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

Yesterday, the Nasdaq Composite opened the day
higher and after a brief rally the price reversed completely following the
strong US ISM Manufacturing PMI report.
The US Dollar and Treasury yields rose to the highest levels this year putting
some downward pressure on the stock market. Inflation is gradually becoming
again the threat for further gains and the expectations for rate cuts continue
to dwindle with the market now seeing basically a 50% chance of a cut in June.
The Fed might also change its tone to a more hawkish stance.

Nasdaq Composite Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Nasdaq
Composite has
been diverging with
the MACD for a
long time. This is generally a sign of weakening momentum often followed by
pullbacks or reversals. We continue to trade inside the rising wedge, and
it’s worth to keep an eye on it because if the price were to break below the trendline, the
sellers will have much more conviction to look for new lows with the base of
the wedge at 14477 being the ultimate target.

Nasdaq Composite Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the
price is consolidating near the bottom trendline where we have the red 21 moving average for confluence. The
buyers keep on stepping in with a defined risk below the trendline to position
for a rally into a new all-time high. The sellers, on the other hand, are
waiting for the price to break below the trendline to increase the bearish bets
and target new lows.

Nasdaq Composite Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that the
gains have been capped by the counter-trendline and even if we got a brief
spike to the upside yesterday, the price fell back below the counter-trendline.
The buyers will likely pile in if we get a break to the upside and increase the
bullish bets in case we get a break above the 16480 level.

Upcoming
Events

Today we have the US Job Openings and tomorrow the
US ADP and the US ISM Services PMI. On Thursday, we get the latest US Jobless
Claims figures while on Friday we conclude the US NFP report.

This article was written by FL Contributors at www.forexlive.com.