Dollar pairs aren’t hinting at much with only the Swiss franc gaining some decent ground in European morning trade. USD/CHF is down 0.4% to 0.8940 as sellers continue to defend the 0.9000 mark in trading this week. The kiwi remains a decent mover as well, with NZD/USD down 0.3% to 0.6175 but that is off its earlier low of 0.6150 – after the currency was dragged lower by the softer NZ CPI data. I shared some thoughts on the technical picture for the pair here.

Besides that, there isn’t much to take note of as the ranges today are leaving a lot to be desired. This comes despite equities looking fairly sluggish and Treasury yields being marked lower across the curve.

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

For some context, the cutoff date for this is currently in early June and typically the can will get kicked down the road. We’re likely to see Yellen announce a revised date in the near future on this.

However, JP Morgan says that it expects both the debate over the debt ceiling as well as the one on federal funding to run „dangerously close“ to their final deadlines. Adding that there is a „non-trivial risk“ that US Treasuries will face a technical default situation. The firm also says that it expects the Treasury could run out of available resources by the middle of August.

The nature of the situation depends on the ongoing tax season and typically the federal government runs a deficit closer to the summer (around the end of Q3), which is the real risk. But as we have seen in the past, this is something that tends to get done one way or another at the end of the day with lawmakers likely to lift the borrowing cap if all else fails.

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

• UK March CPI +10.1% vs +9.8% y/y expected
• Dollar moves higher as sticky UK CPI stoke inflation fears
• Japanese yen under pressure as higher yields weigh
• BOJ said to be wary of tweaking yield curve control in April decision
• BOJ’s Shimizu: Appropriate to continue easing policy for the time being
• Eurozone February current account balance €24.3 billion vs €17.0 billion prior
• Eurozone March final CPI +6.9% vs +6.9% y/y prelim
• US MBA mortgage applications w.e. 14 April -8.8% vs +5.3% prior

Markets:

• USD leads, JPY lags on the day
• European equities lower; S&P 500 futures down 0.6%
• US 10-year yields up 5 bps to 3.622%
• Gold down 1.7% to $1,970.43
• WTI crude down 2.0% to $79.30
• Bitcoin down 3.8% to $29,281

It was a lively session throughout as early morning data from the UK triggered a massive reaction in markets. UK consumer price inflation continues to run hot at double-digits with food price inflation seen at its fastest pace in 45 years.

That sparked some jitters across markets as fears of more sticky inflation and higher interest rates for longer were reignited.

The pound was whippy in reaction to the data with GBP/USD jumping to 1.2440 only to fall back to 1.2410 and then rising back up to 1.2470. The reaction in cable was not helped by the dollar’s strength across the board as equities slumped while bond yields jumped higher in response to the UK data.

But as the dust settled, it is the dollar that is taking charge in the major currencies space with GBP/USD now back down near 1.2400.

EUR/USD steadily declined from 1.0970 to 1.0920 while USD/JPY moved up to hit 135.00 for the first time in a month before running into offers at the key level.

As equities are pinned lower, commodity currencies are also seen weaker with USD/CAD up 0.4% to 1.3445 and AUD/USD down 0.3% to 0.6705, just off lows of around 1.3454 and 0.6690 respectively.

In the equities space, US futures gradually built losses after a bump lower on the UK inflation numbers while European indices are holding slight losses as well amid the sluggish mood.

Elsewhere, gold is also taking a heavy knock in a push down $2,000 to $1,970 at the moment – down nearly 2% on the day. As risk appetite is sapped, oil is also dropping back under $80 and Bitcoin also falling back under the $30,000 mark.

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

A 25 bps rate hike for May is fully priced in and the OIS market is seeing the terminal rate come in at around 5% after today’s inflation report. Here’s the reaction from earlier today.

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

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This article was written by ForexLive at www.forexlive.com.

• Prior +5.3%
• Market index 209.2 vs 229.5 prior
• Purchase index 161.6 vs 179.6 prior
• Refinance index 449.8 vs 477.5 prior
• 30-year mortgage rate 6.43% vs 6.30% prior

That’s a sharp retreat in mortgage activity in the past week as the interest rate of the most popular US home loan jumps higher, following the move higher in rates as well. The continued climb so far this week won’t be good news for homebuyers and will add to pressure on the housing market again, after a bit of a reprieve in the past two months or so.

/US Dollar

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

• Since cut-off date for March projections, incoming data have been mixed
• But if baseline persists, it will be appropriate to raise rates further
• By bringing rates to a sufficiently restrictive level and fostering a period of below-trend growth through dampening demand, we will counteract above-target medium-term inflation pressures

That’s a very big roundabout way of justifying their motive for raising rates further in the next meeting. Whether or not that involves a 25 bps or a 50 bps rate hike is still up for question.

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

• Stocks in a better mood so far today
• UK March payrolls change 31k vs 98k prior
• Germany April ZEW survey current conditions -32.5 vs -40.0 expected
• BOJ’s Ueda: Positive signs are emerging in prices, wage growth
• JP Morgan, Citi upgrade China 2023 full-year GDP growth forecast

Markets:

• NZD leads, USD lags on the day
• European equities higher; S&P 500 futures up 0.4%
• US 10-year yields down 2.3 bps to 3.567%
• Gold up 0.5% to $2,004.21
• WTI crude down 0.2% to $80.70
• Bitcoin up 2.8% to $30,287

It was a relatively quiet session but markets were active, with the dollar slumping as it gets dragged back into the mud after the gains on Friday and Monday. This comes as equities are seen more upbeat, perhaps cheering on the more robust China Q1 GDP data earlier in the day.

The pound also caught a bit of a lift as UK wage pressures continue to run hot, beating on estimates. Put together the above factors and GBP/USD is running up by 0.5% to 1.2430 levels now, up from around 1.2385 earlier today.

As the dollar softened, EUR/USD is seen moving up from 1.0930 to 1.0980 while USD/JPY also dropped from 134.50 to 133.90 with Treasury yields also reversing to fall lower during the session.

The antipodeans are also enjoying life today with AUD/USD up 0.6% to 0.6740 and NZD/USD up 0.6% to 0.6220 at the moment, hanging at the highs for the day.

In other markets, gold is also quietly climbing back above the $2,000 mark as it capitalises on the dollar’s weakness while we are seeing Bitcoin also shoot higher in the last 15 minutes in a burst back above $30,000.

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

After the drop back below the $30,000 mark in trading yesterday, Bitcoin is coming back up today and buyers are catching a second breath on a push above the key figure level at the moment. It’s a quick jump straight to $30,200 and the high last week of around $31,050 will be one in buyers‘ crosshairs.

The key resistance region to be mindful about though, sits closer to $32,000 and that is from highs seen last May. A firm break above that leaves little in between that and a push towards $40,000 in terms of price action.

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

• EPS $8.79 (vs $8.21 estimate)
• Revenue $12.22 billion (vs $12.88 billion estimate)
• Investment banking revenue $1.58 billion (vs $1.54 billion estimate)
• Net interest income $1.78 billion (vs $2.18 billion estimate)

Looking at the initial reaction, Goldman Sachs‘ shares are down 2% in pre-market at the moment.

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