Dollar Grinds Higher

Market Drivers April 24, 2018
USDJPY Inches towards 109.00
GE IFO shows a slowdown
Nikkei 0.85% Dax 0.54%
Oil $69/bbl
Gold $1326/oz.
Bitcoin $9200

Europe and Asia:
EUR EZ IFO 102.1 vs. 102.6
GBP UK PSNB -0.28B vs. 0.9B

North America:
USD New Homes Sales 10:00

The dollar pushed higher for the second day in a row, but gave up some gains by North American open as both euro and cable bounced off lows while USDJPY stalled ahead of the 109.00 figure.

US yields hovered near the 2.96% level but so no push higher also helping to contain the greenback rally for the time being.

On the economic front the GE IFO data came in at 102.1 versus 102.6 eyed confirming that the region is seeing a slowdown in activity. IFO economists predicted that German GDP would increase at 0.4% versus 0.6% rate of Q4 which is consistent with the latest PMI reading from the EZ.

The news is likely to keep ECB firmly neutral in its monetary policy stance on Thursday and the single currency could see further weakness if President Draghi suggests that the central bank many not consider tightening rates until well into 2019. For now, however, the unit has found support at the 1.2200 level and rebounded off the figure into the NY open.

In the UK the better than expected PSNB figures which showed that the government ran a surplus for the first time since 2000 helped lift cable a but as well as the pair recaptured the 1.3950 level.

Overall, however, it still remains dollar’s game to lose. The greenback rally may have paused but looks to push higher as US rate remains elevated and US data shows steady growth. Yesterday’s Existing home data demonstrated that the housing market remains robust and if today’s New Home Sales beat to the upside they may push USDJPY through the key 109.00 figure busting the option barriers that have contained the pair most of the night. For now, the Fed is the only hawkish central bank in the G-7 universe and the market is starting to appreciate that reality.