Marshall Gittler
Trading Analysis
The dollar traded higher or unchanged against its other G10 counterparts during the European morning Thursday. It outperformed SEK and NOK, whereas it was slightly higher against GBP and JPY, in that order. It was virtually unchanged against NZD, AUD, EUR and CHF. It was lower only against CAD.
Sweden’s central bank surprised the market by lowering its main interest rate by a more-than-expected half a percentage point to 0.25%. The Executive Board of the Riksbank considered that an even lower repo rate is required for inflation to rise towards the target of 2%. In addition to cutting the repo rate, they revised down the repo-rate path substantially and said that they do not expect the rate to start rising again until the end of 2015, in order to shield Swedish economy from deflation. USD/SEK climbed as much as 2.2% amid the release. I expect Sweden’s inflation rate to remain flat or in deflation for some time and as a result for the SEK to remain structurally weak.
The euro was flat against the dollar during the European morning, with investors cautious before European Central Bank President Mario Draghi's post-meeting news conference, which is due to start just as the US jobs numbers are released. The main question waited to be answered, is how will the Targeted LTROs work? The four-year TLTROs’ conditions have yet to be defined, and may prove vital in banks’ negotiations on whether to take up the initial allowance of some EUR 400bn. Because the ECB charges a premium for the funds, the plan’s appeal also hinges on banks’ expectations for when and by how much interest rates will rise.
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AUD/USD remained bid above 0.6500
AUD/USD extended further its bullish performance, advancing for the fourth session in a row on Thursday, although a sustainable breakout of the key 200-day SMA at 0.6526 still remain elusive.
EUR/USD faces a minor resistance near at 1.0750
EUR/USD quickly left behind Wednesday’s small downtick and resumed its uptrend north of 1.0700 the figure, always on the back of the persistent sell-off in the US Dollar ahead of key PCE data on Friday.
Gold holds around $2,330 after dismal US data
Gold fell below $2,320 in the early American session as US yields shot higher after the data showed a significant increase in the US GDP price deflator in Q1. With safe-haven flows dominating the markets, however, XAU/USD reversed its direction and rose above $2,340.
Bitcoin price continues to get rejected from $65K resistance as SEC delays decision on spot BTC ETF options
Bitcoin (BTC) price has markets in disarray, provoking a broader market crash as it slumped to the $62,000 range on Thursday. Meanwhile, reverberations from spot BTC exchange-traded funds (ETFs) continue to influence the market.
US economy: slower growth with stronger inflation
The dollar strengthened, and stocks fell after statistical data from the US. The focus was on the preliminary estimate of GDP for the first quarter. Annualised quarterly growth came in at just 1.6%, down from the 2.5% and 3.4% previously forecast.