Outlook
The drop in pending homes sales is awful—down 11% y/y—and bodes ill for other housing data, if not this month, then soon. This morning we get March housing starts, expected up at a 970,000 pace for the first increase in 4 months, according to Bloomberg.
We also get MBA mortgage applications industrial production, the Atlanta Fed’s business inflation expectations, the oil inventory report, the Beige Book and Yellen’s speech. Any or all of these could be negative and re-start the whole tapering postponement scenario, which would be dollar-negative. Meanwhile, the usual asymmetry—if data is good, the dollar doesn’t benefit. Good US data just makes the world safe for risk.
Getting no press at all is the semi-annual Treasury report to Congress, released yesterday. According to Market News, the report again declines to name any country a currency manipulator but says there’s room for more Chinese yuan appreciation and transparency. It singles out S. Korea and wants it to restrict intervention only to disorderly conditions. Japan should do some structural reform and Germany should boost demand. We find the whole thing offensive. People who live in glass houses should not throw stones.
Reviewing all the stories today, we are troubled by the irrationality on display in oil and gold. The stories don’t add up. Why should oil rally like crazy on Ukraine at this point in time and at the same time, gold fall under the 200-day? This doesn’t fit the conventional risk appetite/aversion model. We don’t see any love for the dollar out there, but honestly, this kind of roiling should be dollar-favorable. Be careful. Watch the CAD and watch the yen.
Note to Readers: Friday is a holiday in some countries (and Monday, London is closed). We will not publish a morning report on Friday.
This morning FX briefing is an information service, not a trading system. All trade recommendations are included in the afternoon report.
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Editors’ Picks
EUR/USD steady below 1.0800 after US PCE meets expectations
EUR/USD remains depressed below 1.0800 after soft French inflation data, amid minimal volatility and thin liquidity on Good Friday. The pair barely reacted to US PCE inflation data, with the Greenback shedding some pips. Fed Chair Jerome Powell set to speak ahead of the weekly close.
GBP/USD hovers around 1.2620 in dull trading
GBP/USD trades sideways above 1.2600 amid a widespread holiday restraining action across financial markets. Investors took a long weekend ahead of critical United States employment data next week. Fed Chair Powell coming up next.
Gold price sits at all-time highs above $2,230
Gold price holds near a fresh all-time high at $2,236 in thinned trading amid the Easter Holiday. Most major world markets remain closed, although the United States published core PCE inflation, the Federal Reserve’s favorite inflation gauge.
Jito price could hit $6 as JTO coils up inside this bullish pattern
Jito (JTO) price has been on an uptrend since forming a local bottom in early January. Since then, JTO has revisited the key swing point formed in early December, suggesting the bulls’ intention to move higher.
Key events in developed markets next week
Next week, the main focus will be inflation and the labour market in the Eurozone. We expect services inflation to be impacted by the easter effect, while the unemployment rate to be unchanged.