American FX Outlook: The US Dollar retreats lower as Treasury yields stall

Mario Blascak, PhD Independent Analyst

What you need to know before markets open

The US Treasury yields pushed higher towards 3.0% level on Monday supporting the US Dollar, but the move got exhausted on Tuesday with yields stabilizing at around 2.96%.
The headline German IFO business climate indicator retreated lower in April falling below market expectations.
The US house prices and the new home sales are considered a rather second tier macroeconomic indicators that are unlikely to move the market.

Tuesday’s market moving events

The US S&P/Case Shiller house price index is expected to rise 6.3% y/y in February.
The US news home sales are seen rising 1.9% m/m in March to 630K up from 618 K in the previous month.

Major market movers

The US Dollar retreated lower on Tuesday as the US Treasury yields stall at around 2.96%
With the lack of macro drivers, the corrective market sentiment prevails on the currency market.

Earlier in Asia/Europe

The Australian CPI increased 0.5% Q/Q while increasing 2.0% y/y in Q1 2018, in line with expectations.
The Bank of Japan measure of inflation increased 0.7% y/y in March.
Swiss trade balance reached a surplus of CHF 6.5 billion in Q1 2018, down from 8.2 in Q4 2017.
German IFO business climate indicator decelerated above expectations to 102.1 in April from 103.3 in March after the pool of surveyed companies was increased to 9,000 including services.
The UK public sector net borrowing decreased by £ 260 million in March, the lowest March net borrowing since 2004.
The UK CBI industrial trends remained stable at 4% in April.

Author

Mario Blascak, PhD

Independent Analyst

Dr. Mário Bla&scaron;čák worked in professional finance and banking for 15 years before moving to journalism. While working for Austrian and German banks, he specialized in covering markets and macroeconomics.

EUR/USD stays well offered below 1.1800

The selling pressure on EUR/USD is picking up pace, with the pair slipping decisively below the key 1.1800 level and sliding to fresh two week lows as Wednesday’s session draws to a close. The move lower comes as the US Dollar finds renewed strength after the latest round of US data and the release of the FOMC Minutes. Next of note on the docket will be the US weekly Initial Jobless Claims.

GBP/USD reaches multi-day lows near 1.3500

GBP/USD reverses its initial upside momentum and is now adding to previous declines, approaching the 1.3500 region on Wednesday. Cable’s downtick comes on the back of decent gains in the Greenback and easing UK inflation figures, which seem to have reinforced the case for a BoE rate cut in March.

Gold battle to regain $5,000 continues

Gold is back on the front foot on Wednesday, shaking off part of the early week softness and challenging two-day highs near the $5,000 mark per troy ounce. The move comes ahead of the FOMC Minutes and is unfolding despite an intense rebound in the US Dollar.

Bitcoin has found or is near a bottom, extended consolidation to follow: K33

Bitcoin (BTC) is nearing or has already established a bottom, which could be followed by a sustained period of slow price movement, according to K33.

Mixed UK inflation data no gamechanger for the Bank of England

Food inflation plunged in January, but service sector price pressure is proving stickier. We continue to expect Bank of England rate cuts in March and June. The latest UK inflation read is a mixed bag for the Bank of England, but we doubt it drastically changes the odds of a March rate cut.

Sui extends sideways action ahead of Grayscale’s GSUI ETF launch

Sui is extending its downtrend for the second consecutive day, trading at 0.95 at the time of writing on Wednesday. The Layer-1 token is down over 16% in February and approximately 34% from the start of the year, aligning with the overall bearish sentiment across the crypto market.