• It was a risk-on ending to last week's trade following an improvement in China’s data sending yields on the rise and equities up while the greenback climbed back towards the 97 handle in the DXY having lost its footing in the prior sessions. 

FX traded within familiar ranges. The euro was trading to a two-week high through 1.1320, ending North America a touch below 1.13 the figure. The great British pound was lively throughout the sessions but ended New York on the back foot hitting a low of 1.3064 falling from the 1.3130s in early trade. USD/JPY was making a base on the 112 as risk appetite drove back the yen from the 111.70s. As for yields, the US 10-yr note was up 6.8bps to 2.565%. Stock markets were encouraged by the growth and policy backdrop with the S&P 500 up 0.7%.

U.S. data

  • U.S. import prices climbed 0.6% m/m in March (from 1.0% m/m in the month prior), while export prices also rose by 0.7% m/m. 
  • The University of Michigan’s preliminary sentiment index fell to 96.9 for April (from 98.4 in the month prior).
  • 5-10 year inflation expectations also fell in April, to 2.3% from 2.5% in March while 1-year expectations also dipped slightly, arriving at 2.4%  - (Firming a neutral bias at the Fed).

Antipodes get a boost from China

Risk appetite was a key driver for the Aussie and kiwi at the end of the week following China’s monetary data which was better than expected in March as the stimulatory measure are flowing into lending and credit metrics, as noted by analysts at ANZ Bank:

"New Yuan Loans rose to Y1690bn (against an estimate of Y1250bn), while Aggregate Financing was up Y2860bn (beating expectations of Y1850bn). M2 money growth rose to 8.6% (from 8.0% in the month prior), while March exports were up 14.2% y/y after falling by 20.8% in the month prior. The improvements in credit data mitigated some of the anxiety around China’s 7.6% y/y drop in imports for March."

While we now await China’s retail sales and GDP this week, AUD/USD made a one-month high into the 0.7190s, ending the New York session a in the 0.7170s while the Kiwi moved up to the 0.6780s ending the sessions 20 pips lower as traders look ahead to this week's NZ CPI. 

Key notes from Friday and the weekend

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