Forex today: risk turns sour, dollar pressured, yields met the 3.00% mark

On a day where Trump hosted Macron and wires hitting about Iran, NAFTA and trade, forex today was seeing the dollar drop back from the 91 handle in the DXY while market's trade war angst heats up again on reports that CAT was warning of higher steel costs related to U.S. tariffs which sent stocks and the dollar lower.

The DXY ranged between 90.7100-91.0760, closing around 90.70. US yields in the ten years ranged between 2.95-3.00% while the Fed funds future was pricing in just 100bp of rate hikes over the next 36 month, (62bp of that over the next 12 months). As for data, 

The US housing and consumer confidence were both robust, although analysts at Nomura explained that the stronger-than-expected March new home sales with backward revisions imply greater contribution from brokers’ commissions to real GDP growth in Q1 and after rounding, however, their Q1 real GDP tracking estimate remains unchanged at 1.6% q-o-q saar.

As for other currencies, EUR/USD travelled higher on short covering from a low of 1.2181 to an NY high of 1.2244 after a choppy start and moved in on the mid-February and March lows that define the 14-week range trade as risk sours and the dollar pulls back from daily highs. EUR/USD closed around 1.2245.

GBP/USD also moved higher, correcting a five-day bear trend from 1.4376 double top highs, firming up towards the 1.40 handle from a European low of 1.3919 (fresh five-week low, 50% Fib of Jan-Apr (2018) rise). Cable was lifted on the new Takeda-Shire M&A bid, but concerns of a dovish outcome from the next BoE meeting anchors the pound. The BoE meeting on May 10 is now a coin toss between a hike and a hold and traders are also watching Brexit developments closely. 

As for the cross, EUR/GBP was dropping back from the 0.8790 recent highs and met Monday's low on the back of the IFO data miss, ending the NY session at 0.8749.

The cloud top was a barrier after USD/JPY extended the start of the week's importers lead rally and made a high of 109.19 before tanking with a fall-out in stocks to 108.55 the session low in NY, (below the 100-D SMA) and despite higher yields where the ten years got through 3% for the first time since 2013. The Trump-Macron presser failed to calm geopolitical angst and the yen stayed bid until late NY where a slight recovery made for a closing price of 108.81.

After making a four-month low in Asia after the CPI miss, 1.9% vs 2.00% expected, AUD/USD started out in  NY around 0.7610, and was propped up by some short covering, lifting the pair to 0.7620 but higher US yields sent the dollar higher and the Aussie back below the 0.76 handle to 0.7590 but the pair managed a recovery back to 0.76 the figure for the close. Trump said there is a good chance of a trade deal with China, Tsy Sect Mnuchin to be headed there soon. 

Key notes from US session:

• Funda wrap: Trump on NAFTA, Iran and China, dollar hits 91 handle, 10yrs 3%
• Wall Street stocks down close to 2-weeks’ low as 10-year yields reach the 3.00% level