MArket wrap: equity markets shed early gains, narrow FX - Westpac


Analysts at Westpac explained that the US equity markets shed early gains to close modestly lower. 

Key Quotes:

"This had little impact on US treasury yields but seemed to take the heat out of AUD/USD, which had risen steadily from under 0.7760 in the Sydney morning to a high of 0.7810 in the London morning, its strongest level since 15 March. The Aussie then faded to 0.7760 into the weekend and actually opened Monday Sydney trade a few pips higher, suggesting no impact from the US missile strikes. NZD fell from 0.7395 to 0.7345 in NY. AUD/NZD rose from 1.0540 to 1.0583 before pulling back to 1.0560."

"EUR/USD ranged sideways between 1.2310 and 1.2345, opening this morning at 1.2340. USD/JPY made a roundtrip from 107.40 to 107.75 and back, opening this morning around 107.45, a touch higher than the NY close."

"The US Treasury released its semi-annual FX report, with no formal designation of a nation as a currency manipulator but added India to its "Monitoring List", along with China, Japan, Korea, Germany and Switzerland."

"The US 10yr treasury yield traded mostly around 2.82%. 2yr yields firmed slightly from 2.34% to 2.36%. Fed fund futures yields firmed to price the next rate hike in June as a 90% chance."

"US April consumer sentiment (University of Michigan) fell from 101.4 to 97.8 and disappointed expectations. Some 29 percent of respondents to the survey made spontaneous references to U.S. trade policy, with nearly all of the comments being negative. Even so, there were fewer unfavourable views of economic policy - 27 percent - than the previous month's 33 percent. Inflation expectations for 5-10 years ahead slipped from 2.5% to 2.4%."

"Fedspeak from dove Bullard, who advocated for the next FOMC statement to indicate it is at or near a neutral Fed funds rate, was offset by hawk Rosengren, who argued for three more rate hikes in 2018."

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