US Dollar, USD/JPY, AUD, NZD, Fed, China, Oil, Gold – Talking Points
- USD Rise resumes, but softens in Asian trade
- Fed Reminded Markets of Their Intentions, Stocks Reacted
- If China’s reopening goes smoothly, USD to be influenced?
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The USD is slightly weaker across the board today with more significant losses against Aussie and Kiwi. The dip comes after a solid rally heading into New York’s close. The US dollar was supported by a shift in perception of where the peak for federal funds is.
Overnight, the Fed’s four speakers continued to impose hawkish messages on the market. The reaction to these comments contrasts with the interpretation of Fed Chairman Jerome Powell’s remarks the previous day.
The consistent message is that further rate hikes are on the cards and rates need to stay high for the long term.
Speaking overnight were Fed President Christopher Waller, New York Fed President John Williams, Fed President Lisa Cook and Minneapolis Fed President Neil Kashkari.
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The market seems to have changed its mind about where interest rates are headed. The realization that the tightening cycle could be more aggressive than previously thought has undermined Wall Street.
The Dow Jones, Nasdaq, Russell 2000 and S&P 500 cash sessions fell -0.61%, -1.11%, -1.52% and -1.68% respectively.
Future markets show a positive start to the day. Alphabet reported disappointing earnings in the intraday session, while Disney revealed better-than-expected earnings and cost-cutting restructuring after the bell.
Asia-Pacific stocks had a mixed day with Australia and Japan falling slightly and China and Hong Kong indices mostly green.
Crude held steady throughout the Asian session as hopes of a Chinese reopening fueled speculation of increased demand. The WTI futures contract has him just below 78.50 barrels and the Brent contract is around 80 barrels.
Gold has remained relatively unscathed by US dollar movements so far this week, hovering between US$1860 and US$1886 per ounce.
US Treasury yields have changed little so far, with the benchmark 10-year note trading just above 3.6%.
After Germany’s CPI, the United States will see some employment data. There are still some ECB speakers today.
You can view the full economic calendar here.
USD/JPY technical analysis
USD/JPY has been in the 127.22-134.77 range for seven weeks. The 55- and 260-day Simple Moving Averages (SMAs) are slightly above price, while the 10- and 21-day SMAs are below.
This could indicate a lack of directional momentum and the range trading environment could continue for some time yet.
Resistance may be offered at previous peaks of 122.90, 134.50 and 134.77.
On the downside, support is likely at last year’s April and May lows of 125.11, 126.33 and 126.36. The recent lows of 128.09 and 127.22 may offer close support.
Chart created with TradingView
— Written by DailyFX.com Strategist Daniel McCarthy
please contact daniel @DanMcCathyFX on Twitter