Month: April 2021

The New Zealand dollar has steadied on Thursday after posting strong gains a day earlier. Currently, NZD/USD is trading at 0.7260, up 0.07% on the day. The pair has climbed 0.85% so far this week.

New Zealand dollar heads higher

The New Zealand dollar continues to gain ground against the struggling US dollar. The kiwi has flexed its muscles in April, with sizzling gains of 3.97% this month, erasing the losses sustained in March. The FOMC meeting, which was passed without incident, saw the US dollar retreat broadly against the major currencies.

The FOMC meeting did not contain any surprises, as the Fed remained in dovish mode. However, a close look at the language of the rate statement and Fed Chair Powell’s follow-up remarks revealed a few subtle changes from previous meetings. The Fed acknowledged progress in the battle to control Covid-19 and the strengthening of the US labour market, stating:

Amid progress on vaccinations and strong policy support, indicators of economic activity and employment have strengthened”.

When Powell was asked specifically about tapering, he replied that it was too early to have a conversation about that. This sent US yields lower, dragging down the US dollar.

With the FOMC meeting out of the way, the markets can now focus on key economic releases. The US releases first-estimate GDP for Q1 on Thursday (12:30 GMT), and the consensus is for a strong gain of 6.8%, after a 4.3% gain for Q4, which was revised upwards from 4.0%. A print of 6.8% or higher could shake up the US bond market and send yields higher, which would likely give the US dollar a much-needed boost.

In New Zealand, business confidence improved to -2, up from the preliminary reading of -8.4 points. With the global demand growing for New Zealand commodities and stable domestic activity, I would expect business confidence to continue to improve in the coming months.

NZD/USD Technical

• NZD/USD is testing resistance at 0.7243. This is followed by resistance at 0.7291
• There is support at 0.7135 and 0.7075

The dollar was largely unchanged Thursday near multi-week lows after the U.S. Federal Reserve maintained its very dovish monetary policy, boosting confidence in the global economic recovery.

At 2:55 AM ET (0755 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was flat at 90.610, trading not far away from a nine-week low.

EUR/USD traded down 0.1% at 1.2119, after earlier hitting its highest level against the dollar since late February, GBP/USD rose 0.2% to 1.3962, USD/JPY rose 0.2% to 108.78. The risk-sensitive AUD/USD rose 0.1% to 0.7794 and NZD/USD climbed 0.1% to 0.7258.

The Federal Reserve decided on Wednesday to leave the policy interest rate near zero and kept a $120 billion monthly pace of asset purchases, while acknowledging that there had been an improvement in the economic conditions.

In the press conference that followed the policy statement, Fed chairman Jerome Powell continued to signal that policy will remain steady for some time, to the benefit of the global economy, with inflation risks distorted by the pandemic-related decline in prices last year.

“The inflation rate will increase markedly above 2% but the Fed considers it transitory due to bottlenecks and base-effects. The only true inflation stems from the labor market (according to the Fed), why the labor market is now the one to watch,” said analysts at Nordea, in a note.

That said, the Commerce Department will publish its snapshot of first-quarter GDP growth on Thursday at 8:30 AM ET (1330 GMT). The economy is expected to have grown at a 6.1% annualized rate in the first three months of the year, which would be the second-fastest GDP growth pace since the third quarter of 2003 and would follow a 4.3% rate in the fourth quarter.

And that’s before the impact of the $1.8 trillion package for families and education that President Joe Biden unveiled Wednesday in his first joint speech to Congress. 

Elsewhere, USD/TRY edged higher to 8.1972, ahead of the first public policy presentation by Turkey’s new central bank Governor Sahap Kavcioglu.

Kavcioglu is expected to raise inflation forecasts as the recent slide in the lira, following the abrupt sacking of his predecessor, exposed the limited room to deliver the interest-rate cuts sought by President Recep Tayyip Erdogan.

EURUSD Price Analysis – April 26

In case the Bulls maintain their momentum and push up the price to break $1.22 levels, then, $1.25 and $1.27 may be its target. In case the bears interrupt the bullish momentum, the price may reverse and face the support level at $1.20, $1.19, and $1.18.

EUR/USD Market

Key Levels:

Resistance levels: $1.22, $1.25, $1.27

Support levels: $1.20, $1.19, $1.18

EURUSD Long-term Trend: Bullish

EURUSD is bullish on the long-term outlook. A couple of weeks ago, the bears dominated the EURUSD market to the extent that there was no provision for the Bulls. The bearish momentum pushed down the price and found support below $1.18 level. A bullish engulfing candle emerges at the mentioned level and the price increases towards the north side. It breaks up resistance level of $1.18, $1.19 and $1.20.

The pair is trading above the two EMAs and the EMAs were distance from each other which indicate that the bulls are holding on to the EURUSD market. In case the Bulls maintain their momentum and push up the price to break $1.22 levels, then, $1.25 and $1.27 may be its target. In case the bears interrupt the bullish momentum, the price may reverse and face the support level at $1.20, $1.19, and $1.18. The Relative Strength Index period 14 is at 70 levels with the signal line pointing down to indicate a sell.

EURUSD medium-term Trend: Bullish

EURUSD is bullish in the medium-term outlook. The bulls interrupted the bearish movement that took place last three weeks in the EURUSD market. The bulls reacted against bearish trend at the support level of $1.16 price level. The price is increasing towards the resistance level of $1.22.

The price is trading above the 9 periods EMA and 21 periods EMA, the former EMA has crossed the later EMA upside. Meanwhile, the Relative Strength Index period 14 is above 50 levels with the signal line pointing downside indicating a sell signal which may be a pullback.

Chinese e-commerce company JD.com has paid some employees with the digital yuan as the country’s central bank looks to expand the scope of its use.

The People’s Bank of China (PBOC) began work on the digital currency/electronic payment (DC/EP) in 2014. Also known the digital yuan or e-CNY, the digital currency is a way to replace coins and cash in circulation and is primarily focused on domestic use.

The digital yuan has not been rolled out nationwide yet, but the PBOC has carried out a number of trials across major cities in China. These pilot projects are conducted in the form of lotteries where the digital yuan is handed out to residents of a city for them to spend at certain retailers. JD.com has participated in these trials.https://art19.com/shows/bcd08fc3-8958-4c47-bf8e-524432adcd77/episodes/a8f71e65-4c2f-41b1-9136-22d3b8c6ba29/embed

On Sunday, JD.com said in a blog post it had cooperated with the PBOC on the digital currency trials. The company also said it used the electronic money to pay salaries for some of its employees in January. JD revealed that it used the DC/EP to make payments to other businesses, too.

JD’s efforts highlight new uses for China’s digital currency. It comes after PBOC Deputy Governor Li Bo said earlier this month that the central bank will be looking to increase the scope of trials for the currency. This could include allowing foreign visitors and athletes at the Beijing Winter Olympics in 2022 to use the digital yuan.

China’s digital yuan is not a cryptocurrency like bitcoin. Instead, it is issued by the central bank. China has taken the lead with so-called central bank digital currencies as other monetary authorities around the world explore issuing their own.

EURJPY Price Analysis – April 23 Should the bears increase their pressure, the support level of $129.1 may be penetrated and the bearish momentum may extend to $128.2 and $127.3 price level.  Should the Bulls defend the support level of $129.1, the resistance level of $129.8, $130.7, and $131.2 may be tested by the bulls. […]

U.S. equity index futures mixed, little changed

* Euro STOXX 600 down ~0.7%

* Dollar falls; gold up, crude slips, Bitcoin sub-$50k

* U.S. 10-Year Treasury yield ~1.53% Welcome to the home for real-time coverage of equity markets brought to you by Reuters reporters. You can share your thoughts with us at: [email protected]

DOW TRANSPORTS: TRYING TO DELIVER A RECORD RUN (0900 EDT/1300 GMT)

The Dow Jones Transportation Average .DJT is attempting to rise for a 12th-straight week. Using Refinitiv data back to early 1988, the DJT has never risen more than 11-straight weeks.

As stands, the DJT is virtually flat for the week. It finished at 14,920.95 on Thursday, which is just a 1.4 point, or 0.01%, gain from last Friday’s close of 14,919.55. It came down to the wire last week as well, with the DJT closing up just 1.22 points.

Since closing down for the week ending January 29 of this year, the DJT has gained around 24%. The S&P 500 .SPX and Dow Industrials .DJI have risen around 12%-13% over this period. any event, given the win streak, the DJT appears stretched to the upside. Aside from the current streak, it last rose 11-straight weeks from late-November, 1988, to early-February, 1989:

Momentum also appears overheated. The weekly RSI ended Thursday at 83.775, or its most overbought since an 84.799 print for the week ending January 12, 2018. Of note, back then, from the following week’s intraday high, the DJT collapsed around 14% into early February.

Meanwhile, Avis CAR.O is the best performing stock in the DJT by far in 2021 with a gain of more than 112%. However, Kansas City Southern (NYSE:KSU) KSU.N has provided the biggest positive impact on the index. KSU is responsible for almost a quarter of the DJT’s more than 2400 point year-to-date rise. Just this week, Canadian National Railway Co CNR.TO made a $33.7 billion bid for KSU in a cash-and-stock deal. Gabriel)

The dollar weakened in early European trading Thursday, remaining near to multi-week lows, with the euro in focus as the European Central Bank meets.

At 2:55 AM ET (0755 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was 0.1% lower at 91.013, just above the seven-week low of 90.856 seen on Tuesday. 

USD/JPY was down 0.2% at 107.84, GBP/USD rose 0.1% to 1.3940, the risk-sensitive AUD/USD rose 0.1% to 0.7755, while EUR/USD traded 0.1% higher at 1.2043, after touching a seven-week high of 1.2079 earlier in the week.

Investors have also turned away from the greenback as U.S. Treasury yields reversed their climbs in March 2021, and an auction of 20-year Treasuries drew strong demand on Wednesday, which also helped to cap yields.

The benchmark 10-year Treasury yield was last seen around 1.53%, around the lowest it has been since mid-March, a sharp move lower from the 14-month high at 1.7760% reached at the end of last month.

Still, most attention Thursday will be on the European Central Bank, as it hands down its latest policy decision later in the day. The central bank is widely expected to maintain its current policy, but any positive comments from the central bank about the economic outlook or hints of tapering bond purchases are widely expected to boost the euro, especially after it said at its last meeting that it would step up net asset purchases to curtail the rise in bond yields.

“With the euro below its multi-quarter average and the European Central Bank already announcing front-loaded purchases in March, the April ECB meeting should have a muted impact on the single currency,” said analysts at ING, in a note. “Instead, the focus will be on improving eurozone data in coming months, and with EUR/USD still trading cheap, further upside lies ahead.”  

Elsewhere, USD/CAD fell 0.1% at 1.2480, continuing Wednesday’s selloff after the Bank of Canada tapered the pace of weekly bond buying to C$3 billion per week from C$4 billion, becoming the first G-10 central bank to rein in its bond buying program.

“The outlook has improved for both the global and Canadian economies. Activity has proven more resilient than expected in the face of the COVID-19 pandemic, and the rollout of vaccines is progressing,” the BoC said in a statement.

USD/TRY rose 1.5% to 8.3075, with the lira continuing to weaken amid questions of the extent of foreign-currency reserves the central bank used in an attempt to prop up the domestic currency over the last couple of years, a period when President Recep Tayyip Erdogan’s son-in-law Berat Albayrak was treasury and finance minister.

The euro slipped against the dollar Thursday as the European Central Bank indicated it was in no rush to taper its emergency bond purchases despite optimism over a strong recovery.

EUR/USD fell 0.26% to $1.200.

The European Central Bank, as widely expected, left its benchmark rate at 0.00% and said it would stick with plans to accelerate emergency bond purchases until March 2022 in a bid to keep bond yields steady.   

“[T]he Governing Council expects purchases under the PEPP over the current quarter to continue to be conducted at a significantly higher pace than during the first months of the year,” the ECB said in a monetary policy statement.

President of the bank Christine Lagarde was also quick to downplay any notion the central bank would look at tapering bond purchases, saying it was “simply premature,” and adding that any changes to the program would be “data-dependent.”

The dovish stance from the ECB comes even as the central bank expressed optimism over the recovery as the bloc gets its vaccine rollout back on track.

“Looking ahead, progress with vaccination campaigns and the envisaged gradual relaxation of containment measures underpin the expectation of a firm rebound in economic activity in the course of 2021,” Lagarde said.

Following the meeting, analysts talked up the prospect of further climb in the euro on expectations that most of the bad news has been priced in.

“The EUR/USD uptrend which started this month should remain in place,” ING said. “Plenty of bad news has now been priced into the euro, the currency has been trading with a persistent risk premium over the past few months and despite the recent rise, EUR/USD still screens cheap based on our short-term financial fair value model (by around 1.5%).”

The dollar languished on Wednesday, hovering just above a seven-week low with subdued U.S. bond yields reducing the currency’s yield appeal.

The safe-haven greenback got some respite from a pullback in world stocks from record highs as flare ups in coronavirus infections from India to Canada soured the outlook for a quick global recovery.

The safety bid also bolstered the yen, which climbed to a fresh seven-week peak of 107.88 per dollar on Wednesday.

The dollar index, which tracks the U.S. currency against six major peers, was at 91.196 early in the Asian trading day after slumping as low as 90.856 on Tuesday for the first time since March 3. It has declined 2.2% so far this month.

The index “has broken down through a key short-term support level at 91.30 and can see further downside to the low 90s,” with the euro rising to around $1.22, Westpac strategists wrote in a client note.

“We were looking for the (index) to top in Q3, when second derivative U.S. rebound measures crest and Europe gets her vax act together, but the early indications are that vaccinations across Europe are picking up pace already,” Westpac said.

The single currency traded at $1.2039, after touching a seven-week high of $1.2079 overnight.

The European Central Bank decides policy on Thursday, with the Federal Reserve following next week.

The benchmark 10-year Treasury yield was around 1.56%, not far from its lowest since mid-March, as it continued to consolidate following its retreat from the 14-month high at 1.7760% reached at the end of last month.

Declines in U.S. yields and the dollar in April have come as evidence mounted that the Fed would be slower in tightening monetary policy than it had appeared to the market, analysts said.

Some encouragement for the euro came from the announcement that the European Union has secured an additional 100 million doses of the COVID-19 vaccine produced by BioNTech and Pfizer (NYSE:PFE).

Elsewhere though, pandemic developments triggered investor caution.

India reported 1,761 deaths from COVID-19, its highest daily toll, while Canada and the United States extended a land-border closure for non-essential travellers.

On Wall Street, travel stocks weighed on sentiment, with airline and cruise operators falling sharply.

Oil fell, dragging commodity-linked currencies lower overnight.

The Canadian dollar traded at C$1.26050 to the greenback in Asia, following its biggest plunge in nearly two months on Tuesday. The Bank of Canada is due to announce a policy decision later Wednesday.

The Australian dollar, a barometer for risk appetite, edged higher to $0.77335 after sliding 0.4% overnight.

In cryptocurrencies, bitcoin traded around $56,000, consolidating following its dip to as low as $51,541.16 on Sunday. It set a record high at $64,895.22 on April 14.

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Currency bid prices at 056 GMT

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Euro/Dollar $1.2036 $1.2036 +0.00% -1.49% +1.2044 +1.2031

Dollar/Yen 108.0650 108.0950 -0.01% +4.64% +108.1270 +107.8800

Euro/Yen 130.06 130.08 -0.02% +2.47% +130.1100 +129.8900

Dollar/Swiss 0.9160 0.9159 +0.02% +3.55% +0.9161 +0.9154

Sterling/Dollar 1.3936 1.3938 +0.02% +2.04% +1.3946 +1.3934

Dollar/Canadian 1.2608 1.2612 -0.05% -1.01% +1.2615 +1.2603

Aussie/Dollar 0.7725 0.7725 +0.02% +0.44% +0.7735 +0.7721

NZ 0.7173 0.7170 +0.07% -0.08% +0.7180 +0.7164

Dollar/Dollar

All spots

Tokyo spots

Europe spots

Volatilities

Tokyo Forex market info from BOJ

The dollar dropped to its lowest in nearly seven weeks during the Asian session, while the euro rallied, as investors grew more optimistic about the pace of vaccine rollout in Europe and U.S. Treasury yields remained below their March spikes.

The dollar has fallen so far in April as U.S. bond yields retreated from the 14-month highs touched last month. The moves are a reverse of what happened in the first quarter of the year, when the dollar strengthened as U.S. Treasury yields rose, offering higher returns on the greenback.

At 0728 GMT, the dollar index was down 0.1% at 90.952, having hit a low of 90.877 during the Asian session =USD .

The euro was up 0.3% at $1.2065 – its highest in nearly seven weeks – after having passed the key $1.20 in the previous session.

Commerzbank (DE:CBKG) strategist You-Na Park-Heger wrote in a note to clients that the recent fall in the dollar is due to the U.S. Federal Reserve’s reassuring the market that it will not end its monetary stimulus anytime soon, while an improving vaccine situation in Europe is supporting the euro. But she said that the situation could rapidly change.

“The economic recovery in the U.S. might drive up inflation expectations further, fuelling rate hike speculation. The news situation in the euro zone in connection with corona might change again as uncertainty remains high,” she said.

Some analysts said the support for the euro likely came from the announcement that the European Union has secured an additional 100 million doses of COVID-19 vaccine by BioNTech 22UAy.DE and Pfizer (NYSE:PFE) PFE.N . the yen, the dollar broke the 108 level overnight, before reversing course, up 0.3% on the day at 108.450 JPY=EBS .

“USD/JPY is one G10 currency pair which has still not fully retraced the move higher from March when it started the month trading closer to the 106.00-level,” Lee Hardman, currency analyst at MUFG, said in a note to clients.

The Australian dollar strengthened to a one-month high of 0.7812, helped by minutes from the Reserve Bank of Australia’s April meeting which showed the central bank expects a faster rebound from the pandemic. 0729 GMT it was at 0.7808, up 0.7% on the day AUD=D3 . The New Zealand dollar was up 0.6% at 0.7223 NZD=D3 .

Oil prices edged higher on Monday, supported by a weaker U.S. dollar but gains were capped by concerns about the impact on demand from rising coronavirus cases in India. commodity-linked Norwegian crown hit its strongest since 2018 versus the dollar, and also reached its strongest since January 2020 versus the euro NOK=D3 EURNOK=D3