Analysts at Westpac offered a market wrap.
“The US dollar resumed its recent rally, rising against all G10 currencies though without fresh yield support. ”
“European equities mostly followed Asia’s upbeat lead and US stocks opened higher but ground lower over the day, the S&P 500 closing on its lows. Crude oil prices seemed to be supported by Israeli PM Netanyahu’s presentation claiming Iran is secretly reneging on the nuclear deal.
EUR/USD fell 0.5% to 1.2075, with German retail sales data disappointing and concern over Italy’s struggle to form a coalition government. GBP/USD did better, bouncing off 1.3715 to trim its daily loss to -0.2%. USD/JPY was choppy at times but overall 25 pips higher at 109.30 early Sydney.
AUD/USD extended its Sydney afternoon decline to about half a cent over the day, touching a low of 0.7525 in the NY afternoon, its weakest point since the December 2017 lows around 0.7500. NZD posted a very similar decline, to 0.7034 – a four-month low. AUD/NZD thus remained range-bound on either side of 1.0700.
US personal income and spending in March rose 0.3% and 0.4%, slightly below expectations with Feb revised lower. The core PCE deflator (Fed’s inflation target) rose by 0.2% in March, for a 1.9% annual gain, right in line with consensus. The Chicago purchasing managers index was strong once again in April, at 57.6.
The US 10yr treasury yield fell 1-2 basis points to 2.96%, while 2yr yields were unchanged around 2.49%. Fed fund futures yields price in 2 more rate hikes this year, with a chance of a third (for 4 in total).”