US dollar taps 106 as US 2yr eyes break of 5%, gold rangebound: Asian Open

FOMC member Bostic said on Thursday that a rate cut is not likely until the end of the year. This makes sense given the strength of US data with elevated interest rates, and likely lands conveniently after the election that the Fed do not want to be seen interfering with by changing policy a couple of months before it.
Backing up the sentiment, Kashkari said that “once inflation is heading back to 2%, we can cut rates”.
The ECB continued to prime markets for a June cut, with Kazaks saying “the path for rates in down” and “the probability of a June rate cut is quite high”.
Just in case someone out there may be expecting any monetary policy excitement from the BOJ this year, Noguchi said “it’s short-term policy rate adjustment is likely to be slow”.
The US, Japan and Korea released their first trilateral dialogue on Wednesday and agreed to consult closely on FX markets following the rapid depreciation of the Japanese yen and Korean won.
Australia’s unemployment rose to 3.8% and 28.5k jobs were added in March, which likely changes nothing in regards to the RBA likely retaining their cash rate at 4.35% over the foreseeable future
Morgan Stanley are retaining their call that the Bank of England (BOE) could begin cutting rates in May, which is against the consensus of September among other banks.
US yields were higher on Thursday, sending the US 2-year just below 5% within a potential bullish pennant pattern
Higher yields allowed the US dollar to recoup some of Wednesday’s ‘bearish engulfing day’ losses and retrace to 106, a key level for bulls and bears to scrap over today.
I noted in yesterday’s report that US bonds are nearing support levels on the weekly chart which could cap yields in the coming weeks, but that still allows for some bullish wriggle room over the near term.

Economic events (times in AEST)

09:30 – Japan’s inflation report
16:00 – UK retail sales
16:00 – German PPI
19:00 – IMF meetings
00:15 – BOE Breeden speaks, MOC member Ramsden speaks
00:30 – Fed member Goolsbee speaks

Gold technical analysis:

Gold is currently on track for a fifth consecutive bullish week, and at current level it would close at a record high on the weekly chart (even though it trades beneath last week’s high). However, it is also on track for an inside week, which shows a loss of momentum from the bull camp. A bullish inside day also formed on Thursday, further suggesting gold remains rangebound between 2355 – 2400 with diminishing volatility. And looking at the calendar there is a reasonable chance gold could remain rangebound today.

View the full economic calendar

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

How to trade with City Index

You can trade with City Index by following these four easy steps:

Open an account, or log in if you’re already a customer

• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
Search for the market you want to trade in our award-winning platform
Choose your position and size, and your stop and limit levels
Place the trade

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.