Markets:
- Gold down $40 to $2,372
- US 10-year yields up 1.6 bps to 4.576%
- WTI crude oil down 58 cents to $85.63
- S&P 500 up 0.7%
- AUD leads, CHF lags behind
The ECB’s decision surprisingly had no effect on prices. The euro wavered in a range of 1.0700 to 1.0750 with the main message that the ECB is considering cutting rates, but must continue to gain confidence as inflation falls. The chance of a rate cut in June increased from 70% to 77%, especially after the usual “source” reports made it clear. Still, if you didn’t know there was a central bank decision, the euro chart wouldn’t have stood out.
USD/JPY finished above 153.00 today, but only slightly higher than yesterday. This remains disappointing for the Japanese authorities who are trying to swim against the tide of the weakness of the yen. The usual suspects tried to respond yesterday, but it’s difficult when dollar buying is so strong. The pair did fall briefly as low as 152.77 as US yields fell earlier, but when they rebounded thanks to a poor 30-year auction, bids firmed up.
Cable tested 1.2500 on the downside but was unable to break through and rebounded to 1.2555.
USD/CAD hit a four-month high at 1.3725, but recovered as overall risk sentiment reversed and stock markets recovered much of yesterday’s decline , led by chipmakers and Apple. The pair ended up finishing under the figure and the loonie fell for a second day.
The AUD and NZD did better, holding on to gains and finishing near the day’s best levels. These are nevertheless small rebounds after strong declines yesterday.
The star of the show was once again golden. After erasing the CPI decline, it reached the afterburn phase, climbing to $2,375, a new all-time high and a $42 gain on the day.
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