Markets:
- S&P 500 flat at 4155
- WTI crude oil up $0.43 to $77.80
- US 10-year yields up 2.3 bps to three.568%
- Gold down $22 to $1982
- EUR leads, CAD lags
The each day adjustments within the largest currencies on Friday had been minimal however the day wasn’t with out drama. Particularly, the US PMI from S&P International led to a pointy rally within the US greenback, together with 100 pips in USD/JPY and half that in EUR/USD and GBP/USD. The report was surprisingly sturdy together with excessive numbers on new orders and worth pressures that few individuals noticed coming.
Some skepticism set in after the numbers although and the greenback transfer light. Finally, the greenback rally utterly reversed (and extra) in opposition to the euro and pound. USD/JPY held onto about 60 pips of positive factors from the low however that was nonetheless not sufficient to erase the losses from European buying and selling.
There temper within the markets is uncertainty proper now. For each information level that signifies a recession, there’s one which reveals the economic system on stable floor. This week a gentle Philly Fed cranked up the recession discuss once more just for it to be undercut by the quantity at present. Subsequent week there’s one other spherical of information however the market is much less prone to be swayed by second-tier information factors until just a few run in the identical route.
One worrisome signal was the underperformance of commodity currencies. It got here regardless of positive factors in oil, although copper was down barely and gold fell 1%. Some pointed to softer international manufacturing PMIs at present as a worrisome signal for international useful resource demand and that might have been an element.
The loonie was particularly gentle however that owes to weak particulars within the Canadian retail gross sales report. I am going to repost right here what I instructed Reuters.
“Excessive mortgage charges are beginning to chew Canadians’ wallets,” stated Adam Button, chief forex analyst at ForexLive. “Canada is especially delicate to increased rates of interest and that may result in divergence in U.S. and Canadian financial efficiency within the second quarter and past.”