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Forexlive Americas FX News Wrap: USD Corrects Lower After Recent Stall Rise.

By on April 20, 2022 0

The USD corrected lower today after the Dollar Index (DXY) hit its highest level since its highest level since March 20 yesterday. This move was certainly helped by the rise in the USDJPY which, entering today, closed higher for 13 consecutive days.

USDJPY hit a new cycle high today (and its highest level since May 2002) before falling (JPY higher). The AUD, NZD and CAD also rose sharply against the greenback, with each of these currencies advancing nearly 1% on the day.

USDCAD fell -0.95% after CPI inflation in Canada came in above expectations (although a change in methodology helped boost the number this month) and shifts expectations of a 50 basis point hike by the Bank of Canada at its next meeting.

In other news today, US existing home sales were slightly weaker than expected and more comfortably below the annualized sales pace of 6 million. The run-rate high for the series hit around 6.65 million. The full impact of soaring mortgage rates to 5.25% has yet to be fully realized. Higher prices and higher rates are a formula for a slowing housing market in the future

The Fed’s Evans and Daly both spoke and confirmed the 50 basis point rate hike at the next Fed meeting (there is no debate now). They also reiterated the need for the fed funds rate to be close to neutral by the end of the year, which many see as 2% to 2.5%.

The Fed’s Beige Book indicates that economic activity expanded at a moderate pace, with inflation remaining strong in all districts.

Below is an overview from the strongest to the weakest of the major currencies. The AUD was the strongest and the USD was the weakest.

The strongest the weakest of the major currencies

The US stock market closed mixed, with the Dow Jones Industrial Average outperforming the broader indexes, with Netflix’s fall having a particular impact on the NASDAQ index (Netflix closed a whopping minus one hundred and $22.39 or -35 ,14%):

  • The Dow Industrial Average rose 249.59 points or 0.71% to 35,160.80
  • The S&P index fell -2.76 points or -0.06% to 4459.46
  • The NASDAQ index fell -166.60 points or -1.22% to 13453.06
  • Russell 2000 was somewhat surprisingly up 7.4197 points or 0.37% at 2038.18

In the US debt market, falling yields were a catalyst for the greenback’s decline. The $16 billion 20-year bond auction was strong with very strong international demand (record high). A look at the changes for the daytime shows

  • 2 years 2.577%, -1.9 basis points
  • 5 years 2.862% -5.6 basis points
  • 10 years 2.832%, -10.8 basis points
  • 30 years 2.869% -12.9 basis points

In other markets,

  • Gold had a bearish and bullish trading day, with the price trading near the highs on the back of lower rates and the falling dollar.
  • Bitcoin price closes slightly lower after racing to test its 38.2% retracement of the most recent move lower. The current price is trading at $41,330 down – $174 on the day
  • In the oil market today, weekly inventory data showed a much steeper than expected drop of around -8 million barrels (expected to build around 2.5 million. Nonetheless, The price briefly declined below the $100 level before briefly returning to the level of The current price is trading at $102.56, up $0.51 on the day or 0.5%.