Forex Forecast

USDCAD Forecast Revisions The rally in US equities and higher commodity prices highlight the better environment for risk coming into Asia, helped by the prospect of continued Fed accommodation (reinforced by comments from the Fed’s Dudley and Yellen), decent Italian bond auctions, the strong March new lending figures in China, and the better than expected […]

Strong China Lending Numbers A reasonable set of BTP auctions and some strong Chinese lending numbers saw risk assets turn around as the US walked in. New Yuan loans rose to 1010 Bln yuan in March, significantly above all of the economists surveyed on Bloomberg.

Stronger Employment Boosts AUD A much stronger than expected Australian employment report gave AUDUSD 70 pips of upside overnight. 44k new jobs were created against expectations of only 6.5k, and the unemployment rate held steady at 5.2% despite fears it would tick higher.

Calmer Waters The overnight rebound in equities amid the prospect of strong US earnings results and the better tone in peripheral bond markets have helped to underpin the euro, which has reclaimed some lost ground versus the US dollar and yen.

Respite For Now After the heavy sell-off in risk assets on Tuesday, markets stabilized overnight in Europe. Equity markets turned around, buoyed by the prospects of strong US earnings results and the FX markets responded accordingly.

Don’t Overlook US Earnings FX risk appetite steadied during the Asia session after the US payrolls hangover finally seemed to run its course. AUD, NZD, and to a lesser extent the euro, chalked up some modest gains while USDJPY found a foothold too.

On The Defensive Markets remain in ‘risk off’ mode, emboldening the yen bulls against the backdrop of the overnight drop in the major equity indices, lower commodity prices, sub-2% 10yr UST yields and wider peripheral spreads in Europe.

Investor Caution European investors returning from their holidays were faced with a cautious tone to markets on Tuesday. The dollar gained against the euro, sterling and other risk currencies as the European bond markets re-opened with a clear risk-off tone.

BoJ Holds Steady The Bank of Japan made no change to any of its policy settings overnight – in line with market consensus. USDJPY did drop 20 pips on the headlines however, suggesting a minority of investors were looking for more easing.

BoJ Watching Risk remained under pressure amid holiday-thinned activity overnight, with US equities dealing with the post-payrolls blues, USTs sporting a firmer profile, and USDJPY holding below 82.

Stay Long Dollars Markets were dormant during the European session due to holidays though general risk sentiment remained soft as indices which were open gradually absorbed the weak payrolls number on Friday.