Bond yields. The dollar. Risk sentiment.
Three key themes that have been the pillar of trading for April. And yesterday, we got a bit of a breather or light pullback from some fronts. The bond selling cooled and stocks staged a late comeback (perhaps helped by Twitter accepting Elon Musk's bid). The dollar kept firmer for the most part although USD/JPY looks to be kept in control for now.
Either way, it doesn't take away from what has been the key trend during the month; that being surging bond yields, a stronger dollar, and rather sluggish equities sentiment. One day doesn't make a trend so I wouldn't be too particular about yesterday's moves.
The dollar is keeping lightly softer today but that comes after strong gains in the past few sessions. EUR/USD is up 0.1% to 1.0724 while AUD/USD is up 0.5% to 0.7215. The former doesn't look too appealing technically and the range today is still rather narrow, so I wouldn't bother too much. Meanwhile, the latter is keeping afloat daily support from the 15 March low @ 0.7165 but sellers are keeping well in control.
Elsewhere, USD/JPY is finding support from its 200-hour moving average earlier near 127.50 to keep above 128.00 for now.
Looking at bonds, the selling is not letting up too much with Treasury yields slightly higher across the curve. 10-year yields are up 3.4 bps to 2.86% currently. As for equities, the mood is little changed with S&P 500 futures and Nasdaq futures both up 0.1%.
With little on the economic calendar in Europe, expect the focus to stay on the key themes above. That will likely be the case until we get to the FOMC meeting on 4 May. The only thing that might offer some a bit of a change will be month-end flows in the next few days. On that note, Citi points out that dollar buying will be prevalent.
0600 GMT - Switzerland March trade balance data
That's all for the session ahead. I wish you all the best of days to come and good luck with your trading! Stay safe out there.
