- US employment cost Index for Q1 comes in at 1.2% versus 1.0% expected
- US April consumer confidence 97.0 vs 104.0 expected
- US February CaseShiller 20-city US house price index +7.3% y/y vs +6.7% expected
- Canada February GDP +0.2% vs +0.3% expected
- Former Binance CEO Changpeng Zhao sentenced to four months in prison
- May forex seasonals: The strongest month for the Dollar Index
- US April Texas services sector outlook -10.6 vs -5.5 prior
- ECB's Holzmann pushes for break after cutting in June
Markets:
- S&P 500 down 1.6%
- WTI crude oil down 99-cents to $81.64
- US 10-year yields up 7 bps to 4.68%
- Gold down $42 to $2291
- Bitcoin down 5.5%
- USD leads, NZD lags
Angst revved up into high gear ahead of tomorrow's FOMC decision, in large part due to a hot employment cost index. The fear is that the Fed introduces the idea of rate hikes.
The moves coming into US trading were moderate but after the data, the dollar surged and didn't look back. The ECI moves were around 30-40 pips but those generally doubled as the day wore on, in part because of non-stop bond and equity selling.
For USD/JPY, the data helped to underscore the fundamental backing behind the rally in the pair. The data helped to break the post-intervention high and it steadily rose from there, ultimately gaining nearly 150 pips on the day.
The euro's decline was 50 pips but it also finished on the lows of the day to cap off a moderate loss on the month.
The Canadian dollar was also hit but softer GDP numbers and falling oil prices but it still outperformed the heavy losses in AUD and NZD. Yesterday the kiwi took a run at 0.6000 and fell just short. It's since sunk to 0.5888. The loonie retested the Feb-April range this week but that zone held and it shot higher today to 1.3771.
Earnings after the bell don't bode well for a further equity bounce but it will ultimately come down to how dovish or hawkish the Fed chair wants to be.
