Headlines:
- Euro holds steady ahead of the ECB later
- USD/JPY extends gains to 1% to highest levels since November last year
- Eurozone April trade balance -€11.7 billion vs €25.6 billion prior
- France May final CPI +5.1% vs +5.1% y/y prelim
- Switzerland May producer and import prices -0.3% vs +0.2% m/m prior
- North Korea has fired what could be a ballistic missile - Japan defence ministry
Markets:
- AUD leads, JPY lags on the day
- European equities lower; S&P 500 futures down 0.3%
- US 10-year yields up 3.1 bps to 3.829%
- Gold down 0.7% to $1,929.74
- WTI crude up 1.1% to $69.19
- Bitcoin flat at $24,925
Markets are still digesting the Fed policy decision yesterday, and I shared some thoughts on that earlier here.
It was a rather tentative session in Europe, as regional markets are also gearing up for the ECB meeting outcome later today. The central bank is surely going to hike rates by 25 bps but it will be interesting to see if they will pre-commit to another rate hike in July, which they had been talking up in recent weeks.
The dollar is mostly steady, with the help of a big jump higher in USD/JPY during Asia trading. The pair ran up from a low of 139.95 all the way above 141.00 and pushed to a high of 141.50 in European morning trade.
There weren't much news driving the move but the technicals are your best bet in trying to read into the situation.
Besides that, the dollar is mostly little changed against the rest of the major currencies bloc. EUR/USD is largely hanging around 1.0820-30 levels, being little changed on the day currently.
The kiwi is the only exception with NZD/USD down 0.7% to 0.6163 amid a more cautious risk mood and also a further weakening in the Chinese yuan. The aussie is able to stay more resilient after a hot jobs report, which prompted traders to think about a RBA rate hike in July.
Elsewhere, gold is under pressure in the aftermath of the Fed decision and looks poised to break below its 100-day moving average at long last in a potential fall towards $1,900 next.
