Thursday, March 28, 2024

Capital Markets: "Waller Pushes on Open Door: Push for Patience Lifts the Dollar, Complicating Japanese Efforts"

From Marc Chandler at Bannockburn Global Forex:

Overview: Comments by Fed Governor Waller, urging patience on rates and wanting more evidence that price pressures are moderating has helped the greenback extend its recent gains. The yen is the notable exception as the fear of intervention has restrained the dollar bulls. Poor German data, including a sharp 1.9% drop in February retail sales, the fourth consecutive monthly decline, underscored the euro's negative divergence, and the single currency was sold to new lows for the month below $1.0780. The Antipodeans and Scandis are leading the G10 currencies lower with 0.6%-0.8% losses. Emerging market currencies are mostly lower. The South Korean won, and Taiwanese dollar are exceptions with miniscule gains.

Equities in the Asia Pacific region are mixed. Japan, South Korea, and Taiwan markets fell, while China, Australia, and India are higher. Europe's Stoxx 600 is rising for its fourth consecutive session, and if this is maintained, it would be the longest advance in two months. US index futures are nursing small losses after yesterday's gains. European bond yields are 2-5 bp higher, with peripheral premiums widening slightly. The 10-year US Treasury yield is up three basis points to 4.22%. The two-year US yield is up almost six basis points to 4.63%. The Fed funds futures have shaved the odds of a June cut and pared the extent of this year's reduction. Despite higher yields and a firmer dollar, gold is firm, knocking on $2200. May WTI is in a $81.50-$82.00 range. The week's high was set on Monday near $82.50....