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US Yields/Equities Weigh On Antipodean FX, CNY Continues Slide

FOREX
  • Initially On Thursday, the USD Index extended on the prior day’s declines, exacerbated by a firm rally in the Euro. EURUSD rose from 1.0825 to a high print of 1.0936 in early European trade. This prompted the DXY to retreat a further 0.5% and briefly trade back below 100
  • However, during the US session, continued upward pressure on US yields and equities extending to fresh session lows lent support to the greenback which recovered to print fresh highs for the day.
  • EURUSD fell roughly 90 pips off the earlier highs, narrowing the gap with the intra-day low at 1.0824.
  • In similar vein, USDJPY made fresh session highs above 128.64. Short-term pullbacks - as seen on Wednesday - may prove technically corrective. Recent activity reinforces underlying bullish conditions and signals potential for a continuation of the bull cycle, with the focus on 129.40/44, yesterday’s high as well as a Fibonacci projection.
  • The weakness in major equity benchmarks weighed on the likes of AUD and NZD, both falling around 1% and were the main underperformers. Despite the notable intra-day shift, both pairs simply erased the entirety of yesterdays gains and spot prices reside close to the week’s opening levels.
  • The last few days were marked by some significant moves in the CNY, with USDCNY breaking above the key 200DMA and probing resistance at the 6.45 level. The 200DMA has historically acted as a strong resistance; therefore, the bull trend could extend further in the near term following the recent breakout.
  • Approaching the APAC crossover, markets will turn their focus to a swathe of flash manufacturing and services PMIs, first for Australia and Japan before key European readings. Canadian retail sales will also be published before further comments at the IMF spring meetings from BOE Governor Andrew Bailey.
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