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US Data Underpins Supportive Greenback Tone, AUD, NZD and CHF all Plummet

FOREX
  • Higher-than-expected US data has underpinned a strong USD bid throughout Tuesday’s session, prompting a further adjustment of fed pricing and an associated 0.58% rally for the USD index.
  • A firmer-than-expected Q1 employment cost reading provided the latest ‘hawkish’ input for FOMC-dated OIS, leaving ~31bp of cuts priced through ’24 vs. ~35bp pre-release. Even within the Chicago Business Barometer details prices paid rose 6.7 points to 69.3, the highest level since August 2023, and 5.7 points above the prior 12-month average of 63.6.
  • Downside pressure on equity markets has provided an additional tailwind for the greenback, with potential month-end dynamics also bolstering the supportive greenback tone.
  • AUD and NZD have extended their poor performance overnight and remain the weakest in G10, both declining around 1.2% as we approach the APAC crossover. Weaker-than-expected Australian data overnight set the tone here and AUDUSD has grinded below the 0.6500 handle, narrowing the gap to initial support at 0.6441.
  • The Swiss Franc has also notably suffered which sees USDCHF (+0.81%) rise to a fresh cycle high on Tuesday, printing at 0.9185. It’s worth highlighting that we have April Swiss CPI data on Thursday, an important data point given the Swiss Franc’s sensitivity to the March release amid the dovish stance of the SNB, who unexpectedly cut rates in March. USDCHF’s impressive rally across 2024 will continue to target the October 2023 highs, residing at 0.9244.
  • For the major pairs, EURUSD remained heavy and briefly traded a new low on the week at 1.0676, however, the pair remains in a 60 pip range on the day. USDJPY edged higher, taking out 157.00 and consolidated around 157.50 as markets slowly eroded the sharp move lower from Monday, following the touted intervention from the BOJ.
  • RBNZ Governor Orr is due to hold a press conference about the Financial Stability Report overnight. Multiple European holidays may pave the way for a subdued session before the focus swiftly turns to the US ISM Manufacturing PMI and the May Fed decision/press conference.
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