Forex Market
USD: Under Pressure Amid Softer Data and Cautious Sentiment
The US dollar faced broad-based weakness overnight, pressured by disappointing economic data and cautious risk sentiment. Treasury Secretary Bessent’s remarks on China’s role in trade de-escalation, alongside concerns flagged about a strong euro possibly prompting ECB rate cuts, added to market uncertainty. However, FX markets largely brushed off the comments initially, trading within established ranges.
Data-wise, the Dallas Fed Manufacturing Activity Index plunged to -35.8 in April, sharply down from -16.3 and well below the forecasted -14.1, further weighing on the greenback. In response, EUR/USD broke above 1.1400 to highs of 1.1423, GBP/USD surged to 1.3434, and USD/JPY slid to 142.05. Commodity currencies also rallied, with AUD/USD climbing to 0.6430 and NZD/USD reaching 0.5981. Meanwhile, USD/CAD fell to lows of 1.3825.
Despite the volatility, Wall Street ended relatively flat with the Dow Jones up 0.2%, the Nasdaq down 0.2%, and the S&P 500 unchanged, reflecting lingering market caution.
AUD: Edging Higher but Capped by Technical Resistance
The AUD/USD traded within a range of 0.63685–0.6435 overnight, closing near the upper end as USD weakness supported risk currencies. During Asian and European trading, AUD/USD briefly touched 0.6429 but faced selling pressure near resistance levels.
With no major Australian data releases scheduled today, AUD/USD is expected to remain sensitive to broader USD movements and risk sentiment. Support is likely around 0.6300, while offers are seen building in the 0.6460–0.6480 zone.
In crosses, AUD/JPY tracked USD/JPY movements, holding above 142.0 support. AUD/EUR hovered near 0.5630 amid mixed eurozone signals, while AUD/GBP remained steady near 0.4780 despite a stronger sterling.
Key Economic Data Ahead (Sydney Time)
Today’s US JOLTS data will be closely watched. A significant deviation from the expected 7.5 million job openings could shift sentiment on the US labour market and affect USD performance. Softer data could reinforce expectations of Fed rate cuts.
General Market
Outside of FX, global equity markets had a mixed performance.
Asian equities opened quietly, with the Nikkei gaining 0.4%, the Shenzhen declining 0.1%, and the Hang Seng flat. The ASX managed a 0.4% rise despite weakness in mining stocks.
In Europe, stocks started stronger with the CAC up 0.8%, the Stoxx and DAX both adding 0.6%, and the FTSE climbing 0.3%. However, US indices failed to hold early gains, with Wall Street slipping into losses across the morning session before ending largely flat.
US 10-year Treasury yields fell 3bps to 4.20% early on, before rebounding to 4.27% later in the session. Crude oil also softened, with Brent declining 0.6% to $66.50/bbl, adding mild pressure to commodity-linked currencies.
Overall, cautious sentiment prevailed ahead of key data releases later tonight.
