Forex Today: US Dollar loses momentum as Treasury yields slide
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No economic reports are due during the Asian session on Tuesday. After a quiet beginning of the week, investors will focus on earnings reports while preparing for crucial economic events later in the week, including Australian inflation, US and Eurozone GDP, US Core PCE and the Bank of Japan meeting.
Here is what you need to know on Tuesday, April 25:
On a quiet American session, the US Dollar weakened further as Wall Street indexes rebounded. The Dow Jones gained 0.20%, the S&P 500 rose 0.09% and the Nasdaq lost 0.29%. US bond yields dropped with the 10-year falling to 3.50% and the 2-year to 4.12%. Volatility in the US Treasury market is set to remain elevated amid the debt-ceiling drama and key data and events ahead. The divergence across the curve shows that the difference between the one-month and the three-month bill yields it at record highs.
Tuesday will be a busy day with earnings from Microsoft, Alphabet, Visa, PepsiCo, Novartis, McDonald’s, UPS, Verizon, Texas Instruments, General Electric, UBS, Halliburton and Spotify. Economic data due from the US include the S&P/Case-Shiller Home Price and New Home Sales. The focus is on Thursday’s GDP reading which includes key consumer inflation numbers. Next week is the FOMC meeting. The Federal Reserve (Fed) is expected to raise rates by 25 basis points and signal a pause.
The US Dollar Index fell to 101.35 reaching weekly lows. It is pointing south, looking vulnerable. USD/CHF posted the lowest daily close since January 2021, below 0.8900.
EUR/USD rose to the 1.1050 zone, approaching year-to-date highs supported by hawkish comments from European Central Bank (ECB) officials ahead of the May 4 meeting.
GBP/USD benefited from a weaker Dollar approaching 1.2500. The trend is up. The UK will inform Public Sector Net Borrowing on Tuesday. EUR/GBP rose for the third day, boosted by higher Eurozone bond yields and is near April highs.
USD/JPY finished a quiet Monday higher but far from the highs and trending lower, below 134.30. The pair remains sensitive to US yields. On Friday, the Bank of Japan will announce its monetary policy decision on Ueda’s first meeting as governor.
AUD/USD rebounded after hitting weekly lows at 0.6665 and climbed toward 0.6700. Australia will report inflation on Wednesday and next week it’s the Reserve Bank of Australia meeting.
The Kiwi outperformed among commodity currencies. NZD/USD recovered from monthly lows, rising above 0.6150 and AUD/NZD pulled back further to the 1.0850 area.
USD/CAD finished flat at 1.3540. The rally is facing strong resistance at 1.3565 and a correction seems likely.
Gold rose modestly after holding above last week’s lows, and reached $1,990$. Silver retook $25.00 after bottoming at $24.75.
Cryptocurrencies performed mixed. Bitcoin gave signs of reaching an interim bottom after rebounding from monthly lows below $27,000 to $27,500. An improvement in market sentiment helped crude oil prices. WTI rose 1%, moving closer to $80.00.
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