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Despite gloomy US data, the US Dollar rose after two days of significant losses. On Wednesday, bonds increased in value while equities on Wall Street finished neutral. Even though economic data and stock prices are slowing down, the bond market is still warning of an impending recession.
From two-month lows, the US Dollar Index rose near 102.00. The trend for DXY is still gloomy. On Wednesday, US and European bond yields decreased as the bond market pointed to a possible recession. The US 10-year bond’s closing rate was 3.30%, which was the lowest since September.
Economic Data
The US data came in below projections. Contrary to estimates of a 200K increase, the ADP Employment report revealed a 145K increase in private payrolls in March. As of March, the ISM Service PMI was 51.2 as opposed to 55.1 in February. The US Employment report is due on Friday.
Key Developments
The focus shifts to nonfarm payrolls after the ADP and ISM Service PMI. The Reserve Bank of Australia Financial Stability Review, the Chinese Caixin Service PMI, Canadian employment, and US weekly Jobless Claims are among the data sets that will be released on Thursday. The Easter break might have an impact on the markets.
Falling yields kept the Japanese Yen strong, and it once more outperformed. Despite the Dollar’s strength during the American session, USD/JPY managed to recover 131.00 after falling for the third day in a row. From two-month highs, the EUR/USD fell to finish at 1.0900. Lower European yields and a downturn in market confidence caused the rise to stall.
Due to the Reserve Bank of New Zealand’s surprising move, the New Zealand Dollar had one of the best days on Wednesday (RBNZ). Rates were increased by the central bank by 50 basis points, to 5.25%. NZD/USD originally surged to 0.6379 before falling to as low as 0.6282 and eventually rising to around 0.6330. The AUD/NZD pair spiked to 1.0588, its lowest level since December, before bouncing back to 1.0640.
For the second day in a row, USD/CAD corrected higher, moving above 1.3450. The bearish tendency, though, is still present. On Thursday, Canada will present data on the labour market. Analysts expected more modest gains in jobs, predicting a 12K increase in payroll in March and a slight increase in the Unemployment Rate to 5.1%.
After moving above 1.2500 for the first time since June 2022, the GBP/USD fell; however, it found support at 1.2430 and pared losses. The close for EUR/GBP was the lowest since mid-March after a minor decline. The pound outperformed following comments from Bank of England (BoE) Chief Economist Pill about inflation persistence.
After dropping to 0.6676, just over the 20-day Simple Moving Average, AUD/USD rose back to levels above 0.6700. The Aussie received some support from Reserve Bank Governor Philip Lowe. He said that despite the decision to pause the hike cycle, it does not mean tightening is over.
The Mexican Peso was the worst performer on Wednesday, with USD/MXN rising above 18.30. Mexico reported a slowdown in annual inflation from 7.62% to 6.85% in March. The Central Bank of India will announce its decision on Thursday.
Gold price lost momentum and fell to $2,009 per ounce only to rise back to $2,020, showing that bulls are still in control. Silver continues to consolidate around $25.00. Bitcoin ended flat, hovering around $28,250, while Ethereum rose 1.60% to $1,910.
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