Forexlive Americas FX news wrap 28 May: USD rebounds helped by rising yields &confidence

• NASDAQ new record driven by Nvidia
• EURUSD backs off from swing area today & moves toward hourly MAs. Those are the key levels
• WTI crude oil climbs above $80 for the first time in a week
• Crude oil futures settle at $79.83
• MUFG maintains long EUR/USD position with a target of 1.1050
• The bond market isn’t having a good day
• SF Fed Pres.Mary Daly: New technologies often re-allocate labor
• U.S. Treasury auctions off $70 billion of five-year notes at a high yield of 4.553%
• Fed Gov. Lisa Cook to speak on I and the economy at 1:05 PM ET
• The US treasury to auction $70 billion of 5 year notes at 1 PM ET
• European equity close: Declines in the -0.2% to -0.9% range
• US sells 2-year notes at 4.917% vs 4.907% WI
• Dallas Fed manufacturing index -19.4 vs -14.5 prior
• ECB’s Knot: The risk of a hard landing in eurozone is receeding fairly rapidly
• US May consumer confidence 102.0 vs 95.9 expected
• Fed’s Kashkari: Wage growth is still quite robust relative to 2% goal
• ECB’s Knot: Projection round meetings will be key for rate decisions
• US March Case-Shiller home price index +0.3% m/m vs +0.3% expected
• Kickstart the trading day for May 28 w/a technical look at the EURUSD, USDJPY and GBPUSD.
• ECB’s Holzman says he would support a rate cut next week but next moves not automatic
• Canada April producer price index +1.5% vs +0.8% prior
• As the NA session begins, the CHF is the strongest and the USD is the weakest
• ForexLive European FX news wrap: Dollar stays sluggish in quiet trading

The US consumer confidence came in much better than expectations in the US session. The index moved to 102.00 vs 95.9 estimate

Details:

• Present situation index 143.1 vs 142.9 prior
• Expectations index 74.6 vs 66.4 prior
• Jobs hard-to-get 13.5 vs 15.5 prior
• 16.9% of consumers expect their incomes to increase, from 16.8% last month
• 12-month inflation expectations 5.4% vs 5.3%

Although it was a big move higher, it still only retraced part of the tumble seen over the last three months that saw the index fall from 115 to 97.5 last month.

In other economic news, the Case Shiller Home Price Index for March came in as expected 0.3%.

The U.S. Treasury auctioned off a record amount of two-year notes and five-year notes today. Both had less than stellar demand will each having a positive tail (1.0 basis points and 1.3 basis points respectively). The Bid to covers were also light compared to 6-month averages indicative of light demand.

That helped to send yields higher today with the 2-year yield approaching 5%. It is currently trading at 4.980% up 2.8 basis points on the day.

A snapshot of the yield curve shows:

• 2-year year 4.980%, +2.8 basis points
• 5-year yield 4.593%, +6.3 basis points
• 10 year yield 4.551%, +7.9 basis points
• 30-year yield 4.665%, +8.9 basis points.

Tomorrow the U.S. Treasury will finish it coupon auctions with the sale of 7-year notes.

The move higher in rates helped to reverse earlier declines in the USD.

• The EURUSD moved higher in the Asian and early European session reaching a high of 1.0888, before reversing lower back down toward its 200-hour moving average 1.0852. The low price in the US session reached 1.0854.
• The GBPUSD found willing sellers at its high at 1.27997 – just short of 1.2800. The subsequent fall to the price it down to a low of 1.2753 in the last few hours of trading. In the new trading day, the 100-hour moving average 1.27379 will be a key target followed by the 200 hour moving average at 1.27183 (and moving higher).
• The USDJPY is closing the day making new intraday highs after taking out the Monday/Tuesday hi 156.985. The high price from last week at 157.19 is the next key target. Moving above, opens the door for the potential move toward 158.00 (high praise from May 1).

Other major currency pairs saw the USD get stronger from lower levels, and although the USD is ending lower vs the CHF, it is back above its 200-hour moving average at 0.9116. The low price for the day was down at 0.9085.

In the US equity market, the NASDAQ index closed at yet another record level. The index is now up 13.38% on the year recall from last year the index rose 43.42%.

Today the NASDAQ index rose 99.09 points or 0.59% enclosed above the 17,000 level for the first time at 17,019.88. The gains were led by Nvidia which surged by $74.32 or 6.98%.

The S&P index could only muster up a small 1.32 point gain or 0.02% at 5306.03. It still remains below its all-time high close reached last week at 5321.42.

The Dow industrial average fell -216.73 points or -0.55% to 38852.87. The index is now down 1151 points from its high close at 40003.60

This article was written by Greg Michalowski at www.forexlive.com.