Market update: USD weak against Majors and EM FX – TDS

FXStreet (Barcelona) - Paul Fage, Senior Emerging Markets Strategist at TD Securities, summarizes the market performance in the European trade – Majors and EM FX, noting that ‘USD weakness’ remains the major theme for today.

Key Quotes

“Against USD, EUR is up 0.5%, JPY up 0.25%. GBP is up 0.75% after slightly more hawkish BoE minutes.”

“Today AUD is the clear outperformer, up 1.2%, on the back of slightly stronger than expected CPI data with the market growing more sceptical about of a May cut. We think that the RBA will still cut in May by 25 bps to 2.0%, but that will be the terminal rate. NZD dragged higher by AUD and is up 0.8%.”

“EM FX mainly stronger against USD. A bit weaker than expected CPI data in South Africa had little impact and ZAR is slightly up on the day. MYR is up 0.7%, with Malaysia CPI in line with expectation.”

“TRY slightly down on the day ahead of MPC meeting. We expect rates on hold, but the CBRT will also announce other measures to support TRY; we are sceptical about their potential impact.”

“INR has also bucked the trend and is small down following comments by RBI advisor Goyal that the RBI has room to cut by another 50 bps and would probably like to see INR weaken.”

“Asian equity markets mainly stronger with Shanghai +2.4%, Nikkei +1.1% and Sensex +0.9%. European equity markets are mainly weaker, with Dax down –0.65%.”

“Fixed Income markets are mainly stronger, with 10y UST –1.2 bps and 10y bunds –0.8 bps. But 10Y Gilts +2.34 bps on the back of the BoE minutes.”

“Brent Oil down 0.5%. Base and precious metals mixed.”