The US dollar index trades above $92.50 for the second time in March but the markets disconnect from each other as Oil rises to engulf yesterday’s price action and trade back inside the March range above $60.00 per barrel.
The US EIA Weekly Crude report showed stocks were building but at a slower pace to last week and as the expectations were for a draw added to this the Crude Cushing figure showed a larger draw which gave traders the incentive to keep buying with an expectancy for demand to increase against less supply. Though a report out of OPEC+ was cautionary due to the fresh lockdown, meaning they are also likely to keep the output cuts for longer, adding to the tight supply.
The commodity pairs, AUD, NZD, and CAD trade mixed with the Canadian dollar gaining on the back of stronger energy prices and with the Australian dollar looking likely to end the session with an indecisive candle at the swing lows of February 2021. The New Zealand dollar has taken a battering these last few days especially after the NZ government undermined the Kiwi to try and curb the house prices rising further.
The yen and fixed income markets are showing signs of risk-on, so they are at least trading in their usual manner with each other, but the higher yields pushed the Nasdaq all the way down to 12900 and the US Treasury 5 Year Note auction.
The 5-year notes high yield bid printed 0.850% which is up from the previous auction of 0.621% indicating that dealers are still expecting near-term inflation expectations. The bid-to-cover ratio showed an increase on the previous auction showing the demand for these notes is still there, though under the 6-month average.
If the auction did indeed signal the low in the UsaTec price action today, there is still a lot of work to be done by the bulls to catch up with S&P500 and Dow Jones Industrial Average (DJIA). This month the Nasdaq has lost 2.7% while the DJIA is up 3.6%. The main drag on the Nasdaq today was the top-weighted stocks in the index, with Apple Inc., Microsoft and Amazon all trading lower into the London session close.
This afternoon data release highlight was the IHS Markit Flash US Manufacturing PMI which rose slightly to 59 in March from 58.6 in February, but the miss in expectations was a US session catalyst. Supply chains are still being disrupted and were the highest on record resulting in supplier scarcities and input delays.
The US durable goods data missed expectations as orders for US manufactured goods unexpectedly declined 1.1% month-over-month in February of 2021. The decline is the first in ten months.
UK Prime minister Johnson responded to the US Treasury Yellen's comment today, that a corporate tax rate of 28% would be "appropriate within a global framework" in order for the US to remain competitive; saying that he thinks low taxes are the best way forward and wants to be as competitive as possible. This is slightly different from what the UK Chancellor had been talking about earlier this month as he viewed increased taxes as a necessary tool to reduce the deficit.