As the North American session gets underway, the US dollar is trading higher while equity markets are mostly firmer. Chip stocks are helping lead the gains after reports confirmed that Jensen Huang was traveling to China with President Trump and the US delegation. That news has helped lift shares of NVIDIA and supported broader tech sentiment, with Nasdaq futures up around 200 points. S&P futures are higher by roughly 20 points, while Dow futures lag and are lower by 113 points in pre-market trading.
US yields are modestly lower ahead of today’s $30 billion US Treasury 30-year bond auction at 1:00 PM ET. The recent 3-year and 10-year auctions were met with below-average demand, keeping traders focused on whether longer-duration buyers step in today. The 2-year yield is down 0.6 basis points at 3.989%, the 10-year yield is down 0.4 basis points at 4.466%, and the 30-year yield is off 0.1 basis points at 5.028%.
Crude oil is trading modestly lower, down $0.25 at $101.87, after reaching a session high of $102.39 and a low of $100.56. Meanwhile, traders are also preparing for the US PPI report at 8:30 AM ET. Expectations are for headline PPI to rise 0.5% month-over-month and 4.9% year-over-year. Core PPI ex-food and energy is expected at 0.3% on the month and 4.3% year-over-year. The data could influence both yields and Fed expectations heading into the second half of the week.
Pres. Trump has landed in China for meetings with China’s Xi.
Looking at the major currency pairs versus the USD:
EURUSD:
Sellers pushed the pair lower during the Asian-Pacific session, driving the price below the 200-hour moving average at 1.1737 and through the key 100-day moving average at 1.1708. The move extended to a session low of 1.1696 before downside momentum faded. As North American trading begins, the pair is back above the 100-day moving average, making that level a key barometer for today’s bias. A move back below would shift focus toward the 200-day moving average and the 38.2% retracement of the rally from the February 12 low, both near 1.1680.
USDJPY:
The USDJPY has moved modestly higher, extending away from the 100-day moving average at 157.37 and climbing back above the 38.2% retracement level at 157.495. On the topside, traders are targeting a swing area between 157.97 and 158.26. However, as the pair pushes higher, traders will remain alert to possible intervention rhetoric or action from Japanese officials.
GBPUSD:
The GBPUSD is attempting to break below a key swing area between 1.3497 and 1.3512. The pair briefly traded below the zone, reaching a low of 1.3495, before rebounding modestly. As the North American session begins, price action remains within that support area, making it an important technical barometer for both buyers and sellers. If sellers can extend below the range, the next downside targets include the 100-day moving average at 1.3481, the 38.2% retracement of the rally from the March 31 low at 1.34669, and an additional swing area down to 1.3446. Below that sits the 200-day moving average at 1.34227. In other words, sellers still have several important support levels to break before regaining stronger technical control.
