FOREX: Risk Sensitive Currencies Plummet Amid Tariff Turmoil, AUD Falls 4.7%
Apr-04 16:42
- Risk sentiment continues to be significantly dented amid the pivotal turning point for global trade policy. While pessimism was more centred around the US on Thursday, contributing to the sharp dollar declines, Friday’s broad deterioration for risk has moderately propped up the greenback. However, dynamics have weighed substantially on higher beta currencies, with the 4.7% decline for AUDUSD best displaying the severity of the moves.
- AUDUSD broken a number of important support levels between 0.6200-0.6100, exacerbating the selloff. The pair hovers just above the psychological 0.600 mark as we approach the close, the lowest level since April 2020, shortly after the onset of the covid pandemic.
- At points of the day, moves in AUDJPY and AUDCHF were even outpacing the AUDUSD decline, as investors flocked to the low yielding safe havens. Indeed, record lows for AUDCHF leave the cross sub-0.5200, and down over 5% today. AUDJPY breached the August carry unwind lows below 90.00, prompting a sharp spike down to 87.41, fresh two-year lows.
- NZDUSD sits down 3.6% on the session, while GBPUSD is also 1.5% in the red. 8% losses for crude futures have also weighed heavily on the Norwegian Krone, with USDNOK the best part of 4% higher on the session.
- The USD index is around half a percent firmer, and this magnitude of move has been echoed by the Euro. EURUSD is significantly off the 1.1144 highs from Thursday, at 1.0985, but remains only 0.6% lower on Friday as the focus fell elsewhere.
- In emerging markets, CE3 currencies and the ZAR have all been heavily impacted, dipping around 1.5% against the dollar, but it is LatAm FX that has predominantly bore the brunt of the risk selloff. USDMXN is 2.7% higher, whereas gains for USDBRL and USDCLP have eclipsed 3% amid the poorer commodity backdrop.
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SECURITY: Trump Admin Holding Direct Talks w/Hamas On Ending War In Gaza - Axios
Mar-05 16:40
Axios reporting that the Trump administration is holding direct talks with Hamas on the release of US hostages and a "broader end to the war" in Gaza - understood to include "a deal to release all remaining hostages and reach a long-term truce".
- Axios notes: "The talks — held by U.S. presidential envoy for hostage affairs Adam Boehler — are unprecedented. The U.S. had never before engaged directly with Hamas, which it designated a terrorist organization in 1997."
- The talks come after the first phase of the Gaza ceasefire deal expired on Saturday without an agreement on transitioning to the second phase - withdrawal of Israeli troops and transfer of remaining hostages - or extending the first phase.
- The Jerusalem Post report: "On Tuesday, [Israeli] officials estimated that if no agreement is reached between Israel and Hamas, Israel would return to fighting in Gaza in about a week and a half."
- The Axios report has since been supported by additional reporting from the Jerusalem Post and Kan. Amichai Stein at Kan notes that, "Israel has been updated on the discussions."
- According to JPost: "The talks focused on releasing American hostages - but also all hostages. The message to Hamas: Show goodwill - to enable discussions about the second phase as well."
STIR: Late Morning SOFR Structure Sales, Updates
Mar-05 16:39
- appr -30,000 (pit/Block) SFRM5 95.50/96.00/96.50 put flys, 26.0 vs. 96.005/0.10%
- -10,000 0QH5 96.06/96.31 1x2 call spds, 1.0 to 0.5 ref 96.62
FED: US TSY 17W BILL AUCTION: HIGH 4.180%(ALLOT 83.95%)
Mar-05 16:32
- US TSY 17W BILL AUCTION: HIGH 4.180%(ALLOT 83.95%)
- US TSY 17W BILL AUCTION: DEALERS TAKE 26.04% OF COMPETITIVES
- US TSY 17W BILL AUCTION: DIRECTS TAKE 2.82% OF COMPETITIVES
- US TSY 17W BILL AUCTION: INDIRECTS TAKE 71.14% OF COMPETITIVES
- US TSY 17W BILL AUCTION: BID/CVR 3.42
