Market wrap: higher dollar and yields - Westpac

Analysts at Westpac noted that the US dollar rose against G10 currencies as US yields pressed higher, equities faltered and commodities became more mixed after a strong run. 

Key Quotes:

"Long maturity rates rose. The US 10yr treasury yield rose from 2.86% to 2.93% (a one-month high, and close to the multi-year high of 2.95%), while 2yr yields ranged sideways around 2.43%. Fed fund futures yields continued to price the next rate hike in June around 90%. Fed governor Brainard warned about rising asset prices and leverage."

"EUR weakened modestly, -0.2% on the day to 1.2340. USD/JPY ranged sideways between 107.25 and 107.50, unable to gain traction on the rise in the 10yr US treasury, probably capped by the fall in US stocks."

"AUD fell from its one-month high of 0.7813 to 0.7720. NZD fell from 0.7330 to 0.7260. AUD/NZD rose to a one-month high of 1.0673 before retracing to 1.0630."

"UK March retail sales headline fell -1.2% m/m,  against expectations of -0.6% m/m, mostly due to very low fuel sales, although all sectors bar department stores were weak as cold and snowy weather impacted consumers. Ex-fuel sales fell -0.5m/m (exp -0.4%)."

"GBP/USD dipped a little on the data but then recovered to a high of 1.4246, only to face an unexpectedly dovish tone from BoE governor Carney in a BBC interview. Carney affirmed that interest rates are likely to rise in the years ahead but said that in May, members would be “conscious that there are other meetings.” Cable dropped from 1.4195 to as low as 1.4069."

"US data had little impact. The Philly Fed business survey rose to 23.2 in April, from 22.3 last month, stronger than expected, outperforming other early month PMIs such as the NY Fed Empire which eased in April. On the cautionary side, new orders eased from 35.7 to 18.4, often a leading indicator of future business sentiment; the employment sub-index held firm (rising from 25.6 to 27.8) while the prices sub-indices notably jumped, prices paid rising from 42.6 to a seven year high of 56.4, though that is mostly an oil story. Jobless claims were held down near generational lows at 232k last week."