Talking Points:

  • US Dollar Gains Amid Broad Liquidation Across Commodity Markets
  • Follow-Through on Overnight Moves to be Tested as Liquidity Returns
  • Yen Drops, Nikkei Gains as Soft Trade Data Drives BOJ Easing Bets

The US Dollar advanced in overnight trade in a move that appeared to mirror a selloff in the commodities space. Crude oil traded aggressively lower, with the WTI contract on pace to issue its largest daily drop in three weeks. Liquidation likewise struck the precious metals space, with gold and silver both under pressure. The move may have followed a report from the Financial Times over the weekend saying that Barclays, one the world’s largest players in the commodities markets, is planning to wind down a large portion of the business after a sharp slide in revenues.

Most commodities are priced in terms of the greenback. With that in mind, it stands to reason that a pre-emptive selloff reflecting the exit of major market participant would generate parallel declines in commodity prices and an advance from the benchmark currency. The magnitude of the move may have been amplified by thin holiday-induced liquidity, with key markets in Australia and Hong Kong as well as Europe offline for Easter Monday. It remains to be seen whether momentum carries through into US trade, when participation ought to see something of a pickup.

The Japanese Yen underperformed after the March set of Trade Balance figures revealed an unexpectedly large deficit of -¥1446.3 billion. Details of the report appeared more worrisome than the headline figure: the year-on-year export growth rate slowed to 1.8 percent, marking the weakest reading in a year. The outcome sent the benchmark Nikkei 225 stock index higher and weighed on the Yen in a move that seemed to reflect speculation increasingly weak economic news-flow will encourage the Bank of Japan to expand monetary stimulus efforts.

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Asia Session

GMT

CCY

EVENT

ACT

EXP

PREV

23:50

JPY

Merchandise Trade Balance Total (¥) (MAR)

-1446.3B

-1080.9B

-802.5B

23:50

JPY

Adj. Merchandise Trade Balance (¥) (MAR)

-1714.2B

-1427.6B

-1184.0B

23:50

JPY

Merchandise Trade Imports (YoY) (MAR)

18.1%

16.2%

9.0%

23:50

JPY

Merchandise Trade Exports (YoY) (MAR)

1.8%

6.3%

9.8%

5:00

JPY

Supermarket Sales (YoY) (MAR)

-

1.5%

7:00

JPY

Convenience Store Sales (YoY) (MAR)

-

1.0%

European Session

GMT

CCY

EVENT

EXP

PREV

IMPACT

No Data

Critical Levels

CCY

Supp 3

Supp 2

Supp 1

Pivot Point

Res 1

Res 2

Res 3

EUR/USD

1.3789

1.3802

1.3807

1.3815

1.3820

1.3828

1.3841

GBP/USD

1.6732

1.6761

1.6777

1.6790

1.6806

1.6819

1.6848

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

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