Midday brief – USD selloff continues

The dollar’s weakness on Wednesday was after the CB Consumer confidence declined supporting speculations that the country may fall into a recession this year. Investors await the US Core Durable Goods Orders for clues on the health of the manufacturing sector.

GBPAUD soared +0.92% following the release of inflation data from Australia. The Consumer Price Index in the country rose more than anticipated but stayed below the previous reading supporting limited pressure on the Reserve Bank of Australia to raise rates further.

CPI [YoY] was 7.0% from an estimate of 6.9% and a previous print of 7.8% while [QoQ] Q1 was at 1.4% vs 1.3% forecast and 1.9% of the previous quarter. The sterling rode on the back of improved risk appetite on the day. The pair’s bulls traded above 1.8780 and soared towards 1.9000.

EURUSD traded +0.62% higher, trimming Tuesday’s losses as bulls regain traction ahead of the US Core Durable Goods orders. The goods orders are expected to slide to -0.2% indicating a slowing manufacturing activity, which may add selling pressure on the greenback.

Data from Gfk in Germany showed that consumers’ confidence in the economy increased in May to -25.7 from -29.3, boosting the euro in European trade. The pair took advantage of the dollar`s renewed selloff as central bank meetings closed in. Buyers faced a hurdle at 1.1050 after rising from the 1.0967 intraday low. Bulls may aim for 1.1100 and 1.1120 before retracing to 1.0880.

NZDJPY slid -0.32% as the Yen took over safe haven flows following the broad USD selloff. The NZD failed to ride on upbeat trade balance data released in the Asian session. The country’s exports were more than anticipated at 6.51 billion as a result of revived Chinese economic activity. Imports were however more than exports at 7.78 billion taking the trade balance to -1 273 million vs -920 million expected. The pair is currently trading at the 81.80 support as bears may seek 80.00 below the former.

European stocks fell in the European session as a slump in bank earnings reports in the US affected shares in Europe. The UK 100 was down -0.15% after bulls gave up 7900. CAC 40 trimmed -0.40% from 7600 as bears may seek 7400 resistance-turned-support. DAX in Germany tanked -0.47% towards 15 600.

US stock futures traded south ahead of the earnings report from Meta. The US 100 futures were down -0.12% as bears extended the slide from Tuesday with targets at 12750 and 12 500. US 500 futures lost -0.35% as sellers traded around an 18-day low at 4075. US 30 futures traded -0.17% lower below 33 600 as bears eye 33 300.

Elsewhere, gold traded back to the $2000 mark on US dollar weakness as traders await central bank meetings next week. XAUUSD was trading at +0.04% $1993 and $2000. However, further upside may be likely if bulls manage to trade above $2020.