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Dollar Higher as Treasury Yields Attempting Rebound, Sterling Stays Weak on Brexit

Dollar rises broadly in early US session with help from rebound in treasury yields. 10-year yield is now trying to regain 2.4 handle. Poor Q4 GDP is ignored while traders could be hopeful on some progress in US-China trade talks in Beijing. The development drags down the Japanese to one of the weakest.

Nevertheless, Sterling is the worst performing one on Brexit impasse. There will be another debate in the parliament tomorrow. But there is no sign of finally approving the deal to push the Brexit date from April 12 to May 22. Euro is also among the weakest after poor Eurozone sentiments indicators and Germany CPI miss.

Technically, with today’s decline, EUR/USD is heading to 1.1176 key support and break will resume medium term down trend. USD/JPY’s rebound now turn focus to 110.95 minor resistance and bring will bring stronger rise back to 112.13 resistance. EUR/JPY breached 123.82 temporary low but there is no follow through selling yet. Though, more downside is mildly in favor in EUR/JPY.

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In Europe, FTSE is currently up 0.90%. DAX is up 0.48%. CAC is up 0.34%. German 10-year yield is up 0.0131 at -0.065. Earlier in Asia, Nikkei dropped -1.61%. Hong Kong HSI rose 0.16%. China Shanghai SSE dropped -0.92%, lost 3000 handle. Singapore Strait Times rose 0.16%. Japan 10-year JGB yield dropped -0.0263 to -0.092, heading towards -0.1 handle.

US initial claims dropped to 211k, Q4 GDP revised down to 2.2% only

US initial jobless claims dropped -5k to 211k in the week ending March 23, below expectation of 220k. Four-week moving average of initial claims dropped 3.25k to 217.25k. Continuing claims rose 13k to 1.756M in the week ending March 16. Four-week moving average dropped -4.25k to 1.751M.

Q4 GDP growth was finalized at 2.2% annualized, revised down from 2.6% and missed expectation of 2.4%. That’s sharply slower from Q3’s 3.4%. Real GDP grew only 2.9% in 2018, up from 2.2% in 2017 but was below 3.0% handle.

Pending home sales dropped -1.0% mom in February versus expectation of 0.0% mom.

US Mnuchin look forward to productive meetings in China

US Treasury Secretary Steven Mnuchin said he’s looking forward to “productive meetings” as he arrived in Beijing with Trade Representative Robert Lighthizer for another round of trade negotiations. Mnuchin told reporter that “ambassador Lighthizer and myself are pleased to be back here in Beijing, and we look forward to productive meetings.”

Citing unnamed officials, Reuters reported that China’s proposals went further than in the past, which created hope for an eventual trade deal. The discussions on forced technology transfer covered areas that were not touched before, in terms of both scope and specifics.

Meanwhile, the texts of agreements moved forward in all areas even though they’re not where the US want to be. The areas are believed to include forced technology transfer and cyber theft, intellectual property rights, services, currency, agriculture and non-tariff barriers to trade.

Another official noted that some of the tariffs imposed since last year will stay even after a deal is made. And this will be an important issue to resolve, as an important part of the final deal. But for now, there is no clear timeline for completing the deal yet. And negotiations could drag on till June.

China pledges to quicken full market access on banking and finance

Chinese Premier Li Keqiang told business executives at the Boao forum that there is no trust deficit with the US and hoped that the trade talks could achieve results. Li also pledged that China must protect intellectual property or there is no hope for transformation in the country. He also sounded upbeat on the economy and said “changes” in March exceeded expectations.

Besides, Li said China is “quickening the full opening of market access for foreign investors in banking, securities and insurance sectors.” Scope of foreign banks, bank and non-bank card payments will be “expanded sharply”. Restrictions on securities and insurance brokers will also be rem