Dollar retreats with yields, markets wary of Chinese cooling, US stimulus news eyed

The market mood is somewhat cautious as China is reportedly curbing credit while mixed reports about US stimulus also give investors a pause after sending US stocks to record highs. AUD/USD is edging higher after the RBA and several figures are eyed.

One day after the S&P 500 and the DJIA hit record highs, Asian stocks and US futures are on the back foot amid worries that China would curtail loan growth, to prevent credit bubbles. The cooling may last until the end of the year. On the other hand, the Caixin Services Purchasing Managers’ Index beat estimates with 54.3, showing robust activity in China.

Safe US bonds are finding fresh demand, pushing yields and the dollar lower. EUR/USD is settling above 1.18 and GBP/USD is changing hands around 1.39. Sterling is also benefiting from the British government’s announcement that it will proceed with the reopening plan on April 12. However, the UK remains hesitant about allowing international travel.

US stimulus: Democrats will be able to pass President Joe Biden’s infrastructure program via the quick reconciliation process, providing relief for markets. Investors also cheered comments from Senator Joe Manchin, who ejects an increase of the corporate tax rate to 28% but agrees to 25%. Deliberations within the ruling party are critical to passing the bill, as Republicans oppose it.

Monday’s rally was partially fueled by recent upbeat figures from the US. After Nonfarm Payrolls showed an increase of 916,000 jobs in March, the ISM Services PMI hit 63.7, the highest on record. Tuesday’s economic calendar features the JOLTs Job Openings report.

AUD/USD is changing hands around 0.7650 after the Reserve Bank of Australia left rates unchanged as expected. The Canberra-based institution released no hints about the future of its bond-buying scheme.

The total value of cryptocurrencies reached a peak of $2 trillion, only shortly after topping the $1 trillion mark. While Bitcoin remains below $60,000, Ethereum broke higher and tops $2,100 and XRP is above $0.80.

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