Apr

U.K. GDP, UoM Consumer Sentiment, U.S. Import Prices

12/04/2024 - 07:55 UTC

The dollar rose for yet another session against most major currencies on Thursday, with the dollar index (USDX) gaining approximately 1.3% on the weekly chart, trading at levels last seen in November 2023. Even though the producer prices report came in lower than expected, that did not relieve worries about persistent inflation. In addition, Fed officials who spoke on Thursday repeated the same narrative calling for a patient approach with regards to monetary easing.

According to the CME Group's FedWatch tool, bets that the first cut in rates will occur in June, showed a slight increase to 23.8% from 16.4% seen in the previous session, while the scenario of rates remaining steady is at 75.4%.

In other news, the yen hit a 34-year low against the dollar with Japanese Finance Minister Shunichi Suzuki indicating a possible intervention by authorities to deal with excessive exchange-rate swings.

Wall Street sentiment showed some improvement on Thursday, as cooling producer prices and gains in the tech sector managed to push all three main stock indices higher. Apple contributed greatly to the recent gains, as its stock rose by more than 4% on a Bloomberg report that the tech giant is looking to boost Macbook sales by focusing the next upgrade of its M-family of chips on artificial intelligence. In the meantime, Amazon hit new record levels after its CEO Andy Jassy commented on how cloud computing is set for a major boost from generative artificial intelligence.

On the cryptos front, very little movement was seen in the top ten cryptos by market capitalization with Bitcoin trading right above the 70K mark and Ethereum at approximately 3.5K. Crypto investors appear on edge with the bitcoin halving underway, bracing themselves for a possible surge in price volatility.

Market focus for today shifts to GDP numbers from the UK, surveys on consumer sentiment and consumer inflation expectations by the university of Michigan, U.S. import prices and speeches from several FOMC members including Bostic and Daly.

EUR/USD

The EUR/USD pair ended the session with losses of 0.14% on Thursday after the European Central Bank decided to hold its Main Refinancing Operations Rate steady at 4.5%.

In the monetary policy statement, the ECB commented that restrictive financial conditions and interest rate hikes yet made are weighing on overall demand and pushing downward pressure on inflation. Lagarde added that labour market conditions are continuously easing, and demand for the manufacturing sector is weak.

The strong US Dollar also drives the weakness in the major currency pair. The appeal for the US Dollar strengthens as traders push back market expectations to Federal Reserve (Fed) rate cuts. Meanwhile, the US core PPI grew strongly by 2.4% from estimates of 2.3% and the prior reading of 2.0%.

Gold

Gold prices firmed on Thursday after softer-than-expected U.S. producer prices data boosted hopes for U.S. rate cuts this year, while persistent geopolitical concerns supported the precious metal.

A Labor Department report showed the Producer Price Index (PPI) rose 0.2% month-on-month in March, compared with a 0.3% increase expected.

Meanwhile, data on Wednesday showed that U.S. consumer prices increased more than expected in March.

Boston Fed President Susan Collins said on Thursday that recent data suggest it may take more time than previously thought to gain greater confidence in inflation's downward trajectory, before beginning to ease policy.

WTI Oil

Oil prices settled lower Thursday as concerns about growing non-OPEC output, led by the U.S., following a jump in crude stockpiles to the highest level since July, overshadowed concerns that an attack on Israel by Iran is imminent.

Middle East tensions support oil prices amid fears of imminent Iran attack. Geopolitical tensions in the middle east remain on edge following a Bloomberg report a day earlier that Iran is planning to retaliate against Israel following an attack on its consulate building in Syria.

US 500

U.S. stocks closed higher on Thursday, with tech-related momentum stocks leading the charge, as fresh economic data rekindled hopes that inflation remains in a cooling trend. At the end of the session US 500 was up 0.93% while US 30 rose 0.25% and US Tech 100 added gains of 1.83%.

U.S. producer prices increased by slightly less than expected in March, with PPI rising 0.2% last month, after rising by 0.6% in February. Economists had expected the PPI to gain 0.3%.The data come just a day after consumer inflation data for March rose more than expected, denting investor optimism for a Federal Reserve rate cut as soon as June.

Investors now switch their focus to first-quarter earnings season, with results from three major U.S. banks - JPMorgan Chase & Co, Citigroup Inc, and Wells Fargo & Co due this morning.

U.K. GDP, UoM Consumer Sentiment, U.S. Import Prices

EUR/USD

Gold

WTI Oil

US 500

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