English (India)
7
Apr

EU Service PMI, U.S. Trade Balance, FOMC Minutes

calendar 07/04/2021 - 07:14 UTC

The dollar continues to show weakness in recent days, following a very strong first quarter, as expectations are fading that the accelerating U.S. economic growth and inflation could force the Fed to tighten its monetary policy.

The dollar index rose 3.6% in the quarter, its biggest quarterly rise in three years with investors appearing optimistic about the U.S. economic outlook, as growth and inflation both were seen accelerating, something that could push the Fed to tighten its policy as early as late 2022. Against the yen, the U.S. currency rose 7.2%, the largest gain since the last quarter of 2016.

Investors now await the minutes from the Fed’s March meeting later in the day, and chairman Jerome Powell’s remarks at a panel about the global economy a day later.

In the energy sector, WTI crude oil has posted a small recovery on Tuesday possibly boosted by ongoing signs of reopening progress in the U.S. and reports that the International Monetary Fund lifted its global growth forecast to 6% in 2021, up from its prior forecast of 5.5%.

Stock markets showed little change, with a minor setback from technology and financial stocks, however the main U.S. indices trading close to their all-time highs.

A huge move upwards was seen in cryptos and specifically in the XRP that went from a Sunday open rate of $0.5831 to trade at $1.04 by Wednesday 06:12 GMT up by more than 70% on the week while on Tuesday it also posted its largest one-day gain since April 5.

For Wednesday, Service PMI data is due from the Eurozone while later in the day, U.S. Trade balance data, U.S. consumer credit and the minutes from the FOMC’s most recent meeting are due.

EUR/USD

Following a sharp drop that started on February 25th, where the EUR/USD went form levels above 1.22 to hit a low of 1.17046 by the end of March, some recovery is seen lately, with the pair moving higher into positive territory for the past week, driven by a decline in U.S. bond yields and by traders lowering their aggressive expectations that the Federal Reserve will tighten its policy earlier than pledged.

The EUR/USD ended Tuesday with a 0.48% daily gain while on a weekly basis it is close to 1% higher.

For Wednesday, Service PMI data is due from the Eurozone while later in the day, U.S. Trade balance data, U.S. consumer credit and the minutes from the FOMC’s most recent meeting are due.

EUR/USD

Bitcoin

The bitcoin gave away part of its recent gains on Tuesday, posting a drop of 2.35% while on a weekly basis it is still trading more than 1% higher as of Wednesday 6:00 AM GMT. The cryptocurrency market capitalization seems to benefit from huge inflows of capital and increased institutional participation lately, with its market capitalization reaching a new all-time high of $2 trillion on Monday, with Bitcoin's holding the $1 trillion market cap for one whole week.

A huge move upwards was seen in XRP that went from a Sunday open rate of $0.5831 to trade at $1.04 by Wednesday 06:12 GMT up by more than 70% for the week, while on Tuesday it also posted its largest one-day gain since April 5.

Bitcoin

WTI Oil

WTI oil prices posted a small recovery of 0.57% on Tuesday possibly boosted by ongoing signs of reopening progress in the U.S. and reports that the International Monetary Fund lifted its global growth forecast to 6% in 2021, up from its prior forecast of 5.5%. Gains in WTI were limited however as a report by the American Petroleum Institute showed a stockpile rise that suggests weakness in demand. The commodity is trading almost 3.31% lower for the week.

Investors are also pricing in OPECs recent decision to remove its year-long production cuts on the assumption of increasing summer demand for oil and the fact that Iran, which has been violating the sanctions for some time is ramping up production.

The focus now is shifted towards the official government inventory report due Wednesday which is expected to show a weekly drop of U.S. crude inventories by 1.44 million barrels last week.

WTI Oil

US 500

The US 500 ended a three-day winning streak on Tuesday, closing the day 0.12% in the negative. The index remains however 0.93% higher on the weekly chart and is trading close to its record high of 4074 reached on Monday.

Investors appear to be weighing optimism on the global recovery against the possibility that the recent rise has pushed stock markets into "overbought" territory.

Tech stocks have been the main driver for the index recently, with Tesla standing out and posting a 5% gain on Monday. On Tuesday however technology stocks seemed to struggle to hold onto gains, with Microsoft, Google-parent Alphabet, Facebook, and Amazon traded lower, while Apple was higher.

Investors are now looking ahead to the start of the quarterly earnings season.

US 500

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