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The dollar posted another moderate decline against most major currencies on Wednesday, with the dollar index (USDX) moving further away from the 10-week highs hit earlier this month. Despite comments from Fed Chairman Jerome Powell downplaying the likelihood of early monetary easing last week, investors keep expectations high that rate cuts in March or May are imminent. Some pressure on the US currency came from Cleveland Fed President Loretta Mester who said that if the U.S. economy performs as she expects, it could open the door to rate cuts. But Mester said she was not ready to provide timing for easier policy amid ongoing inflation uncertainty.
On Wednesday, all three main US stock market indices gained sharply, with the US 500 moving to new record highs on the back of robust earnings reports with more than half of the S&P 500 companies having reported quarterly results, and 81.2% surpassing profit expectations, according to LSEG data on Tuesday. Ford shares rose by 6% as the automaker increased its first-quarter dividend and decided to scale back investments for electric vehicles. Wall Street's focus is now around Nvidia which is on the verge of becoming more valuable than Amazon for the first time in two decades, and the AI chipmaker is not far behind Google-owner Alphabet. A 40% surge in Nvidia so far in 2024 has elevated its market capitalization to $1.715 trillion.
Companies reporting fourth quarter earnings today are Wynn Resorts, ConocoPhillips, CYBERARK, Philip Morris, Kellogg, Illumina, Cloudflare, Take-Two Interactive, Affirm, Expedia, Pinterest, LiveRamp.
Some price action could be observed later in the day following the release of the US weekly jobless claims and US natural storage. In addition, investors could be watching closely, an interview of FOMC member Barkin for possible clues regarding future monetary policy.
The EUR/USD pair traded slightly higher on Wednesday ending the session with minor gains of 0.17%.
The Greenback slipped back amid lower in US yields across different timeframes at the time when investors continued to evaluate the likelihood that the Federal Reserve (Fed) might kick off its easing cycle at the May or June events.
European economic figures continue to soften, with multiple mid-week prints missing expectations. The ECB’s Board member Isabel Schnabel expressed that we are now entering a crucial stage where the precise adjustment and implementation of monetary policy are of utmost importance, as the focus is on managing the potential ripple effects. Unfortunately, the latest data that has been received does not alleviate her concerns that the final stretch of this process might prove to be the most challenging.
Gold prices was slightly higher on Wednesday, taking little support from a decline in the dollar and yields as markets remained on edge over the prospect of higher-for-longer U.S. interest rates.
The remain enough geopolitical concerns to keep safe-haven buying on the agenda, which is limiting gold's downside over the delays over timings on potential rate-cuts are acting as a cap to gold's immediate upside potential.
Investors will be watching out for U.S. weekly jobless claims data after last week's monthly non-farm payrolls report came in stronger-than-expected, showing signs of persistent strength in the labor market.
Oil prices rose for a third consecutive day on Wednesday, boosted by a larger-than-expected fall in U.S. fuel stocks, and rising tensions in the Middle East.
U.S. gasoline stocks fell by 3.15 million barrels last week compared with analysts' estimates for a build of 140,000 barrels, according to the EIA. Distillate stocks fell 3.2 million barrels, compared with estimates for a 1-million-barrel draw. On the other hand, crude stocks posted a larger-than-expected build of 5.5 million barrels as production recovered after a cold snap, while U.S. refiners stepped up maintenance.
Market participants are also tracking the Iranian-backed Houthi rebels' attacks on shipping in the Red Sea that have disrupted traffic through the Suez Canal.
U.S major stock indexes rose on Wednesday, with the US 500 registering a record closing high, as market participants applauded overall strength in U.S. earnings and monitored Federal Reserve comments for clues on interest rates. The US 500 ended the session 0.81% higher, while US 30 and US Tech 100 added gains of 0.48% and 1.08% respectively.
Shares in Snap slumped 34.6%, hitting a two-month low after it missed quarterly revenue estimates, as the Snapchat owner struggled to compete for advertising dollars. Ford shares rose 6% as the automaker increased its first-quarter dividend and decided to scale back investments in new capacity for loss-making electric vehicles. With more than half of the US 500 companies having reported quarterly results, 81.2% surpassed profit expectations, according to LSEG data on Tuesday.
Ahead in Thursday's trade, investors will be closely monitoring fresh jobless claims data, wholesale inventories and trade sales, as well as speeches from FOMC member Barkin.
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