It was a good day for the dollar to rise, with the greenback seeing a steady rise across the board, even before the high-level US reports came out.
But how did the rest of the financial markets perform?
Titles:
- China official manufacturing PMI for April: 50.4 (50.3 expected, 50.8 previously)
- China official non-manufacturing PMI for April: 51.2 (52.3 expected, 53.0 previously)
- China Caixin Manufacturing PMI for April: 51.4 (51.0 expected, 51.1 previous)
- Japanese housing starts for March: -12.8% y/y (-7.6% expected, -8.2% previously)
- Swiss economic gauge KOF for April: 101.8 (102.1 expected, 100.4 previous)
- Eurozone headline CPI estimate for April: 2.4% y/y (2.4% expected, 2.4% previous)
- Eurozone core CPI estimate for April: 2.7% y/y (2.6% expected, 2.9% previous)
- Eurozone preliminary GDP Q1 2024: 0.3% q/q (0.1% expected, 0.0% previously)
- Canadian GDP for February: 0.2% m/m (0.3% expected, 0.5% previous)
- US Employment Cost Index Q1 2024: 1.2% QoQ (1.0% expected, 0.9% previous)
- March US S&P Composite Home Price Index: 7.3% y/y (6.7% expected, 6.6% previous)
- Chicago PMI for April: 37.9 (44.9 expected, 41.4 previous)
- US CB Consumer Confidence Index for April: 97.0 (expected 104.0, previous 103.1)
Broad market price movement:
Dollar Index, Gold, S&P 500, Oil, 10-Year US Yields, Bitcoin Overlay Chart by TradingView
Risk assets appeared to be on a holiday from the start, as crude oil and gold fell while the safe-haven dollar gradually rose during Asian market hours. Bitcoin initially rose but was unable to sustain its gains, seeing a steady decline throughout the day.
Meanwhile, Treasury yields began rising at the start of the London session, and continued to rise even after US data was mixed. The quarterly Employment Cost Index reflects stronger price pressures with an increase of 1.2% versus the expected 1.0% increase, while the CB Consumer Confidence Index fell below estimates at 97.0 versus 104.0.
On the other hand, the S&P 500 index likely turned lower amid expectations that… Next Federal Open Market Committee (FOMC) decision It would highlight flat wage inflation and downplay easing plans after seeing strong labor cost data.
Forex market behavior: US dollar against major currencies
Overlay of the US dollar against major currencies Chart by TradingView
The US dollar got off to a strong start, as risk-off flows appeared to be at play for traders in the Asian session after seeing mostly downbeat Chinese official PMI numbers.
The euro was able to put up a good fight when preliminary GDP and CPI readings from the bloc came in stronger than mostly expected, but profit-taking and a strong dollar still forced EUR/USD to close slightly in the red.
Mixed US data did little to derail the dollar's rise, as traders appeared to focus on the possibility of the Federal Open Market Committee highlighting persistent wage pressures from a higher-than-expected quarterly employment cost index.
Weaker-than-expected monthly GDP from Canada added downward pressure on the Canadian dollar, but the Australian and New Zealand dollars remained in a weaker position overall, with each ending down about 1.5% against the greenback.
Potential catalysts coming on the economic calendar:
- Reserve Bank of New Zealand Governor Orr's speech at 1:00 AM GMT
- US Non-Farm Employment changes at 12:15 PM GMT
- Final US Manufacturing PMI at 1:45 PM GMT
- US ISM Manufacturing PMI at 2:00 PM GMT
- US JOLTS JOBS OPEN AT 2:00 PM GMT
- FOMC Monetary Policy Statement at 6:00 PM GMT
- FOMC press conference at 6:30 PM GMT
- Bank of Canada Governor Macklem's speech at 8:15 PM GMT
- Bank of Japan meeting minutes at 11:50 PM GMT
Price action may intensify at the start of the US trading session, as Uncle Sam will print a new set of key jobs indicators that could be useful clues for the Non-Farm Payrolls report release on Friday.
However, the focus is likely to be on Monetary policy decision of the Federal Open Market Committee (FOMC). Later in the day, as well as the Powell Conference, where market participants are keen to see if the central bank's stance has changed after seeing the latest round of growth and inflation data.
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