Major financial assets started the week quietly as the lack of market drivers gave traders room to prepare for potential catalysts this week.
How did your favorite assets perform yesterday?
Titles:
- Caixin China Public Service PMI For April: 52.5 vs. 52.7 previously; Price indices rose. Composite PMI improved from 52.7 to 52.8 (highest level since May 2023)
- Australia's MI inflation measure For April: 0.5% per month (previously 0.5%)
- HCOB Purchasing Managers' Index (PMI) for final services in France for April was revised upward from 50.5 to 51.3; “Job growth accelerated to a nine-month high,” and input cost inflation fell to its lowest levels since August 2021.
- HCOB Purchasing Managers' Index (PMI) for final services in Germany for April was revised downward from 53.3 to 53.2; “Employment increased at a strong and accelerating rate,” and service companies raised their prices due to rising costs and demand
- HCOB Eurozone final services PMI for April was revised upward from 52.9 to 53.3; “New businesses were supported by increased activity and the fastest pace of job creation in ten months,” “Inflationary pressures intensified.”
- Investor confidence in the Eurozone Sentix For May: -3.6 (-4.8 expected, -5.9 previous); “It appears that the economy has to some extent absorbed the various burdens it has borne in the past two years since the beginning of the Ukrainian crisis“
- Industrial producer prices in the euro area For March: -0.4% m/m as expected (vs. -1.1% previously)
- President of the Federal Reserve Bank of Richmond W FOMC voting member Thomas Barkin He believes that today's interest rates could “Take the edge off the order” And “Bringing inflation back to our goal“
- In a letter, Federal Reserve Bank of New York President John Williams He said “Eventually we will have interest rate cuts“But at the moment monetary policy is in”Very good place“
- Survey of Federal Reserve Senior Loan Officers Show more US banks announcing tougher lending standards in the first quarter of 2024
- Retail Sales Controller BRC-KPMG It fell 4.4% year-on-year in April, as wet spring weather, early Easter spending and inflationary pressures curbed shopping activity.
Broad market price movement:
Dollar Index, Gold, S&P 500, Oil, 10-Year US Yields, Bitcoin Overlay Chart by TradingView
After a short trip down at the start of the Asian session, gold and oil prices were trading higher. Gold, which is considered a safe haven, achieved gains on the back of an increase in Federal Reserve interest rate bets and talks about Israel continuing its attack on Rafah despite the ongoing ceasefire talks. Crude oil prices also benefited from these headlines along with speculation of OPEC+ extending production cuts.
Fed rate cut bets dominated the US session, pushing US stock indexes higher and extending gold's immediate gains. The US dollar topped the green today while US 10-year bond yields fell below 4.50%. Bitcoin (BTC/USD) danced to its own tune, reaching highs near $65,500 before falling to the $63,000 region.
Forex market behavior: US dollar against major currencies
Overlay of the US dollar against major currencies Chart by TradingView
The USD/JPY pair started the day with a huge jump while Japanese markets were on holiday and despite the weak US labor market readings seen on Friday.
The dollar's strength diminished towards the open of the European session and remained weak until the start of the US session when demand for US stocks is likely to improve demand for the US dollar. Speeches by FOMC members Barkin and Williams are likely to limit US dollar gains as they hinted that further interest rate hikes are off the table at the moment.
Despite the intraday rebound, the US dollar still ended the day mixed with gains against the Japanese yen, Swiss franc and New Zealand dollar while posting losses against the euro, Canadian dollar, British pound and Australian dollar.
Potential catalysts coming on the economic calendar:
- Unemployment rate in Switzerland at 5:45 am GMT
- German Factory Orders at 6:00 AM GMT
- German trade balance at 6:00 am GMT
- Halifax UK House Price Index at 6:00 AM GMT
- Initial special payrolls in France will be published at 6:45 AM GMT
- French trade balance at 6:45 am GMT
- UK Construction PMI at 8:30 AM GMT
- Eurozone retail sales at 9:00 AM GMT
- Canada's IVEY PMI at 2:00 PM GMT
- Bundesbank President Nagel will deliver a speech at 5:00 PM GMT
We are awaiting another data calendar that is not US-focused, so keep a close eye on potential price action for the currency. The European Central Bank's bets on lower interest rates and additional information about the Canadian economy may move the euro and the Canadian dollar today!
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