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Dollar Retreats from three-month Highs, Stocks Soar

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US Equities

US indices rose for the fourth consecutive day, as US Treasury yields dropped. US stocks are being supported by the positive earnings outlook. Amazon and Microsoft showed huge profits, that helped to take the NASDAQ higher while SP500 and DowJones were capped by the weaker profits of Exxon.

USD

The US Dollar Index, DXY, fell from three-month highs as yields dropped. The US data on Friday showed a strong GDP but the Consumer spending is growing at the slowest pace in five years which might lead to a slowdown in inflation numbers. In terms of data, we await the Federal Open Market Committee meeting and the Non-Farm Payrolls this week.

GBP

The British pound traded at two-month lows against the US dollar, as the preliminary GDP numbers came out lower than anticipated. The Cable was able to benefit from the seasonal factor and ended April in green for thirteen years, as for this year, the winning streak is in danger. The currency was facing pressures after economic figures showed that the economy slowed down in Q1, and the chances of an interest rate hike by the Bank of England in May declined.

Gold

Gold traded at five-week lows as leaders of North and South Korea pledged to remove nuclear weapons, and the US economic data confirmed that the US economy is resilient. The Federal Reserve meeting is awaited carefully by gold traders as a hawkish tone is expected to weigh on gold prices.

Oil

Oil prices slipped on Friday, as geopolitical tensions eased and the Oil rig count pointed to higher US production. The West Texas Intermediate has been trading in almost two dollar range for the past two weeks. Baker Hughes oil rig count showed that U.S. drillers added five oil rigs last week, raising the total count to 825. The US is second oil producer in the world behind Russia, as oil production rose more than 25 percent since mid-2016.

The most important economic events:

GMT Country Event Expectation Previous
12:00 EU German CPI (MoM) (Apr)  -0.1% 0.4%
12:00 EU German CPI (YoY) (Apr)   1.6%   1.6%
12:30 US Core PCE Price Index (YoY) (Mar) 1.9% 1.6%
12:30 US Personal Spending (MoM) (Mar)   0.4% 0.2% 
14:00 US Pending Home Sales (MoM) (Mar) 0.6% 3.1%

 

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