News

US Dollar and Yields Rise ahead of Key Data

News Archive

2011 2012 2013 2014 2015 2016 2017 2018

US Equities

US stocks traded higher earlier on Monday as the trade war tensions between China and the United States eased, especially after president Donald Trump pledged to help the Chinese technology company ZTE Corp to get back into the business. However, the rise of the US 10-yr yields above three percent level, pared the gains leading the stocks to end the session in red. The Retail sales data for April is important and awaited carefully by investors, especially after the drop in both Consumer Price Index and Import Price Index.

USD

US dollar rebounded from almost two-week low as we approach key data. The dollar index, DXY, which measures the greenback strength against six major currencies was drifting lower on Thursday and Friday. A weaker-than-anticipated CPI and Import Price Index added pressures on the currency, as investors were afraid that a slowdown in inflation numbers will lower the chances of the Federal Reserve to hike interest rates three more times this year. The Retail sales data is due today, a better than expected reading should be positive for the inflation expectation.

EUR

The Euro fell yesterday against the US dollar after gaining for two consecutive days. EURUSD was close to $1.20 level for the first time in more than a week. The downside in the currency started with the weakening of major economic indicators in the Q1 of 2018 which limited the hawkish tone of the European Central Bank. The divergence in the monetary policy between the Fed and the ECB led to a gap in the interest rates, thus supporting the US dollar. In terms of data, the preliminary release of the Q1 GDP is due ahead of major CPI data tomorrow.

GBP

The British Pound fell more than six percent in the past weeks as investors were worried about the economic outlook after the soft economic data of Q1. The weakness in the economic indicators prohibited the Bank of England from raising rates in its meeting last week. The bank Governor, Mark Carney, said that they prefer to see the fundamentals picking up before raising rates again. Today, the job report is due, average earnings index will be monitored closely as a tick higher in the index might implement positive sentiment on the inflation outlook.

Gold

Gold tumbled yesterday as US treasury yields rose approaching multi-year highs. The Precious metal was pressured lately by the interest rate hikes of the Federal Reserve. Investors favored a yielding investment versus the non-yielding bullion. Gold prices are at a key support area near the $1300 psychological level, which is the lowest for the year.

Oil

Oil prices were almost stable near multi-year highs as OPEC forecasts higher oil demand in 2018. OPEC said that the Geopolitical Developments will impact supply in the months ahead. One live example of Oil supply disruption due to Geopolitics or political turmoil is the drop in Venezuelan output that declined to 1.505 million barrel per day. The weekly crude inventory from the American Petroleum Institute is due today.

The most important economic events:

GMT Country Event Expectation Previous
8:30 UK Average Earnings Index +Bonus (Mar) 2.7%  2.8% 
8:30 UK Claimant Count Change (Apr)  13.3  11.6
8:30 UK Unemployment Rate (Mar) 4.2% 4.2%
9:00 EU German ZEW Economic Sentiment (May) -8.0 -8.2
9:00 EU GDP (YoY) (Q1)  2.5% 2.5%
9:00 EU GDP (QoQ) (Q1) 0.4% 0.4%
12:30 US Core Retail Sales (MoM) (Apr) 0.5% 0.2%
12:30 US Retail Sales (MoM) (Apr) 0.4% 0.6%
14:00 US Business Inventories (MoM) (Mar) 0.2% 0.6%
20:30 US API Weekly Crude Oil Stock   -1.850

 

Disclaimer
The prices and news mentioned in this outlook are absolutely no guarantee of future market performance and do not represent the view of ICM Capital Limited. Financial markets can move in either direction causing profits to be made or complete losses to be incurred by the trader. Each trader must decide for themselves what their risk appetite is and ensure that correct risk management procedures are in place before placing any trades.

CFDs and Spot FX are leveraged products. Trading CFD's or Spot FX carries a high risk to your capital and can result in losses that exceed your deposits. Read More
Read More
Mail Call Chat