US equities rose on Thursday boosted by the earnings of companies such as Amazon, Intel, and Baidu. The earnings outlook is providing support to the US stocks, as this earning season is expected to be the best since 2011. Earlier this week, stocks were pressured by the rise in the US treasury yields which lead to higher corporate cost. However, 10-year yields ended a seven-day streak of gains yesterday, and rebounded from the highs of 2014.
The US dollar strengthened yesterday on dovish comments from the European central bank. The dollar index, which measures the greenback against six major currencies reached a high of 91.64, which is the highest since early January. Economic figures coming out from the United States are still showing robust economy which supports the monetary policy stance of the Federal Reserve. In terms of data, the preliminary release of the Q1 GDP is due today.
The Euro was the weakest performer, and drifted lower against major currencies, especially the US dollar. The EURUSD pair was able to trade below $1.21 for the first time since early January. The European Central Bank kept interest rates unchanged at 0.00%.The drop in the common currency occurred after Mario Draghi, the European Central Bank president, failed to deliver hawkish comments in his press conference. Draghi confirmed that he is confident that the inflation numbers will conver with the bank’s target, and that the growth in the Eurozone is expected to remain solid and broad based. On the other hand, he showed some worries about the rising risks to the global economy due to trade conflicts.
The British pound traded at five-week low against the US dollar, as investor’s expectations of a rate hike in the next meeting of the Bank of England dropped. Last week, the cable retreated from the highest levels since the Brexit referendum after disappointing economic figures, knowing that April is proved to be a good month for the currency historically. The preliminary release of the growth figures in the first quarter are due today.
The Japanese Yen is steady against the dollar as the Bank of Japan kept the monetary policy unchanged. The inflation is still well below the price target and Koruda confirmed that they persist on the commitment to overshoot 2%. Koruda added that they will continue with the powerful monetary easing policy and will consider additional easing if needed.
Gold prices drifted lower against the US dollar, to trade at five-week low. Gold is approaching a major support area that was being formed since early 2018. The better earnings, rise in treasury yields, and the ease of geopolitical concerns are weighing on gold prices.
Oil prices held steady as investors are waiting for new developments in the geopolitical factors. President Donald Trump will decide on May 12 whether to re-impose sanctions on Iran or not. The rise in U.S. oil production is encouraging exports. Baker Hughes oil rig count is due today.
The most important economic events:
|8:30||UK||GDP (YoY) (Q1)||1.4%||1.4%|
|8:30||UK||GDP (QoQ) (Q1)||0.3%||0.4%|
|12:30||US||GDP (QoQ) (Q1)||2.0%||2.9%|
|14:00||UK||BoE Gov Carney Speaks|
|14:00||US||Michigan Consumer Expectations (Apr)||86.9||86.8|
|17:00||US||U.S. Baker Hughes Oil Rig Count||820|
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