News

Euro Falters Following Sluggish German PMI

EUR

The Euro declined against rivals following soft German PMI figures. The previous release had a negative impact on the euro as it indicated a severe drop in the manufacturing activity in Germany. The preliminary reading of the April German manufacturing PMI came in at 44.5 versus an expectation of 45.0 to dampen concerns over the economic activity in Germany. The ongoing downturn in the economic activity in the Eurozone will force the ECB to maintain low-interest rates for a longer period of time or even introduce new monetary easing measures. The EURUSD dropped to a one-week low of $1.1265, and the EURJPY plunged to 126.02.

GBP                                                                                  

The British pound tumbled against other major currencies following softer than expected inflation figures. The March Consumer Price Index YoY came in at 1.9% versus an expectation of 2.0%, and the Core figure was at 1.8% versus an expectation of 1.9%. Market participants await today the release of the retail sales figures for March. On the other hand, he Brexit headlines lessened recently especially after delaying the Brexit deadline till the end of October 2019. Lately, the GBPUSD is trading in a hundred pips range between $1.3030 and $1.3130, a severe drop in retail sales or a Brexit headline could lead to a breakout from the consolidation zone.

USD

The dollar index which measures the greenback against a basket of major currencies resumed the rally higher towards a high of 97.20 after weaker than expected PMI figures from Germany. The euro and pound account for almost 70% of the dollar index basket. Therefore, a drop in these currencies will eventually drive the index higher. The greenback was a bit shy following the release of the Beige book which suggested that the economic activity is growing at a slight-to-moderate pace. The US 10-year yields faltered from a four-week high of 2.616% to drop to a low of 2.557%, and the USDJPY continued to hover around the 113 level.

Metals

Gold prices finished lower for the fifth consecutive day as investors preferred riskier assets to the safe-haven metal. The price of gold ounce dipped to a four-month low of $1271, the silver ounce hovered near $15, while palladium soared to a high of $1403.

Oil

Oil prices retreated from a five-month high despite a slight drop in US inventories. The US Energy Information Administration reported that the weekly US crude oil inventories dropped by 1.396 million barrels last week. However, the record output offset the drop in inventories. The United States oil production is sitting at a record high of 12.1 million barrels per day. The West Texas Intermediate crude futures dropped to a low of $63.44, and Brent futures drifted lower towards $71.18.

Major Economic Events

GMT Country Event Expectation Previous

8:30

UK

Retail Sales (MoM) (Mar)

-0.3%

0.4%

12:30

US

Core Retail Sales (MoM) (Mar)

0.7%

-0.4%

12:30

US

Philadelphia Fed Manufacturing Index (Apr)

10.4

13.7

12:30

US

Initial Jobless Claims

205

196

12:30

CA

Core Retail Sales (MoM) (Feb)

0.2%

0.1%

13:45

US

Manufacturing PMI (Apr)    

52.8

52.4

13:45

US

Services PMI (Apr) 

55.0

55.3

14:00

US

Business Inventories (MoM) (Feb)

0.4%

0.8%

 

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