News

Dollar Rises on Stronger Outlook, Jobs Data Eyed

USD

The dollar index which measures the greenback against a basket of major currencies settled higher for the second consecutive day closing at 97.85. US Treasury yields and the greenback are still gaining support from Powell's presser. He said that the current drop in inflation figures is "transient", and the downside risks to the global economy are diminishing. His comments raised the probability of further tightening if inflation picks up. Also, the upbeat economic data are boosting demand for the dollar. The March Factory Orders rose by 1.9% versus an expectation of 1.0%, the largest surge since September. Market participants await the release of April's jobs report later today, where an NFP reading above 180 is expected with the unemployment rate holding 3.8% and Average Hourly Earnings picking up 0.3%. In addition, the ISM Non-Manufacturing PMI will be released to provide more clues on the performance of the services sector. The US 10-Year yields rose to a ten-day high of 2.563%, the USDJPY hovered near 111.50, and the EURUSD dipped further towards $1.1158.

Metals

Metals prices extended losses as the dollar and Treasury yields raced higher. The price of a gold ounce dropped to retest the 2019 low of $1266, the silver ounce declined to a low of $14.54, and palladium hung above $1355.

Oil

Oil prices plunged amid rising expectations that OPEC will raise output to cover the lost supply due to US sanctions on Iran and Venezuela. The US waivers to Iran's oil exports expired on the first of May raising woes over a shortage in oil supply. However, President Trump urged Saudi Arabia and other allies to increase output to offset the drop in supply as the world cannot afford the current high oil prices. Saudi's Energy Minister announced that the kingdom would boost in June but remain under the OPEC+ deal quota. The West Texas Intermediate crude futures dropped to a one-month low of $60.93, and Brent futures dived to a low of $69.66.

Major Economic Events

GMT Country Event Expectation Previous

8:30

UK

Services PMI (Apr)

 50.4

 48.9

9:00

EU

CPI (YoY) (Apr)

1.6%

1.4%

12:30

US

Nonfarm Payrolls (Apr)

 181

 196

12:30

US

Unemployment Rate (Apr)

3.8%

3.8%

12:30

US

Average Hourly Earnings (MoM) (Apr)

0.3%

0.1%

14:00

US

ISM Non-Manufacturing PMI (Apr)

57.2

56.1

 

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