[Market Review].
The dollar index continued to fall. The dollar index continues to come under pressure and has now fallen below the 92 mark, a four-week low. U.S. bond yields hovered below recent highs, reducing the relative attractiveness of the dollar. At the same time, Goldman Sachs, JP Morgan Chase and other U.S. banks performed strongly, which also reduced the market’s demand for safe-haven assets. On top of that, Fed Chairman Jerome Powell’s speech also put pressure on the dollar.
Early this morning, Powell spoke that the U.S. economy is at an inflection point to accelerate growth, but also warned of the risk of a surge in new crown cases. Policymakers will wait until inflation reaches 2% on a sustained basis and the labor market has fully recovered before considering raising interest rates. He said that these two conditions are unlikely to all be achieved by the end of 2022.
In addition, Powell also said the Fed may consider raising interest rates before gradually reducing the size of bond purchases. It is worth noting that he did not specify when the reduction will be discussed, as St. Louis Fed President Bullard did a little earlier. Bullard said at the time that when the U.S. vaccination rate reaches 75 percent, discussions on QE tapering may begin. The media has since estimated that the U.S. will reach 75% vaccination in August of this year at the current rate of vaccination, which could be reached as soon as June.
In addition to Powell’s speech during the day, there was also news about the Biden-based construction plan. It is reported that U.S. senators are studying a streamlined version of the infrastructure plan, hoping to replace Biden’s $2.25 trillion proposal. A Republican said that a $600 billion to $800 billion infrastructure plan would likely receive bipartisan support. As to whether the U.S. will launch a streamlined version of the package, we can keep an eye on it.
Gold shocks lower. Moving on to gold. The weaker dollar also failed to give much support to gold. U.S. bond yields remain high, the Fed says U.S. economic activity is recovering in an orderly fashion, gold ETF positions continue to decline, bitcoin soars to highs, and U.S. stocks reach new highs, all of which are bearish for gold prices. Gold prices oscillated lower during the day and are now in a narrow range of $1730-$1740.
Silver closed slightly higher. Not quite the same as gold’s modest decline, silver closed slightly higher. Silver prices have not been very volatile in recent days, currently running mainly around $25-25.5.
The euro is approaching the 1.20 mark. In terms of non-US currencies, the euro has been shining recently. After two consecutive days of big gains, the euro continued its oscillation upward against the dollar yesterday, approaching the 1.20 handle and touching the highest level since March 18. The news that Europe is afraid to stop using AstraZeneca and Johnson & Johnson vaccines did not dent the euro’s rally.
The British pound continued to rally. Likewise, the British pound saw gains. The pound rose more than 10 points against the dollar during the day and is now hovering around 1.3770.
U.S. oil was once strong above the $63 mark. Finally, take a look at the oil market. Oil prices surged to the highest level in a month, breaking a weeks-long stalemate. Falling U.S. crude inventories bolstered hopes for a recovery in global demand. Data showed that U.S. EIA crude inventories fell by 5.89 million barrels in the week to April 9.
[Risk Warning].
Australian dollar: slow vaccination process Australian dollar fears range-bound oscillation
In April, the International Monetary Fund raised its growth forecast for Australia to 4.5% this year, one percentage point higher than expected in January. Meanwhile, the market remains optimistic about Australia’s economic growth prospects. However, Credit Suisse stressed that the country’s new coronavirus vaccine was launched at a disappointing pace, and the AUDUSD fears to trade in the 0.7415-0.78 range.
CAD: Canadian dollar outlook upbeat US-Canadian may fall to 1.2260
Credit Suisse is optimistic about the outlook for the Canadian dollar, maintaining its forecast for a decline to 1.2260 against the greenback ahead of next week’s fiscal budget announcement by the Canadian government and the announcement of the Bank of Canada’s interest rate decision. Credit Suisse believes that the impact of the new crown epidemic and the embargo will be partially offset by the prospect of additional fiscal spending. In addition, the CBC may announce plans to reduce asset purchases, which is expected to have a positive impact on the Canadian dollar.
Swiss franc: Risk sentiment is high and the Euro-Swiss is expected to rise to 1.11
Rabobank said the Swiss franc’s sensitivity to safe-haven flows means it is likely to remain subject to broader market popularity, with the euro rising to 1.11 against the Swiss franc by the end of the year. however, there is a risk that the pair will fall back below 1.10 this quarter after a sharp rise earlier this year.
[Key Outlook].
20:30 U.S. retail sales may perform well
First, let’s focus on the U.S. monthly retail sales rate for February. In recent months, the monthly rate of U.S. retail sales has been volatile, with January data rising to 5.3% and February falling to -3%. March data is expected to improve. Collating the U.S. data for March, we can find that the monthly PPI rate recorded 1%, far exceeding expectations; the ISM non-manufacturing PMI hit a record high; non-farm payrolls increased by 916,000 and the unemployment rate fell to 6.0%. The improvement in the labor market indicates that economic activity continues to recover.
Currently, the market is expecting a 5.9% monthly retail sales rate in March. If the data meets or exceeds expectations, the dollar index is expected to gain support. Conversely, if lower than expected, the dollar index may suffer a blow.
Recent U.S. data releases are good performance, retail sales may also be better than expected, the dollar is expected to gain support.
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