Market Drivers – US Session 13/04/2023

Mohamed Abdelhamid 14 April, 2023 3:16 am Forex Market, Market Update

A further decline in the US Dollar broke technical and psychological support levels. US stocks also increased at the same time. The Nasdaq increased by 1.99%, while the Dow Jones finished up 380 points, or 1.15%. Since February, the VIX closed at its lowest level. On Friday, major US banks will report Q1 earnings.

Economic Data

The US Consumer Price Index report released on Wednesday revealed that while annual inflation decreased to 5% in March, the lowest level in two years, the core rate remained high. Data from Thursday indicated that wholesale inflation decreased more than was predicted. The annualized Producer Price Index (PPI) inflation decreased from 4.9% to 2.7%, which is the lowest level since January 2021 and less than the 3% forecast. The most recent data showed that inflation is still slowing down.

Initial claims for unemployment insurance in the US increased to 239K, exceeding the 232K forecast, the highest amount since January 2022. Indicators of a softening labour market were given by the report. Data on retail sales, industrial production, and consumer confidence are coming on Friday. The US Dollar may benefit from positive economic statistics, but the trend is still downward. Unless positive news increases risk appetite and puts more pressure on the dollar.

Key Developments

The dollar is expected to surpass forecasts, according to three possible outcomes. Because of the stronger Euro and the significant decline in the US Dollar, EUR/USD had its first daily close over 1.1000 in a year. The EUR/GBP exchange rate increased for the third day in a row, reaching its highest point above 0.8800.

The USD/JPY declined for the second straight day, but it pared its losses during the American session and rose above 132.50. The Japanese yen suffered from the deterioration in market mood.

The GBP/USD exchange rate increased for the third day in a row and reached its highest daily close since June above 1.2500. Data from the UK revealed that GDP remained flat in February despite estimates for a 0.1% growth. Silvana Tenreyro from the Bank of England (BoE) will take part in a discussion on how to combat inflation on Friday at the International Monetary Fund Spring Meetings. She voted in favour of maintaining rates at the most recent BoE meeting.

Amidst a weakening US Dollar, the AUD/USD spiked towards 0.6800 while the NZD/USD reached levels above 0.6300. The Kiwi excelled. The March Business NZ PMI is due early on Friday. USD/CAD tumbled to 1.3340, a 2-month low.

Long-term support levels were broken by the USD/CHF, confirming the breakout, and the drop continued to 0.8854, the lowest point since January 2021. On Friday, Switzerland will announce its wholesale inflation rate.

As Silver neared $26.00, Gold continued to climb towards record highs, going above $2,040. The improved atmosphere on financial markets helped Bitcoin recover $30,000 as well.

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