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On the back of positive earnings announcements, Wall Street saw its best day in a week on Thursday, with the Dow Jones rising 1.57% and the Nasdaq rising 2.43%. Surprisingly, Meta Platforms increased by approximately 14% on Thursday. Companies including Exxon Mobil, Chevron, PetroChina, China Construction Bank, Sony, and Mercedes-Benz will all report further earnings on Friday.
Currency pairs including the AUD, NZD, and CAD were favoured by the uptick in market mood while the US Dollar, CHF, and JPY were weaker. US rates substantially increased, driven more by risk sentiment than by expectations for monetary policy.
Economic Data
US real GDP increased by 1.1% during the first quarter, below the 2% of markets consensus. On the positive side, Jobless Claims dropped more than expected. Pending Home Sales tumbled 5.2% in March. Analysts continue to forecast that the US economy to slip into recession, which we expect will be of moderate severity, in the second half of the year.
Pending Home Sales in the US fell sharply in March. US Dollar Index holds in positive territory above 101.50. Pending Home Sales in the US declined by 5.2% on a monthly basis in March, the data published by the National Association of Realtors showed on Thursday. This reading followed February’s no-change (revised from +0.8%) and came in much worse than the market expectation for an increase of 0.5%.
Key Developments
The Japanese Yen was among the worst performers on Thursday amid higher yields. USD/JPY rose to 134.15 and then pulled back.
The Bank of Japan (BoJ) will announce its monetary policy decision, the first under Kazuo Ueda. No change is expected; however, comments or signs about the future path can have a significant impact. The BoJ will release new macro forecasts. Japan will report Unemployment, Tokyo inflation, Retail Trade, Industrial Production and Housing Starts.
EUR/USD fell modestly on Thursday, closing above 1.1000. The trend is up but gains remain limited by 1.1050. On Friday, Spain, France and Germany will release inflation figures (April preliminary) and also Eurozone growth numbers are due. Those reports are critical ahead of next week’s European Central Bank (ECB) meeting, which is seen rising rates by 25 basis points, but a 50 bps is not ruled out.
GBP/USD rose for the second day, staying below the recent high and slightly below 1.2500. The Pound outperformed on Thursday with EUR/GBP having the biggest daily loss in a month, falling from 0.8875 to 0.8825.
USD/CAD had the worst day in two weeks, pulling back under 1.3600 on risk sentiment and steady crude oil prices. Canada will report monthly GDP growth, with the economy expected to have expanded at a 0.2% rate in February and flash estimates for March are expected to show slowing activity.
NZD/USD advanced, finding resistance around the 200-day Simple Moving Average at 0.6160. AUD/USD also recovered after being able to defend 0.6600. Both pairs are moving with a bearish bias. Australia will report Q1 Producer Price Index (PPI) on Friday.
Turkey’s central bank kept the policy rate unchanged at 8.5%, as expected, ahead of May 14 elections. USD/TRY posted a new record high close above 19.43.
Gold and Silver continued to move sideways, ending unchanged at $1,987 and $24.90, respectively. Crude oil prices recovered moderately after days of sharp declines, closing the gap created after the OPEC+ production cut announcement at the beginning of April. WTI surpassed $75.00 but failed to hold above. Crude remains under pressure, even amid larger inventory draws, reflecting concerns about the global economic outlook.
What To Watch On Friday
The Bank of Japan will announce its decision at Ueda’s first meeting; market participants will pay close attention to the details. In addition, Australia will release its report on wholesale inflation, and Japan will publish several reports.
On Friday also, the US will report Fed’s preferred inflation measure: the Core Personal Consumption Expenditures Price Index. Later in the day, the focus will shift to the Eurozone, where GDP and inflation figures will be released.
Also Read:
EUR/USD defends corrective bounce after volatile US session
Gold steadies below $1,990 after key US data
WTI’S comeback closes chart gap as EIA slammed by OPEC
Meta stock surges following earnings
World Bank expects global commodity prices to decline in 2023
