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A two-day rally on Wall Street began on Friday as a result of larger-than-expected results from the tech sector. Amid renewed worries about First Republic Bank and the gloomy outlook for global growth, the optimistic mood may, however, not last long. The incoming economic data will be eagerly watched, but central bank choices may have an impact on it.
Economic Data:
Market expectations were met with the publication of the US Personal Consumption Expenditure (PCE) Price Index. The Core PCE Price Index fell by 4.6% Year-over-Year and increased by 0.3% Month-over-Month.
Within the first few minutes of the release, the price of bitcoin increased to get closer to $29,500. Prior to the announcement of the US PCE, BTC was trading about $29,300. The US PCE publication had a beneficial impact on the price of ether, which rose to $1,915 within minutes of the announcement.
The ISM PMIs, the ADP Private Employment, and the official employment report are among the economic data sets that will be issued this week, making it a busy one for the US Dollar. On Wednesday, the Federal Reserve will reveal its choice, and market participants anticipate a final rate increase of 25 basis points.
Key Developments
Following the Bank of Japan’s monetary policy meeting on Friday, the value of the Japanese Yen plummeted. The central bank discontinued its interest rate forward guidance and began a review of its policies that will last more than a year. At his first press conference following the meeting, Uedo stated, “We’re not starting the review with the aim of normalising. On Friday, the USD/JPY jumped from 134.00 to 136.55.
Among the G10 currencies, the British pound performed the best. The GBP/USD exchange rate crossed over 1.2550 and increased to 1.2583, its highest level since June 2022. However, the EUR/GBP pair suffered on Friday, recording its largest daily loss in recent weeks as it sank towards 0.8750.
Around 101.50 was where the US Dollar Index ended the week with little change. The DXY is still circling its recent lows, hovering above but making only modest gains. The upcoming week’s economic schedule calls for turbulence and might put the current consolidation pace under pressure.
The EUR/USD pair increased slightly this week, maintaining its close proximity to one-year highs but unable to stabilise above 1.1050. With a 0.1% growth, the Eurozone’s Q1 GDP narrowly avoided going into a recession. As long as inflation stays high, the European Central Bank is predicted to increase interest rates by 25 basis points the following week.
After a significant fall on Friday, USD/CAD concluded the week with little movement, suggesting a possible reversal that may continue. Despite weaker-than-expected Canadian GDP data, the pair reached its peak at 1.3667, the highest level in four weeks, before falling back below 1.3550. The employment data for Canada will be made public on Friday.
A difficult week for commodity prices saw maize decline by more than 10%, coffee drop by 4% and soybeans decrease by 4%. After reversing Friday’s losses, the price of crude oil fell by 1.5%. The price of gold and silver remained largely unchanged throughout the week, finishing flat about $1,990 and $25.00, respectively. As opposed to this, Bitcoin increased 7%.
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