Market Drivers; US Session, April 11

Mohamed Abdelhamid 12 April, 2024 4:29 am Commodities, Forex Market, Market Update

Risk-linked assets regained some momentum amid a mild corrective decline in the US Dollar and rising speculation of a Fed rate cut later in 2024. In the meantime, the ECB left rates unchanged as expected and opened the door to a rate cut in June.

Economic Data

Based on annualized data released by the US Bureau of Labour Statistics on Thursday, the Producer Price Index (PPI) for final demand in the US increased 1.6% in February. This number came in above the 1.1% market expectation and followed the 1% increase reported in January (raised from 0.9%).

During that time, the annual Core PPI increased by 2%, mirroring the increase seen in January. The Core PPI increased by 0.3% on a monthly basis, above the 0.2% estimates by analysts.

The Labour Department reported a drop in initial claims for state unemployment benefits to 211,000 for the week ended April 6, down from the forecasted 215,000 claims. Unadjusted claims increased to 214,386 last week, with a surge in New Jersey filings due to temporary layoffs. Other states saw notable increases in claims. The Easter and Passover holidays also contributed to the volatility in claims data. However, the labor market remained healthy in the second quarter, with job growth accelerating in March and the unemployment rate dropping to 3.8% from February.

Key Developments

According to the DXY, the US dollar held onto its upward trend and reached new 2024 highs on Thursday of 105.50. The preliminary Michigan Consumer Sentiment report is due on April 12; Bostic and Daly of the Fed will thereafter give fresh statements and remarks.

Further downward pressure on EUR/USD resulted in a brief drop below the 1.0700 support level. April 12 is the deadline for the ECB’s Survey of Professional Forecasters (SPF) and Germany’s final inflation rate.

After plunging to multi-week lows earlier in the session, GBP/USD concluded with small gains. April 12 is the deadline for the UK’s GDP printing, Balance of Trade, Construction Output, Industrial and Manufacturing Production, and NIESR GDP Tracker.

The rally in USD/JPY remained unchanged, this time hitting highs not seen since June 1990 around 153.30. In Japan, final Industrial production readings are expected on April 12.

AUD/USD met some decent support near the 0.6500 neighbourhood, managing to regain composure and advance modestly on Thursday.

Commodities:

WTI prices resumed the downtrend amidst geopolitical concerns and diminishing bets on the Fed’s rate cut in the summer.

Prices of Gold regained the upside momentum and shifted their focus to the all-time high near $2,360 per troy ounce. Silver, in the same direction, set aside Wednesday’s decline and reclaimed the area beyond the $28.00 mark per ounce.

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