Market Drivers; US Session, April 16

The US economy is expanding rapidly, yet inflation is still there. In the meantime, the Federal Reserve conveys, via Chair Jerome Powell, conflicting messages: while the US central bank supports market-led tightening through higher rates, it is not a big fan of immediate rate cuts.
Economic Data

On the data front; US housing indicators, such as Building Permits and Housing Starts, have underperformed, suggesting a construction sector slowdown. However, US Industrial Production remains stable, highlighting a mixed yet resilient economic backdrop.

The US Federal Reserve’s Industrial Production in March remained unchanged at 0.4% MoM. Monday’s strong retail sales data sparked a reaction in the fixed-income market, with US Treasury yields rising more than 10 basis points during the week.

The Fed is expected to drive the main reference rate to 4.965% towards the end of 2024. San Francisco Fed President Mary Daly said the US central bank is in no rush to ease policy.

Currencies

The US Dollar rose as a result of the sharp decline in softening forecasts for June and July following the release of solid labour and inflation data for March.

The US Dollar continued to rise, setting new records against a backdrop of rising rates and intensifying expectations of a rate decrease by the Fed before year’s end. Meanwhile, ongoing global tensions maintained a low level of price movement in the risk complex.

Maintaining its bullish position, the US Dollar soared to new heights for 2024, hitting about 106.50 on the USD Index (DXY). The Fed’s Beige Book, the Net Long-term TIC Flows, and the regular weekly Mortgage Applications tracked by MBA are all expected on April 17.

Reaching fresh lows for the year, the EUR/USD pair continued its bearish tone to the limits of the 1.0600 mark. On April 17, the final rate of inflation for the entire euro zone will be the main focus.

Gains were offset by losses as the GBP/USD moved closer to the 1.2400 zone, or new YTD lows. The UK’s March inflation rate is expected to be released on April 17.

The USD/JPY strengthened somewhat and increased in response to increasing US rates, reaching new highs close to 154.80. The Reuters Tankan Index and Balance of Trade figures for Japan are released on April 17.

For the third straight session, the AUD/USD pair fell, momentarily breaching the 0.6400 support level. The Leading Index gauged by Westpac is due on April 17.

Commodities

WTI maintained the choppiness consistently at $85.00 per barrel over the multi-session consolidative theme. Gold prices increased on Monday and even went as high as $2,400 per troy ounce. Meanwhile, silver was unable to maintain a rise to the $29.00 per ounce zone and finished the session with large losses.

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