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The start of the week on Wall Street was uneven. Participants in the market are analysing the events of the previous week, including central bank meetings and US labour market data. There were no significant shocks in the Federal Reserve bank survey as worries about banking continue to decrease, bolstering market optimism. The Consumer Price Index (released on Wednesday) and the Producer Price Index (released on Thursday) of US inflation statistics will be crucial.
During the American session, the US dollar increased thanks to higher US yields, while commodity currencies gained, continuing the run from the previous week. The DXY mildly increased to 101.30 and is still close to the critical 101.00 support zone.
Economic Data
Germany reported a worse-than-expected 3.4% fall in industrial production in March. Investor confidence in the Eurozone decreased for May, going from -8.7 to -13.1. The EUR/USD pair is still in a sideways trend and has pulled back to the 1.1000 region.
Unexpectedly, industrial production dropped 3.4% in March. This meant that a sizeable portion of the profits made over the previous two months were once again erased. A significant reduction in output is anticipated in the upcoming months as a result of the current weakening of demand. The second half of the year is more likely to see a minor recession rather than the economic recovery that many were hoping for.
Key Developments
GBP/USD hit fresh multi-month highs before pulling back toward 1.2600. The rally lost momentum as it approached the 100-day Simple Moving Average, which awaits at 1.2700. The Bank of England will announce its decision on Thursday, and market participants expect a 25 basis points rate hike.
On Monday, there was little movement in the USD/JPY sideways movement around 135.00. There were no surprises in the Bank of Japan (BoJ) meeting minutes from March 9–10. The BoJ will publish a summary of the meeting’s opinions on April 27-28 on Thursday.
AUD/USD hit 0.6803, the highest intraday level since April 14, before pulling back modestly. It remains bullish, looking at the critical 0.6800 resistance area. Australia will report Retail Sales, Westpac will release the Consumer Confidence Index, and the government will announce the budget.
NZD/USD rose for the fifth consecutive day and peaked at 0.6358. The Kiwi posted the highest daily close since February, boosted by the improvement in risk sentiment. The Canadian dollar lagged with USD/CAD ending flat around 1.3370/80, after approaching 1.3300.
Crude oil prices extended their recent recovery, rising more than 2%. Metals posted mixed results: Gold rose marginally, ending above $2,020, while Silver fell modestly to $25.50. Cryptocurrencies tumbled on Monday, with Bitcoin losing almost 5%, falling to $27,500.
On Tuesday, New Zealand will report Electronic Card Retail Sales, Japan will release Household Spending data, and Australia will release Retail Sales. China will publish trade data, and the Australian Westpac Consumer Confidence for May is due. In the Australian evening, Treasurer Jim Chalmers will present the budget. The key report of the week will be US consumer inflation on Wednesday.
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