Market Participants Still Focusing on Policy Divergence

The US dollar reached new heights this week due to bets on when the Fed will most likely begin its easing cycle. Meanwhile, confidence in an ECB interest rate cut in June continued to build, pushing the EUR/USD down to as low as the 1.0600 region. The EUR/USD is trading at 1.0651 at the time of writing.

The USD Index (DXY) indicated that the American currency had a turbulent week even if it had reached a fresh high of 106.50. On April 22, the Chicago Fed National Activity Index is expected, followed on April 23 by flash PMIs and new home sales. Furthermore, on April 24, Durable Goods Orders are anticipated, and on April 25, the GDP Growth Rate, Pending Home Sales, and Initial Jobless Claims are all due. The week will come to a finish on April 26 with the release of the PCE’s inflation tracking data, personal income, personal spending, and the final Michigan consumer sentiment report.

The EUR/USD exchange rate recovered some of its equilibrium following a five-month low at 1.0600. On April 22, the European Commission will release its preliminary Consumer Confidence measure. On April 23, advanced PMIs for the euro zone are scheduled, and on April 24, Germany’s IFO Business Climate. On April 25, the GfK’s measure of consumer confidence is anticipated, still in Germany.

After a highly volatile week, GBP/USD reached yearly lows in the sub-1.2400 zone before stabilizing. Prior to Gfk’s Consumer Confidence on April 26, the UK is due for Public Sector Net Borrowing and flash PMIs on April 23.

Amidst ongoing market speculation of FX intervention, the USD/JPY continued its consolidative theme north of 154.00. Prior to the BoJ interest rate decision and Quarterly Outlook Report on April 26, the Japanese calendar will display Foreign Bond Investment statistics, the final Coincident Index, and the Leading Economic Index on April 25.

With more losses, the AUD/USD pair finished the week in negative territory for the second time in a row, dropping below the 0.6300 support level for the first time since mid-November. From a data perspective, in Australia, the Inflation Rate is due on April 24 and the flash Judo Bank PMIs are scheduled on April 23.