News

Dollar Extends Losses, Equities Edge Higher

USD

The dollar index which measures the greenback against a basket of major currencies fell further, dropping below the 90 mark, the lowest reading since the 25th of February. The softening economic data from the United States suggests that the Federal Reserve will have to keep buying assets at the same pace for longer than anticipated. Several Fed officials stated post the sluggish April jobs report, that there is still work to be done for the economy to go back to pre-pandemic levels. Market participants will wait for further hints from the FOMC meeting minutes, where any tapering talks to fight inflation could revive the dollar. The EURUSD rose to $1.2196, the GBPUSD soared to $1.4190, and the USDCAD fell to 1.2014, the lowest since May 2015.

Equities

Major US stock index futures marched higher during the Asian session, recovering losses incurred yesterday. Investors are leaning toward the view that the Federal Reserve will continue with the same monetary policy path, and even delay tapering to ensure economic recovery if the average inflation target remains in check. The Dow Jones Industrial Average futures rose to 34420, the S&P500 futures rallied to 4178, and Nasdaq futures advanced to 13430.

Metals

Precious metals prices extended their upside rally as the dollar continued to weaken. The price of a gold ounce hit $1873, the highest since late January as US real yields remained soft. The price of a silver ounce rose to $28.75, and palladium inched higher to $2917.

Oil

Oil prices raced higher to hit their highest levels since early March as investors look forward to the economic recovery. Major world economies are doing better with controlling covid19, suggesting a busy summer. Meanwhile, the drive towards commodities seemed extremely rewarding to investors. The West Texas Intermediate crude June contract rose to $66.95, and the Brent blend July contract rallied to $70.20.

Major Economic Events

GMT Country Event Expectation Previous

9:00

EZ

 GDP (QoQ) (Q1) 

-0.6%

-0.6%

12:30

US

 Building Permits (Apr)

1.770

1.759

12:30

US

 Housing Starts (Apr)

1.710

1.739

20:30

US

 API Weekly Crude Oil Stock

-

-2.533

 

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