Dollar Inches Higher with Yields, Stocks Extend Gains


The dollar index which measures the greenback against a basket of major currencies rebounded to 90.78 as the US Treasury yields marched higher. The stronger-than-expected economic data pushed the chances of higher inflation ahead. The US economy grew by 6.4% during the first quarter, the GDP price index rose by 4.1% compared to 1.9% previously, and the Real Consumer Spending jumped by 10.7%, the highest since Q3 2020. These upbeat figures drove US yields higher where 10-year yields rallied to 1.686%, the highest since April 13. Market participants are looking forward to the PCE figures later today, the Fed's favorite inflation gauge. A surprise to the upside may push yields above yesterday's high. The EURUSD fell to $1.2099, the GBPUSD eased to $1.3908, and the USDJPY hovered near 109.


Major US stock index futures continued to hover near their all-time high going to May. The upbeat corporate earnings season and solid economic data are boosting investors' risk sentiment. Top companies such as Apple, Amazon, Facebook reported outstanding numbers for the first quarter. Investors will continue to monitor further releases but will keep an eye on US yields, and Biden's tax plans. The Dow Jones Industrial Average futures rose to 33976, the S&P500 recorded a new all-time high of 4209, while Nasdaq softened to 13900.


Precious metals prices declined sharply as US yields raced higher along with the dollar. The price of a gold ounce fell to $1756 after trading as high as $1790 earlier, the price of a silver ounce dropped to $25.71, while palladium extended gains, rising to $2974.


Oil prices drifted lower after hitting their highest levels since mid-March. Reports on improving demand from China and the United States are boosting the rally. However, the COVID19 outbreak in India and Japan, the world's top oil importer, is capping gains. The West Texas Intermediate crude June contract fell to $64.31, and the Brent blend July contract eased to $67.44.

Major Economic Events

GMT Country Event Expectation Previous
8:00 EZ  German GDP (QoQ) (Q1)  -1.5% 0.3%
9:00 EZ  CPI (YoY) (Apr)  1.6% 1.3%
9:00 EZ  GDP (QoQ)  -0.8% -0.7%
9:00 EZ  Unemployment Rate (Mar) 8.3% 8.3%
12:30 US Core PCE Price Index (MoM) (Mar) 0.3% 0.1%
12:30 CA  GDP (MoM) (Feb) 0.5% 0.7%
14:00 US  Michigan Inflation Expectations (Apr) 3.7% 3.7%


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