News

Dollar Index Hits 4-Month High on Brighter Economic Outlook

USD

The dollar index, which tracks the performance of the United States dollar against a basket of the World's major currencies, raced higher to 92.56, its highest level since November 23rd amid improved optimism over the US economic outlook relative to peers. The Federal Reserve chairman and other Fed officials reiterated that the economic recovery is strong and it has progressed more quickly than was expected. Such performance could mean that the Federal Reserve will have to reassess policy earlier than expected. On the other hand, the Euro region is still suffering from Covid19. France and Germany introduced new lockdown measures the curb the latest breakout, with vaccination failing to reach the same pace of that of the United States, hinting that the recovery could take more time. The EURUSD dipped to $1.1823, the GBPUSD tumbled to $1.3677, and the AUDUSD declined to $0.7583.

Equities

Futures tied to major US stock indices finished in red yesterday as Yellen brought tax increases to her testimony. The Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen were testifying on the CARES act and the economic recovery. Powell restated that the economic recovery is strong, but the Federal Reserve will continue to support it, while Yellen expressed the importance of tax changes to fund the Biden's administration economic programs. Tech stocks were better across the board as covid19 numbers picked up in Europe, and Treasury yields retreated. The Dow Jones Industrial Average futures erased Monday's gains, falling to 32233, the S&P500 futures tumbled to 3890, while Nasdaq pared partial gains falling to 13019.

Metals

Precious metal prices slipped as the dollar gathered strength. However, the falling US Treasury yields limited room for losses. The price of a gold ounce dipped to $1724, the price of a silver ounce declined to $24.98, and palladium futures were almost unchanged near $2600.

Oil

Oil prices fell sharply yesterday amid fears of oversupply. Investors are worried about the impact of the recent lockdowns in Europe over the oil-demand recovery, while oil producers other than OPEC+ continued to pump more oil to the markets to benefit from higher prices. On the other hand, the American Petroleum Institute reported a buildup of 2.927 million barrels in US oil stock. The West Texas Intermediate May contract fell as low as $57.43, and the Brent oil May contract dropped to $60.45. Oil benchmarks trimmed losses during the Asian session as the sharp drop attracted buying power.

Major Economic Events

GMT Country Event Expectation Previous

9:00

EZ

 Manufacturing PMI (Mar)  

57.7

57.9

9:00

EZ

 Services PMI (Mar) 

46.0

45.7

9:30

UK

 Manufacturing PMI (Mar)  

54.9

54.9

9:30

UK

 Services PMI (Mar) 

-

49.5

12:30

US

 Durable Goods Orders (MoM) (Feb)

0.8%

3.4%

13:45

US

 Manufacturing PMI (Mar)  

59.3

58.6

13:45

US

 Services PMI (Mar) 

60.0

59.8

14:00

US

 Fed Chair Powell Testifies 

-

-

14:30

US

 Crude Oil Inventories

-0.272

2.396

 

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