The U.S. Dollar is starting the week with weakness across the board as yet another weekend has gone by with incomplete negotiations to try and end the conflict in the Middle East.
Iran’s leadership sent a peace deal that was rejected by the White House, only fomenting anxiety and nervousness for risk markets and oil prices. The latest proposals have been described as “totally unacceptable.” We shall see if the mood changes as geopolitically this week becomes significant with the U.S. President heading over to China for talks directly with China’s President Xi Jinping. There is growing speculation about how the two world leaders can come up with a solution and work out an agreement that would give huge relief to all market classes.
Meanwhile, risk-appetite worldwide is not hitting the breaks as A.I. investment and spending on microchips seems on growing, per reports. As an example, South Korea’s Kospi Index is up 4.3% hitting a fifth consecutive record high. Government capital into the industry is also supporting it. We shall see if this trend keeps on weakening the Buck throughout the week as well.
In terms of bets over what is to come on monetary policy, Fed watchers believe not only that interest rate cuts may never arrive this year, but that incoming Chairman Kevin Warsh will need to consider hiking as soon as 2027 begins because of mounting inflationary pressure. U.S. economists fear a 0.6% increase when monthly inflation is calculated, following and advance in March that marked the highest monthly occurrence since 2022. Consumer Price Indices will be released tomorrow at 8:30AM. Rest of the week will provide Producers Price Index, Retail Sales and Industrial Production.
What to Watch This Week…
- U.S. CPI, Tuesday 8:30AM
- U.S. PPI Wednesday 8:30AM
- Monex USA Online is always open
EUR ⇑
The Euro has maintained its latest gains as this week brings key data points to light and forms a narrative of merit or decline for the shared currency. On Wednesday, we will get a look at a second revision of first-quarter (Q1) Gross Domestic Product (GDP), which is expected to just give a reading of 0.1%, avoiding contraction, barely staying positive. Industrial Production for March will also be out along with notes over ECB economic bulletin, forecast, and labor. Since the start of April, the euro has been on a solid run, rising in value over the Buck by over 1.5%.
GBP ⇑
Sterling has been on a good streak similar to the Euro over the U.S. Dollar, but there seems to be more vulnerability on the U.K. side as political havoc continues. Prime Minister Keir Starmer continues to work on survival mode as he keeps holding on to his position while plenty of lawmakers have called for his ouster. Officials in Epstein files and other scandals have been brewing chaos for Downing Street while the most recent local elections dealt a major blow to the Labour Party in places typically tilted bigly in their favor. As popularity wanes, Labour faces a major challenge from the Nigel Farage-led party Reform, which is looking to be more protectionist in trade and business policies. GDP as well as Industrial Production figures will be out Wednesday and Thursday.
