After another strong showing yesterday that saw the Bloomberg Dollar Spot Index close the session slightly higher, the United States Dollar is trading mixed with a slight tinge of downside this morning.
Overview
Markets have turned their attention to a slew of Q1 corporate earnings due out this week as the Magnificent Seven mega-cap tech companies all report their performance. Equities are attempting to dig out of their collective worst week since 2022 last Monday through Friday, led by AI giant Nvidia’s 10% rout on Friday. The first of the mega-caps is due out today from Tesla, and other companies have thus far leaned toward positive, tracking with a hot US economy and a broader global recovery.
Earlier this morning, PMI data from various Eurozone nations and the UK were released. Eurozone private-sector activity posted its highest reading in more than a year, and Germany’s economy appeared to return to growth on its composite release. Manufacturing in Germany is still of some concern, but the Eurozone’s composite PMI beat expectations and is boosting the global mood as further signs of economic recovery emerge. Christine Lagarde & company are still more likely than not to cut interest rates as soon as possible to boost economic growth from the bloc. The UK’s release showed that their economy, rather unexpectedly, recovered from a brief recession last fall and winter, and private firms showed their strongest growth readings in just shy of a year. US preliminary PMIs for the month of April are due out at 9:45 this morning, and if previous readings of strong employment and a hot economy are any indication, they could help return USD to positive territory across the board.
US GDP for Q1 is also due out Thursday morning, expected to show that the US economy grew 2.5% for the period of January thru the end of March. Of perhaps more weight, however, is the PCE Price index due out with that GDP release, and concerns continue that inflation may be re-heating.
What to Watch Today…
- US Q1 GDP, Thursday 8:30 AM
- Monex USA Online is always open.
JPY ⇓
Japanese Yen, ever the currency of concern, is trading flat on the morning but only slightly off levels that many market makers would be a proverbial ‘red line in the sand’ for intervention. The beleaguered currency hit a fresh 34-year low overnight ahead of the Bank of Japan’s meeting this Friday. BoJ Governor Kazuo Ueda has said time and again that currency weakness will not constitute reason enough for the central bank to raise interest rates a second time this year, but currency officials may step in in conjunction with Friday’s meeting as the Yen continues its slide.
ZAR ⇓
South African Rand is barreling toward its weakest close against USD in nearly two months. This month alone, ZAR, along with most emerging market currencies, has slid 1.8% amidst expectations that the Federal Reserve will keep interest rates higher for longer than previously anticipated. Riskier currencies and assets as a whole are facing fairly heavy losses so far this calendar year as geopolitical risk events, and a more entrenched Fed keep traders focused on guaranteed returns.
