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17
May

Eurozone CPI y/y, U.S. Building Permits and Housing Starts

calendar 17/05/2023 - 08:02 UTC

The dollar is moving back to positive territory against most major currencies on Tuesday, with the USDX ending the day with a moderate 0.17% gain, heading closer to the 103.0 mark. A similar move was observed among emerging market pairs, with the USD/ZAR pair gaining by 0.35%, the USD/CNH posting a 0.52% rise and the USD the USD/MXN adding another 0.27% on its value.

The main stock market indices in the U.S. showed mixed results with the US 30 and the he US 500 posting minor losses of 0.79% and 0.43% respectively in a subdued trading session while the US tech 100 gained by a mere 0.31% as the debt ceiling deadline quickly approaches with no deal to be seen. Stock markets in Japan extended their winning streak as better-than-forecast growth figures, boosted optimism over the market’s outlook. This is reflected in the Japan 225 index that surged by 1.72% in the past week and more than 10% since the last week of March.

Sideways trading activity is seen in the cryptos front, with investors waiting for new catalysts that could set a clear direction for prices. The two main cryptocurrencies are seen fluctuating between gains and losses with Bitcoin is trading in a tight range between $25,835.5 and $27,712 over the past week and Ethereum trading between levels $1,743.3 and $1,850.25.

In the spotlight for Wednesday is the Italian Trade Balance and annual CPI figures from eurozone while later in the day, the U.S. will publish data on building permits and housing starts.

EUR/USD

The euro is back to losses on Tuesday ending moderately lower, posting a 0.08% decline against the dollar, following reports showing solid consumer spending numbers and rising industrial production in the U.S. for the second quarter.

In Europe, the German ZEW Economic Sentiment index declined to -10.7 in May, against the expected -5.5. Eurozone Preliminary GDP data showed a 0.1% expansion during the first quarter, in line with expectations. On an annualized basis, the economy expanded by 1.3%. Employment showed a 0.6% increase. No significant impact was seen on the euro following the above releases.

EUR/USD

Gold

Gold, that is used to seeing its demand rising in times of uncertainty fell sharply and settled below $2,000 per ounce the first time since the beginning of May on Tuesday. The precious metal ended the day 1.23% lower for the day and is currently trading more than 4% lower than its recent high of $2,081 seen earlier this month.

Part of this move could be attributed to a strengthening US dollar that investors fled to as a safe-haven and rising U.S. treasury yields as the 10-year U.S. Treasury note hit a two-week high of 3.572%.

In the fundamentals front, US, Retail Sales rose 0.4%, below the expected 0.7% of market consensus; the details of the report were mixed. Industrial Production rose 0.5% in April, surpassing expectations of 0%. On Wednesday, the US will release Building Permits and Housing Starts.

Gold

WTI Oil

Oil price fell on Tuesday ending the session with a loss of 1.10% at 70.64 after a surprise rise in U.S Crude inventories stocked demand concerns, following weaker-than-expected economic data from the United States and China, the world's two biggest oil consumers.

U.S. crude stockpiles rose by about 3.6 million barrels in the week ended May 12, according to market sources citing American Petroleum Institute figures, while the analysts had expected a 900,000-barrel drawdown.

Official US government data on crude oil inventories are due later in the session.

WTI Oil

US 500

The main stock market indices in the U.S. showed mixed results on Tuesday, with the US 30 and the US 500 posting minor losses while the US tech 100 closed slightly higher than its opening rate in a rather subdued trading session. Some gains were seen in large-cap technology stocks, but these were outweighed by investor concerns over the ongoing debt ceiling negotiations. Treasury Secretary Janet Yellen warned that "time is running out" on a debt ceiling agreement.

Weaker than expected earnings from Home Depot were seen adding pressure on Wall Street, however, these were outweighed by positive results in the technology sector where Alphabet and Amazon surged by 2.78% and 2.06% respectively, while Microsoft posted small gains of 0.62%.

In the spotlight for Wednesday, is the U.S. housing sector with building permits and housing starts data due while in the week ahead, investors will be watching closely as several Fed members as well as the Fed President are due to speak about financial stability and could provide possible hints about upcoming monetary policy measures.

US 500

The materials contained on this document should not in any way be construed, either explicitly or implicitly, directly or indirectly, as investment advice, recommendation or suggestion of an investment strategy with respect to a financial instrument, in any manner whatsoever. Any indication of past performance or simulated past performance included in this document is not a reliable indicator of future results. For the full disclaimer click here.

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