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22/03/2024 - 09:23 UTCThe US Dollar is back on a positive track against most major currencies, with the dollar index (USDX) recovering Wednesday’s losses and moving further up to end Thursday’s session 0.62% higher. According to reports, the move is partly attributed to an unexpected interest rate cut by the Swiss National Bank that is said to have pushed currency traders into the safety of the dollar. Additional support could derive from signs of a resilient US economy as a flurry of economic reports from the US manufacturing, services and employment sectors, came out better than forecasted.
Investors bets dropped from around 70% seen a day earlier to 65.9% that the Fed will have enough reason to begin cutting rates by June, according to the CME Fedwatch tool. Markets remain cautious following recent indicators pointing to a resilient US economy that could keep inflation elevated.
In other news, the British Pound declined after the Bank of England kept its interest rates unchanged as expected, however, dovish comments by the Federal Reserve on Wednesday seem to have provided a strong boost to risk assets worldwide and also increased investment flows to the U.S.
Sentiment in Wall Street remains strong as all three main indices ascended to new highs once again on Thursday, even though momentum appears to be losing some steam. The impact from the Fed’s latest comments that point to three rate cuts taking place this year is still at play, easing fears that inflation would force the central bank to remain hawkish. In corporate news, Apple Inc fell more than 4% after the U.S. Department of Justice and 16 states on Thursday filed a lawsuit against the tech giant, alleging that it is illegally monopolizing the smartphone market. Some sharp gains were seen in the chipmaking sector as NVIDIA Corporation and Intel Corporation gained 1.17% and 0.47% respectively while Micron Technology rose by 14% climbing to a record high. Support for Micron came from surprise profits and forecasts of strong current-quarter revenue on soaring demand for its memory chips.
In today’s session, some price action could be observed upon the release of upon the release of German business climate data, monthly retail sales numbers from Canada and a speech by Fed’s at a Fed Listens event, in Washington DC.
The EUR/USD pair posted a sharp decline on Thursday losing 0.69% after the release of US and Eurozone PMI data, as well as US Initial Jobless Claims and Philadelphia Fed Manufacturing.
The release of US PMI data for March, Initial Jobless Claims and the Philadelphia Fed Manufacturing Index all supported the USD and saw the pair fall back.
The release of Eurozone HCOB PMI data painted a lopsided picture of growth in the Eurozone. Europe's economic powerhouse Germany, meanwhile, revealed a similar trend.
Gold eased on Thursday, hitting pause after a rally that got an extra fillip after Federal Reserve Chair Jerome Powell hinted that the central bank was on course for three interest rate cuts in 2024.
The dollar bounced back up 0.8%, after slipping to a one-week low, making bullion more expensive for overseas buyers.
Traders are now pricing in a 72% chance that the Fed will begin cutting rates in June, up from 65% before the rate decision.
Despite recent high inflation readings, Powell said the central bank is still likely to reduce interest rates by three-quarters of a percentage point by end-2024.
Oil prices settled slightly lower on Thursday, pressured by weaker U.S. gasoline demand data and reports of a United Nations draft resolution calling for a ceasefire in Gaza.
Though gasoline inventories fell for a seventh week, down 3.3 million barrels to 230.8 million, gasoline product supplied, a proxy for product demand, slipped below 9 million barrels.
Oil prices also were pressured by confirmation that the U.S. drafted a U.N. resolution calling for a ceasefire.
Wall Street's three major stock indexes on Thursday registered record closing highs for the second day in a row after the Federal Reserve reassured investors about the prospects for rate cuts this year while chip stocks rallied after Micron Technology upbeat forecast.
At the end of the session US Tech 100 posted gains of 1.70% while US 30 and us 500 ended the sessions with gains of 0.58% and 0.14% respectively.
Heavyweight technology stocks were a key boost on Thursday, with Nvidia rising over 1% extending gains after it said it planned to ship its new AI chips later in 2024.
Risk appetite remained upbeat after the Fed kept interest rates steady and stuck to its projections for at least three rate cuts this year, despite recent stickiness in inflation.
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