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19
May

German PPI, ECB President Lagarde speaks, Fed President Powell speaks

calendar 19/05/2023 - 07:56 UTC

The U.S. dollar edged higher once again on Thursday, with the USDX marking a 0.67% daily gain, and rising further to cross the 103.0 mark and end the day at 103.43. Emerging market pairs also push higher with the USD/ZAR posting moderate gains of 0.37%, the USD/CNH rising by 0.55% and USD/INR up by a mere 0.20% for the day with the latter briefly hitting a high last seen in March. The USD/TRY is seen steadily gaining ground and closing in on 20 Turkish liras per dollar, marking new all-time highs on a daily basis.

The main stock market indices in the U.S. also edged higher on Thursday supported by rising expectations that a potential debt ceiling deal is underway, something that could potentially shift concentrated cash that sits in technology and growth stocks that have been havens this year, into the rest of the market. The three main U.S. stock indices US 500, US 30 and US tech 100 rose by approximately 1.14%, 0.54% and 2.10% respectively.

Japanese equity markets continue to surge on Thursday, with the Japan 225 hitting its highest level since August 1990 and adding another 1.14% to its value. The move could be attributed to a combination of factors including among others strong earnings, an economy showing signs of strong recovery and optimism over a U.S. debt ceiling deal.

In the spotlight for Friday is the German monthly PPI report, a speech by ECB president Lagarde, speeches by several Fed members and later in the day, market attention could be shifted towards a speech by Fed Chairman Jerome Powell regarding the current outlook on a policy summit panel with former Chair Bernanke at 11am EDT.

EUR/USD

The EUR/USD pair for a third consecutive session ended with losses of 0.58% to end the day at 1.07753. The dollar rose against the Euro on Thursday after another round of solid data from the U.S., which showed lower than expected initial jobless claims in the latest week and a milder-than-expected fall in a business index from the Philadelphia Federal Reserve.

It is worth recalling that ECB President Christine Lagarde has already made it clear that efforts to curb high inflation aren't over and said that there are factors that can induce significant upside risk to the inflation outlook.

Focus is now on Fed Chair Powell and European central bank President Lagarde later today for fresh clues about the next policy moves that may influence and provide some impetus to the EUR/USD pair.

EUR/USD

Gold

Gold saw another day of significant losses on Thursday with prices dragged now nearly $30, ending the session 1.23% lower ate 1958.63.

A combination of supporting factors pushes the US Dollar (USD) to a nearly two-month high, which, in turn, is seen weighing heavily on the gold prices.

Hawkish comments from Fed officials also rattled gold markets this week, and with rates remaining higher for an extended period, the precious metal is likely to remain under pressure.

Gold

WTI Oil

Oil Price slid 0.76% on Thursday, and despite the gains earlier this week the oil market is around 8% lower over the last month on the back of monetary tightening and weak growth prospects in the U.S and China.

A stronger dollar can weigh on oil demand by making the fuel more expensive for holders of other currencies.

The immediate outlook remains gloomy with elevated inflation data pointing to more interest rate hikes from global central banks, while weak economic data from China, the world’s largest crude importer, continued to emerge.

WTI Oil

US 500

The main stock market indices in the U.S. showed positive results on Thursday, with the US 30 posting 0.54% gain, the US 500 moving slightly higher of 1% and the US Tech 100 gaining more than 2.1%. US 500 and US Tech 100 closed to their highest levels since August 2022.

Market optimism surrounding the US debt ceiling extension joined with upbeat US data seem to be providing a strong boost to the major stock indices.

All eyes are no turned to Washington for signs that the White House will come to an agreement with congressional Republicans to increase the U.S. borrowing limit before June 1, where the Treasury Department has said is the day the federal government will run out of money to pay its bills. President Joe Biden and top U.S. congressional Republican Kevin McCarthy both expressed confidence that a deal would be reached.

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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