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26/03/2024 - 09:06 UTCThe US Dollar retreated on Monday starting a rather calm week ahead, with many trading desks and markets across the globe closed on Good Friday. The Dollar index (USDX) ended the session with moderate losses of 0.21%. Moreover, data on Monday showed that sales of new U.S. single-family homes unexpectedly fell in February after mortgage rates increased during the month. Fed officials said on Monday they had faith that U.S. inflation will ease but acknowledged an increased sense of caution around the debate.
Traders are pricing in a 65% probability that the Fed will begin cutting rates in June, according to the CME Group's FedWatch Tool.
Wall Street momentum appears weakened, with all three main indices ending lower for a second consecutive session on Monday, wiping away a small chunk of last week’s gains as investors are bracing for key catalysts due later this week including an update on inflation and remarks from Federal Reserve officials.
So far, comments from Fed members were mostly hawkish as Atlanta Fed’s Raphael Bostic reiterated Monday that he sees the need for just one rate cut, adding that the strong economy allows the central bank to continue with its cautious approach. Fed governor Lisa Cook also stated that there is a need for the Fed to proceed carefully on rate cuts. These remarks came in contrast to Fed chairman Powell's speech last week where he clearly signaled that three rate cuts remain on the table for 2024.
In corporate news shares of Super Micro Computer Inc jumped more than 7% after JPMorgan started coverage on the company giving it an “overweight” with a price target at $1,150 amid optimism about an acceleration in server demand to support the AI revolution. Big techs, Apple, Meta Platforms and Alphabet stocks ended lower after EU antitrust regulators launched investigations for potential breaches of the Digital Markets Act
In addition, some key players will be reporting their earnings this week, among which are GameStop, Carnival and Walgreens Boots.
In today’s session, some price action could be observed upon releases of US durable goods orders, consumer confidence data and the Richmond Manufacturing index.
The EUR/USD pair bounced on Monday ending the session with moderate gains of 0.28% after last week’s losses.
Atlanta’s Fed President Raphael Bostic projected one rate cut in 2024 if the US central bank embarks on slashing borrowing costs. On the dovish side, Chicago’s Fed Austan Goolsbee still sees three cuts in 2024, adding that they need to see evidence of inflationary declines.
US housing data was weaker than expected as New Home Sales slumped 0.3%, with sales coming at 0.662 million. The Chicago Fed announced the National Activity Index saw improvement, moving from -0.54 to 0.05, with positive developments across all four index categories.
Across the pond, the Eurozone’s (EU) Consumer Confidence in Spain was almost unchanged, while European Central Bank (ECB) officials led by Mario Centeno said inflation has peaked. Fabio Panetta added that the EU’s inflation is quickly falling toward its 2% target, giving room to cut rates.
Gold prices rose on Monday, driven by expectations of interest rate cuts by the U.S. Federal Reserve this year, even as traders await inflation readings this week for confirmation on the timing of these reductions.
The weekly initial jobless claims print is due on Thursday and will be followed by the U.S. core personal consumption expenditure (PCE) price index data on Friday.
The dollar also pared some of last week's gains, making bullion cheaper for overseas buyers. Gold hit record peaks last week after the Fed reiterated its view of three rate cuts in 2024.
Oil prices settled higher Monday, driven by growing bets on tighter global crude supplies as Russia is reportedly set to cut oil output at a time when Ukraine continues to target the country's refineries.
Moreover, The United Nations Security Council voted on a measure Monday calling for a immediate temporary ceasefire in the Gaza strip for Ramadan, as well as the release of all hostages by Hamas. The non-binding resolution isn't expected to curb Israeli forces pressing on with their offensive in Gaza.
U.S. main indexes posted minor losses on Monday after rallying to record highs last week on the back of a seemingly dovish Federal Reserve. Regulatory action against some of the biggest technology companies also weighed on sentiment. At the end of the session US 500 lost 0.17% while US 30 and US Tech 100 ended the session 0.30% and 0.24% lower respectively.
U.S. stock index futures rose slightly in evening deals on Monday, recovering some ground after a negative session on Wall Street as markets remained largely on edge ahead of more cues on inflation and the Federal Reserve.
PCE price index data- which is the Fed’s preferred inflation gauge- is due this Friday and the reading will still be closely watched for more cues on the path of inflation.
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