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What’s happening: The British pound started the week on a strong note, recorded gains against the US dollar on Monday.
What happened: The sterling hit its strongest level in about two weeks versus the US dollar and the euro, ahead of several big events.
However, the pound fell sharply against one of the major currencies during Monday’s trading session.
Why it matters: Investors are closely monitoring monetary policy announcements by major central banks around the world. The Bank of England is widely expected to begin cutting its benchmark interest rate in August, while the US Federal Reserve could wait till the end of the year.
Strong economic reports had lent support to both the British pound and the euro last week. Services PMI data from the Eurozone and the UK, released last week, surged to their strongest levels in around one year, raising hopes of the economic stagnation having come to an end.
Investors also monitored comments from the Bank of England’s officials. Deputy Governor for Markets, Dave Ramsden, recently said inflation in the UK could ease below the central bank’s latest projections.
Weakness in the US dollar also lent support to the GBP/USD forex pair on Monday. The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell more than 0.3% to 105.58.
The GBP/USD forex pair gained more than 0.5% to settle at 1.2563 on Monday, while the EUR/GBP pair lost around 0.3% to reach 0.8535.
However, the sterling recorded losses versus the Japanese yen on Monday. There were wide speculations of Japanese authorities purchasing the yen to support the currency that is trading at its lowest level versus the greenback since 1990. The GBP/JPY pair ended the day lower at 196.40 on Monday, after edging past the 200 level earlier in the session.
London’s FTSE 100 index rose 0.09% to close at a record high of 8,147.03 on Monday.
What to watch: Investors await the release of economic reports on consumer credit, M4 money supply and net lending to individuals from the UK today. Consumer credit in the UK, which increased by £1.378 billion in February, is expected to rise by £1.6 billion in March. Analysts expect M4 money supply in the UK to grow by 0.5% in March, compared to a 0.5% gain in February.
Context: US stocks closed higher on Monday, with the Dow Jones index gaining more than 100 points during the session.
Details: Strong gains in some mega-cap tech stocks provided a boost to the US equity market on Monday.
Shares of Tesla jumped more than 15% on Monday, after the EV maker cleared a major hurdle to roll out its full self-driving car in China. Apple’s shares rose around 2.5% after having declining sharply on prospects of flat iPhone sales on weak demand, especially in China.
Investors also assessed earnings reports on Monday. Shares of Domino’s Pizza gained around 5.6% after the company reported stronger-than-expected quarterly earnings. Big names, including Apple, McDonald’s, Starbucks, Coca-Cola, and Amazon, are all set to release their quarterly earnings reports in the week ahead.
The US Federal Reserve is scheduled to announce its recent interest rate decision on Wednesday. Markets widely expect the Fed to keep its benchmark rates unchanged at this meeting.
The Dow Jones index gained 146.43 points, or 0.38%, to close at 38,386.09, while the S&P 500 added 0.32% to 5,116.17 on Monday. The Nasdaq 100 rose 0.36% to settle at 17,782.72 on Monday.
What to watch: Investors await the release of economic data on employment cost index, S&P CoreLogic Case-Shiller 20-city home price index and Chicago PMI from the US today. US compensation costs for civilian workers, which rose by 0.9% in the fourth quarter, are expected to increase by 1% in the first quarter.
Analysts expect the Case Shiller home price index to rise by 0.6% in February, following a 0.1% decline in January, while the Chicago Business Barometer is expected to increase to 44.9 in April, from 41.4 in the previous month.
Other Markets: European indices closed mixed on Monday, with the DAX 40 and CAC 40 down by 0.24% and 0.29%, respectively, and the STOXX Europe 600 Index up by 0.07%.
NATO Secretary Jens Stoltenberg said that Ukraine’s lack of ammunitions had resulted in the Russian military forces making gains along the frontline, with new aid being slow in arriving from Western nations. The news sent the safe-haven US dollar index higher in forex trading this morning.
China’s official NBS manufacturing PMI fell to 50.4 in April, from March’s reading of 50.8, exerting pressure on the CNY/USD forex pair.
Singapore’s bank loans grew to S$807.8 billion in March, from S$801.5 billion in the prior month, which sent the SGD/USD pair lower in forex trading this morning.
Australia’s retail sales contracted by 0.4% in March, missing market expectations for a 0.2% gain, which exerted pressure on the AUD/USD forex pair.
New Zealand’s ANZ Business Outlook Index fell to 14.9 in April, from 22.9 in the prior month. This being the weakest reading since September 2023 sent the NZD/USD pair lower in forex trading this morning.
France’s GDP growth rate, household consumption, producer prices and inflation rate, Germany’s retail sales, import prices, number of unemployed persons, unemployment change, jobless rate, and GDP growth rate, South Africa’s money supply M3, private sector credit, balance of trade and government budget value, Spain’s GDP growth rate and current account, Turkey’s balance of trade, tourism revenues and tourist arrivals, Italy’s gross domestic product and inflation rate, UK’s mortgage approvals and mortgage lending, Eurozone’s GDP growth rate, India’s infrastructure output, Brazil’s unemployment rate and producer prices, Mexico’s GDP growth rate and government budget value, Canada’s GDP, US Redbook index, FHFA house price index, CB consumer confidence, Dallas Fed services index and API crude oil stocks, Saudi Arabia’s money supply M3 and value of loans, as well as Russia’s money supply M2.
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