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USD edges lower on mixed economic data

Friday, April 26, 2024

Today’s headlines

What’s happening: The US dollar slipped on Thursday, as investors digested the latest economic reports.

What happened: The US economy slowed during the first quarter, while inflation accelerated.

Despite the pressure, the US dollar gained versus one of its major peers during the session.

Why it matters: The Commerce Department said that US gross domestic product grew at an annualised rate of 1.6% in the January-March period. The figure came in significantly below market expectations of 2.4% and marked a deceleration from the 3.4% recorded in the prior quarter.

Underlying inflation, measured by the price index for personal consumption expenditures (PCE), increased an annualised rate of 3.7% in the first quarter. The figure was higher than market estimates of 3.4% rise and came in above than the 2% increase recorded in the earlier three-month period.

Other data released on Thursday showed the number of people claiming jobless benefits declining by 5,000 to 207,000 in the week ending April 20. This was the lowest in two months. US trade deficit in goods widened to $91.83 billion in March, logging the largest gap in 11 months, while wholesale inventories slipped by 0.4% in March.

Traders lowered their speculations of the Fed cutting interest rates in September, following the GDP report and other data releases.

The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell around 0.2% to 105.60 on Thursday, after hitting the 106.00 mark during the session.

While most major currencies gained against the US dollar, the Japanese yen fell to a new 34-year low on Thursday. Investors are concerned that the Bank of Japan may not be hawkish enough to provide a boost to the yen. The USD/JPY forex pair declined to as low as 155.31 after the US GDP report, but reversed losses to settle at 155.66, up around 0.2%.

What to watch: Investors await the release of data on PCE price index data for March, which is the US Federal Reserve’s preferred gauge of inflation, with the rate remaining stubbornly above the central bank’s target of 2%. Core PCE Price Index annual change in the US, which fell to 2.78% in February, is expected to slow to 2.6% in March.

Data on Michigan consumer sentiment will also remain focus. The University of Michigan consumer sentiment for the US is expected to decline to 77.9 in April, compared to 79.4 in the prior month.

The markets today

European stocks will be in focus today ahead of a basket of major economic reports

Context: European stock markets settled mostly lower on Thursday, as investors assessed the latest corporate earnings results.

Details: Several companies, including Barclays, Nestle, Deutsche Bank and Airbus, released their earnings results on Thursday. Deutsche Bank’s stock jumped more than 8% after the bank reported stronger-than-expected profits for the first quarter. Shares of Barclays shares surged around 7% following upbeat earnings for the first quarter.

Shares of Adyen dipped more than 18% on Thursday, after the Dutch company posted lower-than-expected sales for the first quarter. Sanofi’s shares gained more than 4%, posting better-than-expected first-quarter earnings and sales figures.

Economic data released on Thursday showed the GfK Consumer Climate Indicator for Germany increasing to -24.2 heading into May, versus -27.3 in the earlier period.

The pan STOXX Europe 600 Index fell 0.64% to settle at 502.38 on Thursday, with most sectors closing in the negative zone. Industrial stocks were among the worst performers, while healthcare stocks bucked the overall market trend, adding 0.2% during the session.

Mining stocks also moved higher, after Anglo American disclosed that it had received an all-share takeover offer from BHP Group.

London’s FTSE 100 gained 0.48% to close at 8,078.86, while Germany’s DAX 40 and France’s CAC 40 lost 0.95% and 0.93%, respectively.

What to watch: Investors await the release of economic data on loans to non-financial corporations, household credit growth and money supply M3 from the Eurozone today. Lending to companies in the Eurozone, which increased by 0.4% year-over-year to €5.13 trillion in February, is expected to rise by 0.2% in March.

Analysts expect bank lending to households in the Eurozone to increase by 0.3% year-over-year in March, while the M3 measure of money supply is projected to grow by 0.5% year-over-year in March, following a 0.4% gain in the prior month.

Other Markets: US trading indices closed lower on Thursday, with the Dow Jones index, S&P 500 and Nasdaq 100 down by 0.98%, 0.46% and 0.55%, respectively.

The news shaping the markets

The US is considering a new weapons package worth $6 billion for Ukraine in its war with Russia. The news sent the USD/RUB pair higher in forex trading this morning.


Australia’s final demand producer price index rose by 0.9% in the first quarter, increasing at the same pace as in the prior quarter, lending support to the AUD/USD forex pair.


Singapore’s private home prices rose by 1.4% in the first quarter, slowing from the 2.8% growth recorded in the previous period, which sent the SGD/USD pair lower in forex trading this morning.


Argentina’s consumer confidence indicator improved to 37.17 in April, from 36.68 in the earlier month, which lent some support to the ARS/USD forex pair.


Canada’s average weekly earnings of non-farm payroll employees rose by 4.5% year-over-year in February, which sent the CAD/USD pair higher in forex trading this morning.

What else to watch today

France’s consumer confidence indicator, Spain’s unemployment rate and retail sales, Russia’s unemployment rate, business confidence, wage growth, retail sales, gross domestic product and Bank of Russia’s interest rate decision, Canada’s CFIB business barometer, wholesale sales and government budget value, India’s foreign exchange reserves, Brazil’s mid-month consumer price inflation and nonfarm payrolls, Mexico’s balance of trade and unemployment rate, US personal spending, personal income, Baker Hughes crude oil rigs and Baker Hughes total rigs, as well as Turkey’s gross foreign exchange reserves.


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