Buck mixed as hopes grow for dealmaking
The U.S. Dollar is trading in mostly familiar ranges with sustained strength against Majors peers such as Euro and Pound Sterling, while slightly down against most others ahead of a key China-U.S. meeting.
At the time of writing, it was reported that U.S. President Donald Trump and a crew of business leaders, including Elon Musk, were just arriving for scheduled talks directly with China’s leader Xi Jinping.
With markets mostly awaiting the results of talks, the hopes are that a deal for peace with Iran can be discussed and that trade concerns are once again dealt with on the table. While armed conflict continues, with news that Saudi Arabia has started launching some retaliatory attacks against Iranian territory and assets, anxiety remains most around the negative effects of higher oil prices and access to energy.
Yesterday’s Consumer Price Index figures from April confirmed that inflationary pressures are seriously mounting with the annual average CPI climbing 3.8% from a year earlier, the most since 2023 per the Bureau of Labor Statistics. Government data also highlighted that gas prices have risen by over 28.0% in the last two months. Traders highly doubt the Fed has any room to exercise any loose monetary policy with chances that a hike will happen by next April up to 80.0%. Later at 8:30AM, we will get Producers Price Index, tomorrow we get Retail Sales and Industrial Production is out on Friday.
What to Watch This Week…
- U.S. Retail Sales, Thursday 8:30AM
- U.S. Industrial Production, Friday 9:15AM
- Monex USA Online is always open
The complete Economic Calendar can be found here.
EUR ⇓
The Euro is down to its weakest point on over a week as the grind of waiting for resolution to the Iranian conflict keeps markets on edge and outlooks quite blurry. As previously written about, economic growth has been difficult to achieve as proven by the second reading of Q2’s Gross domestic Product for the Euro-zone which came out at just 0.1%. Industrial Production failed to meet expectations for March of climbing by 0.3% while the annual average remains in negative territory at (-2.1%), exacerbated by a poor run in the first quarter. Inflationary figures, crucial now that energy costs have been taken into account and Purchasing Managers Indices are scheduled for release next week, painting a clearer picture, which may not be pretty.
GBP ⇓
Pound Sterling has dropped by about 1.0% in value in the past week and has fallen to its weakest level against the Buck since April 29th. Political drama continues to unfold as Prime Minister Keir Starmer’s time seems to be running out with growing challenges and calls for his ouster. U.K. Secretary of State for Health and Social Care Wes Streeting is looking to resign and run against Stermer thus far receiving support from 81 U.K. ministers. We shall see if tomorrow’s Q1 GDP numbers keep things volatile for “Cable.”