Anna Zaitseva, analyst, FINAM Group
On Friday, April 16, the weakening of the US dollar slowed slightly after an almost non-stop decline since the beginning of the month. As of 11:41 Moscow time, the EUR / USD rate is growing by 0.12% and is at the level of 1.19782, and the DXY dollar index is consolidating near yesterday’s close, trading at 91.620. At the end of Thursday, the main currency pair fell by 0.11% to 1.19668, while the DXY indicator slightly decreased and closed at 91.618.
Yields on US Treasury bonds in yesterday’s trading fell to monthly lows: the yield on 10-year bonds reached 1.574%, and 30-year bonds – 2.265%. It seems that market participants no longer expect a sharp acceleration of inflation in the United States and are increasingly agreeing with the Fed’s estimates that the current rise in consumer prices will be temporary and inflation will soon stabilize near the 2% mark. Against this background, expectations have weakened that the Federal Reserve will begin the rate of increase in the interest rate earlier than planned, as a result of which the yields on government bonds and the US dollar rate fell.
In turn, the euro was strengthened by expectations that the problem of the shortage of vaccines against coronavirus in Europe will soon be eliminated. In II The European Union may receive three times more vaccine doses in the quarter than in the previous quarter, which will accelerate the pace of immunization of the population and the recovery of the European economy.
In terms of macroeconomic statistics, the US data released yesterday delighted investors, contributing to risk-on sentiment in global markets. Thus, retail sales rose by 9.8% (mom) in March compared to a 2.7% decline (mom) a month earlier, exceeding the consensus forecast of + 5.9% (mom). The number of initial applications for unemployment benefits fell last week to 576 thousand against the previous value of 769 thousand, while analysts expected a result of 700 thousand. The index of business activity in the manufacturing sector from the Federal Reserve Bank of Philadelphia rose to 50.2 points in April compared to with a March value of 44.5 points, which was the maximum increase in almost 50 years. Manufacturing output increased by 2.7% (mom) in March against a decrease by 3.7% (mom) in February. At the same time, the results on industrial production were lower than forecasted: the growth in March amounted to 1.4% (m / m), while analysts expected an increase of 2.8% (m / m).
Today it will be necessary to follow the publication in the eurozone of data on inflation and trade balance, and in the US – data on the volume of new home construction, the number of building permits issued, as well as a number of indicators from the University of Michigan.
The EUR / USD rate is holding above the 50-day moving average line and is approaching the 1.2000 mark, which currently acts as resistance. Stochastic lines are in the zone of strong overbought, which indicates limited upside potential for the instrument in the short term.
This information is not investment advice.