© Reuters
By Peter Nurse
Investing.com – The US dollar fell in early European trade on Thursday, but volatility was limited ahead of the release of weekly employment data and quarterly growth that could provide clues to the Fed’s future moves.
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US dollar index now
The US dollar index is declining in today’s trading, to record 102.062, down by 0.24%, and is about to fall from the 102 level, near the monthly low, and is on its way to falling by 2% in March.
This coincides with a quiet rise in gold futures contracts, by 0.17%, to record 1987.8 dollars an ounce, while spot contracts recorded 1970.3 dollars, up by 0.29%. And it shoots towards $24, where it is now trading at 23,880, up by 1.76%.
US index futures are succeeding so far in achieving a collective rise, as the Nasdaq futures rose by 0.40%, the Dow Jones by 0.50%, and the S&P 500 by 0.51%.
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The Fed returns to the fore again…important data
Declining concerns about the banking sector also shifted traders’ attention to the Fed’s fight against inflation.
This Friday sees the release of the Fed’s favorite inflation measure, which is , but before that comes the release of the weekly and preliminary growth data for the fourth quarter, providing more clues about economic activity in the world’s largest economy.
Markets are currently pricing in a 60% chance of interest rates sticking in May, according to CME FedWatch, but that figure was much higher last week in the midst of a banking crisis.
Dollar and foreign currencies
The rate fell to 1.0839, after inflation data from Germany’s most populous state, North Rhine-Westphalia, showed growth of 1.0% in March, }. This represented a significant slowdown in growth from the 8.5% annualized rise in the previous month.
Additionally, the index rose 3.3% year-on-year in March, a significant slowdown from the 6.0% level in February.
The official release of the index is scheduled for Friday.
As analysts at ING said in a note: “With the ECB clearly reliant on data despite its implicit hawkish bias, this week’s inflation numbers are set to be an important driver of market price expectations.” “Currently there are two rate hikes of 25 basis points at a full rate by September in the OIS curve, and another hawkish repricing very high capped.”
It rose 0.2% to 1.2341, the risk-sensitive index rose 0.4% to 0.6711, while it fell 0.4% to 132.28, with the safe-haven yen recovering after suffering heavy losses overnight.
Although volatility has subsided in the past few days, the global currency market is vulnerable to a liquidity crunch later this year as financial conditions tighten and economic growth slows, according to Bank of America (NYSE:).
The bank also said: “The delayed impact of bank credit tightening has not yet been fully implemented, and the economic cycle is likely to enter a contractionary growth phase.”
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