Markets were off to another quiet start, but this turned out to be the calm before the U.S. PPI storm.
Crude oil chalked up a day in the red while gold and U.S. equities advanced. Treasury yields and the dollar closed out lower as well.
Read on to find out how it all went down!
Headlines:
- U.K. April claimant count change: 8.9K (13.9K expected, -2.4K previous), unemployment rate up from 4.2% to 4.3% as expected
- U.K. average earnings index for three-month period ending in March: 5.7% (5.3% expected, previous reading upgraded from 5.6% to 5.7%)
- Swiss PPI for April: 0.6% m/m (0.2% expected, 0.1% previous)
- BOE MPC member Pill talked of the possibility of an interest rate cut this summer
- Eurozone ZEW economic sentiment index for May: 47.0 (46.1 expected, 43.9 previous)
- German ZEW economic sentiment index for May: 47.1 (44.9 expected, 42.9 previous)
- Canada’s wholesale sales for March: -1.1% m/m (-0.9% expected, +0.2% previous)
- U.S. headline PPI for April: 0.5% m/m (0.3% expected, previous reading downgraded from +0.2% to -0.1%)
- U.S. core PPI for April: 0.5% m/m (0.2% expected, previous reading downgraded from +0.2% to -0.1%)
- Fed head Powell on latest PPI numbers: “I wouldn’t call it hot, I would call it sort of mixed.”
- Australia wage price index for Q1 2024: 0.8% q/q (0.9% expected, previous reading upgraded from 0.9% to 1.0%)
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
A bit of sideways price action was seen during the Asian and European trading sessions, as traders braced for the U.S. PPI release later in the day.
Still, some divergences among asset classes price action was noticeable, with crude oil crawling lower and gold and U.S. equity indices already edging up.
Volatility picked up when the actual PPI numbers were printed, as the headline results for April came in the green but the previous report saw downgrades. Later on, Fed head Powell noted that the numbers weren’t enough to change their outlook on inflation.
The U.S. dollar and Treasury yields tumbled as a result while the S&P 500 index continued to climb, with the latter likely being buoyed by the renewed attention on meme stocks like GME and AMC.
FX Market Behavior: U.S. Dollar vs. Majors
Overlay of USD vs. Major Currencies Chart by TradingView
The Greenback was off to a mostly positive start, except against the Kiwi which was supported by a 9.1% monthly pickup in visitor arrivals in March versus the earlier 1.6% uptick.
From there, the U.S. currency stayed afloat then cruised sideways during Asian market hours, before eventually giving up more ground to the Kiwi and then the franc, which was boosted by an upbeat Swiss PPI report.
The pound veered from the forex pack during the release of the U.K. jobs figures, which turned out mostly stronger than expected and generated an overall bearish aftermath for the currency. However, it soon joined its peers in advancing against the dollar, even when the U.S. April PPI beat estimates.
Downgrades to the March PPI report and a “meh” reaction from Fed head Powell likely contributed to the dollar’s general bearish tilt for the rest of the New York session.
Upcoming Potential Catalysts on the Economic Calendar:
- Eurozone flash employment change at 9:00 am GMT
- Eurozone flash GDP at 9:00 am GMT
- U.S. headline and core CPI at 12:30 pm GMT
- U.S. headline and core retail sales at 12:30 pm GMT
- U.S. Empire State manufacturing index at 12:30 pm GMT
- U.S. NAHB housing market index at 2:00 pm GMT
- EIA crude oil inventories at 2:30 pm GMT
- Japanese preliminary GDP and price index at 11:50 pm GMT
All eyes and ears are on the U.S. CPI report later today, potentially leading to another round of market consolidation before volatility picks up again upon seeing the actual results.
Don’t forget that the U.S. retail sales report and Empire State manufacturing index are also up for release then, potentially leading to additional price spikes, so make sure you check out our Event Guide for the U.S. April CPI to know what to expect!
Looking for your own spot to record your market observations & trading statistics? If so, then check out TRADEZELLA! It’s an easy-to-use
journaling tool that can lead to valuable performance & strategy insights! You can easily add your thoughts, charts & track your psychology with each and every trade. Click here to see if it’s right for you!Disclaimer: Babypips.com earns a commission from any signups through our affiliate link. When you subscribe to a service using our affiliate links, this helps us to maintain and improve our content, a lot of which is free and accessible to everyone–including the School of Pipsology! We appreciate your support and hope that you find our content and services helpful. Thank you!