Renewed buying interest propelled the U.S. Dollar to recover from Monday’s downturn, achieving notable gains on Tuesday. This resurgence was primarily fueled by easing concerns surrounding U.S.-China trade relations and increased caution in anticipation of crucial U.S. economic data releases scheduled later in the week.
Key Developments to Watch on Wednesday, April 30:
The US Dollar Index (DXY) registered modest gains, hovering around the 99.20 level, despite the ongoing decline in U.S. Treasury yields across the yield curve. The economic calendar is packed with significant releases. Initially, the weekly MBA Mortgage Applications data will be released, followed by the ADP Employment Change, providing an early indication of the health of the labor market. Inflation figures, as measured by the Personal Consumption Expenditures (PCE) Price Index, along with data on Personal Income and Personal Spending, will offer insights into consumer behavior and inflationary pressures. The Chicago PMI will provide a snapshot of manufacturing activity in the Midwest, while Pending Home Sales will shed light on the housing market. The Employment Cost Index, a broad measure of labor costs, and the advanced estimate of Q1 GDP Growth Rate, a key indicator of overall economic performance, are also due. Finally, the EIA’s weekly report on U.S. crude oil inventories will provide an update on the nation’s energy supply and demand dynamics. Market participants will be closely scrutinizing these releases for clues about the Federal Reserve’s future monetary policy decisions. The expectation is that a strong GDP reading could further bolster the dollar.
EUR/USD partially reversed Monday’s upward movement, finding support around the 1.1370 level. Germany will be a focal point in Europe, with the release of Retail Sales figures, the unemployment report, and the advanced estimate of Q1 GDP Growth Rate. These data points will provide a comprehensive view of the German economy’s performance. Furthermore, the flash Inflation Rate and the preliminary Q1 GDP Growth Rate for the broader euro area will be closely watched for signs of economic strength or weakness across the Eurozone. The European Central Bank (ECB) will be paying close attention to these figures as it assesses the need for further policy action. Concerns remain about the overall health of the Eurozone economy, and disappointing data could put downward pressure on the euro. Analysts suggest that a strong German GDP reading is crucial to maintain the euro’s current level.
