Forex News

The dollar index rebounded to above 105.3 on Friday and is on track to end the week about 0.3% higher, as traders digest key economic data and cautious comments from Fed officials regarding interest rate cuts. The Michigan consumer sentiment dropped to a six-month low with expectations of higher prices. Yesterday however, initial jobless claims unexpectedly soared to 8-month highs, offering further evidence the labour market is softening. Meanwhile, Fed Governor Michelle Bowman said on Friday the central bank should proceed “carefully and deliberately” and Federal Bank of Dallas President Lorie Logan said there are uncertainties about how restrictive policy is. Market odds suggest a 62% chance of a rate cut in September and 75% in November. The key CPI and PPI reports due next week will offer insights on evolving price pressures in the economy. Elsewhere, two BoE policymakers signaled support for a rate reduction, while the ECB is expected to lower borrowing costs in June.

WTI crude futures stabilized around $79 per barrel on Friday, poised for a weekly gain of over 1.5% as market participants evaluate global demand prospects and ongoing tensions in the Middle East. On Thursday, data showed that crude oil imports in China increased in April, signaling improving demand in the world’s top crude importer. However, recent US data showed consumer confidence slipping to a six-month low due to expectations of rising prices. Meanwhile, Israel said it would proceed with plans to invade Rafah and other parts of Gaza as the latest round of peace negotiations in Egypt yielded no progress. Elsewhere, the outlook for OPEC+ production policy remains highly uncertain ahead of the group’s policy meeting on June 1.

The yield on the US 10-year Treasury note edged up to 4.5% on Friday, after hitting a low of 4.42% earlier in the week, as traders digest key economic data and cautious comments from Fed officials regarding interest rate cuts. The Michigan consumer sentiment dropped to a six-month low with expectations of higher prices. Yesterday however, initial jobless claims unexpectedly soared to 8-month highs, offering further evidence the labour market is softening. Meanwhile, Fed Governor Michelle Bowman said on Friday the central bank should proceed “carefully and deliberately” and Federal Bank of Dallas President Lorie Logan said there are uncertainties about how restrictive policy is. Market odds suggest a 62% chance of a rate cut in September and 75% in November. The key CPI and PPI reports due next week will offer insights on evolving price pressures in the economy.

US stocks pared some of the early gains on Friday, with the S&P 500 and the Nasdaq swinging around the flatline while the Dow Jones edged up about 90 points as recent data brought down expectations for Fed interest rate cuts. Michigan consumer sentiment fell to a 6-month low driven by a sharp uptick in year-ahead inflation expectations. This added up to fresh comments from a Fed official advocating a cautious stance on lowering interest rates. Still, three averages are set to finish the week sharply higher: the S&P 500 up 1.7%, the Dow Jones adding 1.8%, and the Nasdaq rising 1.2%. Communication services was the worst performing, followed by consumer discretionary and energy, while financials and materials outperformed. Most megacap stocks were in the red although Nvidia held the 1.2% gain. Meanwhile, Novavax shares soared more than 125% after the vaccine maker announced a multi-billion dollar deal with Sanofi to co-commercialize its Covid vaccine starting next year.

Elevance Health increased to a 16-month high of 542.22 USD. Over the past 4 weeks, Elevance Health Inc gained 7.89%, and in the last 12 months, it increased 18.7%.

Coca-Cola increased to a 51-week high of 63.33 USD. Over the past 4 weeks, Coca-Cola gained 7.23%, and in the last 12 months, it decreased 0.83%.

The UK 10-year government bond yield rebounded to 4.15% from a 4-week low of 4.0985% hit earlier in the session, driven by increasing US treasury yields following a report showing a decline in US consumer sentiment to a six-month low, driven by rising short-term inflation expectations and job market concerns. Gilt yields hit one-month lows earlier due to Bank of England dovish signals and positive GDP data. The BoE kept its key interest rate at 5.25%, although two MPC members pushed for a rate cut. Governor Andrew Bailey expressed confidence that inflation would reach the 2% target soon, and insisted that monetary policy would remain restrictive even with a potential rate cut. Also, recent economic figures showed a 0.6% growth in Q1, surpassing expectations and officially ending the country's brief recession. This economic recovery is the strongest in over two years.

Aluminum futures retreated to $2,550 per tonne from a near-two-year-high of $2,670 on April 22nd, trimming their rally in the second quarter amid eased concerns of low supply. Aluminum LME stocks surged after nearly 140,000 tonnes of sanctioned Russian aluminum were re-warranted for traders to profit from rent deals in approved warehouses. Despite the increase in warranted stocks, the development did little to change fundamentals as commodity giants were widely expected to re-warrant their metals, although new sanctions prevent selling aluminum to US and UK customers, limiting supply for the markets. In the meantime, the Aluminum Corp of China underscored that the country’s bauxite security still remains uncertain due to China's dependency on Guinea, which has been subject to disruptions following an explosion in a key fuel depository. Further, smelters in Yunnan, China's fourth-largest aluminum-producing region, remained subject to production curbs due to the annual dry season.

The S&P/TSX Composite index climbed 0.3% to surpass the 22,450 milestone on Friday, achieving a record high with support from gains across nearly all major sectors as the earnings season unfolds. Enbridge reported record first quarter 2024 financial results and reaffirmed its financial guidance, resulting in shares rising by over 0.7%. Additionally, Ritchie Bros Auctioneers stood out as a top performer, surging by more than 7% following an earnings report that exceeded expectations. Other notable gainers included Canadian National Railway and Suncor, each gaining over 0.8%. Conversely, Sun Life fell short of core profit estimates for the first time in 12 quarters, leading to a 4.9% drop in its shares. On the economic front, Canada added 90,000 jobs in April, maintaining an unchanged unemployment rate of 6.1%. For the week, the TSX was poised for a robust 2% increase, tracking the strong performance of commodities, particularly oil and gold prices.

Boston Scientific increased to an all-time high of 74.28 USD. Over the past 4 weeks, Boston Scientific gained 7.63%, and in the last 12 months, it increased 39.03%.

Philip Morris International increased to a 40-week high of 99.89 USD. Over the past 4 weeks, Philip Morris International gained 11.55%, and in the last 12 months, it increased 4.97%.

Berkshire Hathaway increased to a 4-week high of 411.33 USD. Over the past 4 weeks, Berkshire Hathaway gained 0.74%, and in the last 12 months, it increased 27.39%.

Wells Fargo increased to a 6-year high of 61.86 USD. Over the past 4 weeks, Wells Fargo gained 8.44%, and in the last 12 months, it increased 61.49%.

The University of Michigan consumer sentiment for the US fell to 67.4 in May 2024 from 77.2 in April, the lowest in six months and missing market expectations of 76, preliminary estimates showed. Inflation expectations for the year-ahead increased to 3.5%, the highest in six months from 3.2% in April. Also, the five-year inflation outlook hit 3.1%, the highest in six months, from 3.0%. Finally, both current conditions (68.8 vs 79 in April) and expectations (66.5 vs 76) declined. Consumers expressed worries that inflation, unemployment and interest rates may all be moving in an unfavorable direction in the year ahead.

The year-ahead inflation expectations in the United States picked up to 3.5% in May 2024, the highest in six months, from 3.2% in the prior month, according to the preliminary estimate from the University of Michigan Consumer Survey. In the meantime, the five-year outlook rose to a six-month high of 3.1% in May, compared to 3% in the prior month.

BlackRock increased to a 4-week high of 796.27 USD. Over the past 4 weeks, BlackRock gained 1.11%, and in the last 12 months, it increased 23.97%.

Thermo Fisher Scientific increased to an 8-week high of 591.73 USD. Over the past 4 weeks, Thermo Fisher Scientific gained 3.09%, and in the last 12 months, it increased 11.85%.

US stocks were higher on Friday, with the three major averages rising nearly 0.4%, building on gains from the previous day. Traders are optimistic about potential interest rate cuts by the Fed this year, especially after yesterday's higher-than-expected claims data. On the week, the S&P 500 gained 1.7% so far, the Dow Jones added 1.8% and the Nasdaq rose 1.2%. Today, comments from Fed officials will be closely watched, along with next week's key inflation data. The tech sector outperformed while communication services was the worst performing sector. On the corporate front, megacap stocks were mixed, with Microsoft (0.5%), Apple (0.3%) and Nvidia (2.1%) rising, while Amazon (-0.3%) and Tesla (-0.4%) were in the red. Meanwhile, Novavax shares soared more than 140% after the vaccine maker announced a multi-billion dollar deal with Sanofi to co-commercialize its Covid vaccine starting next year.

The Brazilian real stabilized around 5.14 per USD, retracing from a three-week peak of 5.07 on May 3rd, as investors assessed the latest inflation data and the recent interest rate decision by the Brazilian central bank. The annual inflation rate dropped to 3.69% in April, loosely aligned with forecasts to near the central bank’s 3.5% target. The lack of upside surprises potentially paves the way for more rate cuts by the BCB policy committee. The data followed the central bank’s recent 25bps cut, which marked a slowdown from the previous pace of 50bps cuts and contradicted the BCB’s previous guidance. Despite the hawkish turn, the decision highlighted a stark divergence in policy choices by Copom members brought in by the current administration with those from the prior administrations, resulting in dovish bets for the central bank following next year’s committee shakeup, and pressuring the real.

American Express increased to an all-time high of 243.24 USD. Over the past 4 weeks, American Express gained 11.16%, and in the last 12 months, it increased 62.94%.