The US Dollar may extend its recovery if March Durable Goods Orders data tops expectations, arguing for continued “tapering” of Fed QE stimulus efforts.
Talking Points:
NZ Dollar Higher on RBNZ Rate Hike But Gains May Prove Fleeting
Upside Surprise on German IFO Survey Data May Not Help the Euro
US Dollar Looks to Extend Recovery, Eyeing Durable Goods Report
The New Zealand Dollar outperformed in otherwise quiet overnight trade after the Reserve Bank of New Zealand (RBNZ) raised its benchmark interest rate to 3 percent, the highest since January 2011. Follow-through may be limited however. The monetary policy statement seemed to suggest that the level of the exchange rate will be considered in setting future policy, which presumably suggests that appreciation will undermine the case for further tightening. That may undermine traders’ interest in the Kiwi, capping upside potential.
Germany’s IFO Survey of business confidence headlines the economic calendar in European hours. The headline Business Climate index is expected to tick lower to 110.4 in April, marking the second consecutive decline and the lowest level in four months. An upside surprise may be in the cards as persistent disinflation feeds ECB interest rate cut speculation. Indeed, a measure of the priced-in 12 month policy outlook has notably trended lower since the beginning of the month. A pickup in sentiment driven by hopes for monetary easing hardly bodes well for the Euro however.
Later in the day, the spotlight turns to the US Durable Goods Orders report. A 2 percent increase is expected in March, an outcome that would mark a slight slowing compared with the 2.2 percent gain recorded in February. Economic data outcomes from the world’s largest economy notably improved relative to forecasts in the past two weeks however (according to data from Citigroup). If that trend continues, ebbing doubt about the continued withdrawal of Fed stimulus may offer yield-based support for the US Dollar.
Critical Levels
FXCM, L.L.C.® assumes no responsibility for errors, inaccuracies or omissions in these materials. FXCM, L.L.C.® does not warrant the accuracy or completeness of the information, text, graphics, links or other items contained within these materials. FXCM, L.L.C.® shall not be liable for any special, indirect, incidental, or consequential damages, including without limitation losses, lost revenues, or lost profits that may result from these materials. Opinions and estimates constitute our judgment and are subject to change without notice. Past performance is not indicative of future results.
Recommended Content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.