DXY: Fed repricing supports US currency – Deutsche Bank

FXStreet Insights Team FXStreet

Deutsche Bank analysts note that strong United States (US) Purchasing Managers' Index (PMI) data have reinforced perceptions of economic resilience and rising price pressures, leading markets to scale back expectations for Federal Reserve (Fed) rate cuts. With only a small probability of easing priced by year-end and US yields firmer, this backdrop is broadly supportive for the US Dollar Index (DXY).

US resilience curbs Fed cut pricing

"In fact, the flash composite PMI for April moved up to 52.0 (vs. 50.6 expected), with both the manufacturing (54.0) and services prints (51.3) coming in above expectations, while the subindices also pointed to rising price pressures."

"This saw markets dial down remaining Fed cut pricing, with a cut by year-end now only 20% priced, down from 30% at Wednesday’s close."

"Still, with the cacophony of headlines showing no signs of de-escalation, oil prices held onto most of their gains, while both 2yr (+3.6bps) and 10yr (+2.3bps) US Treasury yields closed higher on the day."

"We have seen some stablisation of these moves overnight, with both S&P 500 futures (-0.06%) and 10yr Treasury yields little changed."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

AUD/USD sticks to positive bias above 0.7100; lacks bullish conviction

AUD/USD trades with a positive bias for the second straight day, holding above 0.7100 in the Asian session on Friday as softer US bond yields keep US Dollar bulls on the back foot. Furthermore, hawkish RBA Governor Bullock's comments boost rate hike bets and support the Aussie. However, the Fed's hawkish outlook, along with geopolitical uncertainties, limits USD losses and caps the pair.

USD/JPY approaches 158.00 as Japanese Yen resumes decline

USD/JPY is resuming its upside in the European session on Friday, refreshing two-week highs and nearing 158.00. The Japanese Yen extends losses, despite the Bank of Japan's (BoJ) expected rate hike to 1.25% and hawkish Governor Ueda's comments, as two surprise dissents against the rate hike weigh on it.

Gold keeps the bid tone in place; still below $4,400

Gold adds to the optimism seen in the second half of the week, trading with decent gains just below the $4,400 mark per troy ounce on Friday. The precious metal’s advance finds traction in declining crude oil prices and fresh selling pressure on the US Dollar.

Why altcoin season isn't coming back — and what stole its capital

If, after two years of being frozen in ice, Katara and Sokka woke you up to the crypto market, it would seem like 100 years have passed. With Bitcoin soaring to record highs just over a year ago, everyone expected a routine altcoin season, where investors take profits from the top crypto to chase higher returns in altcoins.

BoJ Recap: Not as hawkish as expected

The BoJ raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks. Governor Kazuo Ueda said the policy phase had changed.

BoJ Recap: Not as hawkish as expected

The Bank of Japan (BoJ) raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks.