Here is what you need to know for next week:
On Friday, Wall Street enjoyed a two-day rally thanks to better-than-expected earnings from big tech companies. However, the positive sentiment may be short-lived given the gloomy global growth outlook and renewed concerns surrounding First Republic Bank. Incoming economic data will be closely watched, although it could potentially be offset by central bank decisions.
It will be a busy week for the US Dollar, as the economic data set to be released includes the ISM PMIs, the ADP Private Employment, and the official employment report. The Federal Reserve will announce its decision on Wednesday, with market participants expecting a final 25 basis points rate hike. The US Dollar Index finished the week little changed around 101.50. The DXY continues to hover around recent lows, holding above but with gains limited. The economic calendar for next week warrants volatility and may challenge the ongoing consolidation pace.
EUR/USD saw a modest rise during the week, continuing to trade near one-year highs but struggling to consolidate above 1.1050. The Eurozone's Q1 GDP narrowly avoided a recession with a 0.1% expansion. The European Central Bank is expected to raise interest rates by 25 basis points next week, as inflation remains elevated.
The Japanese Yen tumbled on Friday following the Bank of Japan's monetary policy meeting. The central bank dropped its forward guidance for interest rates and launched a review of its policies that will take more than a year. "We're not starting the review with the aim of normalizing," said Uedo at his first post-meeting press conference. USD/JPY soared on Friday from 134.00 to 136.55.
The Pound was the best performer among G10 currencies. GBP/USD broke above 1.2550 and climbed to 1.2583, reaching the highest level since June 2022. On the other hand, EUR/GBP suffered on Friday, recording the biggest daily loss in weeks, falling towards 0.8750.
USD/CAD ended the week with little change after a considerable pullback on Friday, signaling a potential reversal that could continue. The pair reached its peak at 1.3667, the highest level in four weeks, before dropping back below 1.3550, despite weaker-than-expected Canadian GDP data. Next Friday, Canada will release its employment report.
New Zealand will release its employment report next week. NZD/USD ended a three-week negative streak after a considerable rally on Friday, with the Kiwi outperforming. The pair rose from 0.6120 to 0.6190.
The Reserve Bank of Australia will make its interest rate decision next week; no change is expected. The key will likely be in the monetary policy statement on Friday. AUD/USD fell during the week but managed to recover 0.6600. The bias is to the downside, but losses seem limited while above 0.6560.
The Colombian Peso is expected to face continued pressure, having been the worst performing currency of the week due to increasing political risk in Colombia. This was triggered by President Petro's decision to remove a moderate finance minister and replace him with a key leftist ally. As a result, USD/COP surged to 4,714 on Friday, experiencing a gain of over 4% for the week.
Commodity prices had a tough week, with corn sliding more than 10%, coffee falling 4%, and soybeans dropping 4%. Crude oil prices dropped 1.5% after trimming losses on Friday. Gold and silver finished the week flat near $1,990 and $25.00, respectively, as they remained mostly sideways. Bitcoin, on the other hand, jumped 7%.
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