- US dollar takes a hit in risk off markets.
- Mexico risk, U.S. and Chinese data in focus.
Forex on Friday traded in response to President Trump's unexpected tariff threat to Mexico which was announced in early Asia sending Us stocks down sharply and making for a risk-off theme across financial and commodity markets. U.S. yields played havoc on the dollar as investors started to factor in rate cuts for the second half of the year. The DXY ended Friday 97.73 and is bleeding to a fresh low of 97.61 while U.S. ten-year yields dropped from 2.18% to 2.13% - (the lowest since September 2017).
As for data, U.S. personal incomes and spending both rose more than expected in April and the core PCE inflation gauge posted a modest rebound in April rising 0.25%; "that follows a tepid +0.03%, +0.04% and +0.05% in Jan, Feb and March respectively, providing some early support for the Fed’s view that recent low inflation has been transitory," analysts at Westpac argued.
As for the Mexico risk, the Trump administration has underlined their demands since the initial Tweet from Trump and Mexico’s president on Saturday hinted his country could tighten migration controls to defuse the threat to impose tariffs on Mexican goods. Mexico’s president said he expected “good results” from talks planned in Washington next week - which should be risk-positive, but judging by the stock index futures performances today on the open, investors are staying with the risk-off theme, likely taking a heed of warning from last week's Chinese economic data still, whereby China’s official manufacturing PMI fell to 49.4 indicating that activity is contracting.
Currency's performances
- EUR/USD climbed from 1.1130 to 1.1170.
- GBP/USD firmed up within a volatile trade to 1.2644 from a cent lower.
- USD/JPY dropped from 109.00 to 108.28 for a five-month low – (The yen was the best performer on the day).
- AUD climbed from 0.6905 to 0.6935/40, despite the risk-off mood and the RBA this week.
- NZD also rose, from 0.6495 to 0.6547.
- AUD/NZD dropped from 1.0630 to 1.0600.
Key notes from Wall Street
Wall Street closes in the red following a series of bearish inputs
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD failed just ahead of the 200-day SMA
Finally, AUD/USD managed to break above the 0.6500 barrier on Wednesday, extending the weekly recovery, although its advance faltered just ahead of the 0.6530 region, where the key 200-day SMA sits.
EUR/USD met some decent resistance above 1.0700
EUR/USD remained unable to gather extra upside traction and surpass the 1.0700 hurdle in a convincing fashion on Wednesday, instead giving away part of the weekly gains against the backdrop of a decent bounce in the Dollar.
Gold keeps consolidating ahead of US first-tier figures
Gold finds it difficult to stage a rebound midweek following Monday's sharp decline but manages to hold above $2,300. The benchmark 10-year US Treasury bond yield stays in the green above 4.6% after US data, not allowing the pair to turn north.
Ethereum suffers slight pullback, Hong Kong spot ETH ETFs to begin trading on April 30
Ethereum suffered a brief decline on Wednesday afternoon despite increased accumulation from whales. This follows Ethereum restaking protocol Renzo restaked ETH crashing from its 1:1 peg with ETH and increased activities surrounding spot Ethereum ETFs.
Dow Jones Industrial Average hesitates on Wednesday as markets wait for key US data
The DJIA stumbled on Wednesday, falling from recent highs near 38,550.00 as investors ease off of Tuesday’s risk appetite. The index recovered as US data continues to vex financial markets that remain overwhelmingly focused on rate cuts from the US Fed.