Early Morning Call: USD remains on back foot after US CPI, Fed minutes
The US dollar remained on the back foot on Thursday, after falling on Wednesday afternoon at the release of a cooler-than-anticipated US CPI.
The US dollar remained on the back foot on Thursday. The greenback fell yesterday afternoon at the release of a cooler-than-anticipated US CPI. US consumer price index (CPI) rose 0.1% in March month-on-month (MoM) last month after advancing 0.4% in February. The market expected a gain of 0.2%. Year-on-year (YoY), the index increased by 5%, its slowest pace since May 2021.
Fed minutes published on Wednesday evening showed that several Federal Reserve policymakers considered pausing interest rate increases after the failure of Silicon Valley Bank (SVB) and Signature Bank, but the conclusion was that tackling high inflation remained the priority. The minutes also showed projections of a mild recession later this year, followed by a recovery in 2024-25.
In Australia, the S&P/ASX 200 declined after the release of another strong job report in the country. The unemployment rate held near 50-year lows at 3.5% in March, while net employment rose 53,000 in March from February. The market had forecast a rise of 20,000. Full-time employment surged by 72,200, after a similar increase in February.
Strong job gains could mean a slower return to inflation targets, suggesting that the Reserve Bank of Australia's (RBA) tightening campaign may not be over yet.
In China, exports unexpectedly rose in March, rising 14.8%, ending five months of decline. Economists polled by Reuters had expected exports to fall by 7%. Imports rose by a smaller-than-expected 1.4%, meaning that the trade surplus was much larger than anticipated, at just over $88 billion.
China's crude oil imports rose 22.5% in March from a year earlier to the highest for a month since June 2020. Crude imports averaged 12.3 million barrels per day.
Oil prices benefited from US inflation data on Wednesday, rising their highest level since November 2022. US crude inventories unexpectedly rose last week, according to EIA data, helped by the release of US strategic Petroleum Reserves. Crude stocks rose by 597,000 barrels. Analysts had forecast a 600,000-barrel drop.
Stocks of crude oil in the Strategic Petroleum Reserve declined 1.6 million barrels, the first drawdown this year.
Gasoline and distillate inventories fell less than expected, respectively by 300,000 and 600,000 barrels.
UK monthly gross domestic product (GDP) was flat in February MoM. The market expected a 0.1% expansion. Industrial production fell by 3.1% YoY, less than the 3.7% decline economists anticipated.
A few macroeconomic indicators are scheduled this Thursday. At 10am, industrial production in the eurozone is expected to rise by 1% in February compared to January, and in the US, the market awaits producer price index for March, and initial jobless claims.
Tesco reported a full-year adjusted operating profit of £2.63bn, in line with expectations. Statutory revenue was up 7.2% to £65.7bn - including fuel sales which were up 23.3%.
The supermarket chain proposed a final dividend of 7.05 pence per share, taking full-year dividend to 10.90 pence, in line with last year's full-year dividend.
Luxury goods giant LVMH has seen a "significant rebound" in sales in Asia which has helped boost its first quarter (Q1) numbers. The easing of Covid-19 lockdown restrictions, particularly in China, has been a big generator of that climb in sales. Sales were up 17% to €18.5bn.
Bloomberg reported that Apple assembled more than $7 billion worth of iPhones in India last fiscal year, tripling production in the world's fastest-growing smartphone arena after accelerating a move beyond China. The US company now makes almost 7% of its iPhones in India through expanding partners from Foxconn Technology to Pegatron.
Also, according to Japanese newspaper Nikkei, Apple is in talks with suppliers to make MacBooks in Thailand. The group has been mass-producing its Apple Watch in Thailand for more than a year.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
Start trading forex today
Trade the largest and most volatile financial market in the world.
- Spreads start at just 0.6 points on EUR/USD
- Analyse market movements with our essential selection of charts
- Speculate from a range of platforms, including on mobile
Live prices on most popular markets