Dollar Back in Power as Week Starts

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Market Drivers April 30, 2018
Dollar bid resumes
GE inflation data runs cool
Nikkei 0.66% Dax 0.22%
Oil $67/bbl
Gold $1317/oz.
Bitcoin $9140

Europe and Asia:
CNY PMI Manufacturing 51.4 vs. 51.3
EUR GE Retaial Sales 1.3% vs. 1.0%
EUR GE Brandenberg CPI -0.1% vs. 0.4%

North America:
USD Personal Spending/Income 8:30
USD Chicago PMI 9:45
USD Pending Homes 10:00

It’s been a quiet open to the start of the week with most of the majors contained in 30 pip ranges from most of Asian and early European trade, but the greenback bid reasserted itself in London dealing as EURUSD slid towards the 1.2100 figure while cable came within a few pips of testing the March lows.

There was little on the calendar today, but the inflation data out of Germany offered no solace to euro bulls as most of the regional readings came in either in line or cooler than expected indicating that inflationary pressures are non-existent in Eurozone and that Mr. Draghi’s enthusiasm notwithstanding the ECB will not even consider hiking rates until well into 2019.

The EURUSD saw a short covering rally at the end of Friday’s trade, but the pair ois back to probing the 1,2100 figure and shorts no doubt have their eye on key 1.,2000 support as the rotation out of the pair continues.

Cable meanwhile continued to probe the 1.3750 level as shorts tried to push it past the March lows. The pair has seen a stunning turn around as it lost more than 500 pips in the last 10 days and shows no signs of bottoming out. This week will bring of slew of UK PMI data and if it shows further weakness cable could drop towards 1.3500 by end of the week.

In North America today the market will get a look at Personal income and Personal spending with the forecast looking at health 0.4% gains in both. If the numbers meet expectations then USDJPY could once again test the 109.50 level and if the 10 Y trades towards 3.00% once again, dollar bulls could make a run towards the 110.00 level as the day proceeds.

Boris Schlossberg
Managing Director

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