The dollar index extended its gains during the day after the release of data on employment costs, home prices and consumer confidence in the United States.
The dollar index now rises to the level of 105,770 points, by 0.3% during the day.
The US dollar rose on Tuesday ahead of the start of the Federal Reserve’s latest policy meeting, while the Japanese yen fell after intervention measures were tipped. At 1:30 Cairo time, the dollar index, which measures the US currency against a basket of six other currencies, was trading 0.1% higher at 105.555, on track to achieve gains of about 1.4% in April.
Financial markets witnessed a noticeable demand for the dollar during this month, following a series of optimistic US inflation data, which prompted traders to estimate the possibility of an early cut in interest rates by the Federal Reserve. “Within this context, the US Central Bank is holding its last meeting for this period, It is widely expected to keep interest rates in a high range, between 5.25% and 5.5%, when it announces the results of its meeting next Wednesday.” “Pending the final decision, investors are awaiting signals about the Federal Reserve’s position on reducing interest rates during This year, expectations previously indicated the possibility of a rate cut at various stages during the year, but recent developments have raised new questions about the timing of this step.
The EUR/USD currency pair fell in Europe by 0.2% to 1.0702” “EUR/USD saw challenges in achieving tangible gains despite the release of data showing German retail sales rose in March according to expectations.
Improved retail sales and positive outlook for the economy in the Eurozone
A 1.8% increase in retail sales was achieved during the current month compared to the previous month, which is a positive indicator of the recovery in consumption in the euro zone’s largest economy, which appears to be exceeding recession expectations.
Traders are also awaiting the release of the latest data on inflation and growth in the euro zone during the coming period, within the framework of an extraordinary session for traders.
According to preliminary forecasts, the Eurozone CPI is expected to increase by 2.4% year-on-year in April, exceeding the European Central Bank’s target of 2.0% on the long-term average. Regarding economic growth, it is expected to be a slight increase of 0.1% in the first quarter of this year, which equates to growth of 0.2% on an annual basis.
The 1.8% increase in retail sales during the current month represents a positive point indicating the restoration of confidence in the economy, as consumption is considered a major indicator of economic activity. Therefore, this improvement in retail sales is considered a promising sign for the continued recovery of the largest economy in the Eurozone.
It is worth noting that traders are eagerly awaiting the release of new data on inflation and economic growth in the region. Preliminary CPI data is expected to reveal a 2.4% year-on-year increase in April, exceeding the European Central Bank’s long-term target of 2.0%. Regarding economic growth, the data is expected to show a slight increase of 0.1% in the first quarter of this year, equivalent to growth of 0.2% on an annual basis.
In general, these data indicate the continued recovery of the euro area economy, and support positive expectations regarding economic stability and increased inflation, which enhances hopes for improved economic conditions in the near and long term.
Global Market Update: Eurozone, Japanese Data Impact
All eyes are on the European Reserve Bank with expectations of a cut in the deposit interest rate next June, but there is still a large degree of uncertainty about other steps that central banks may take during this year.
Regarding global markets, the British pound witnessed a decline of 0.2% against the US dollar to reach 1.2534, a decline attributed to the strengthening of the dollar, with expectations that the British pound will decline by approximately 0.7% during this month.
In the Asian context, the Japanese yen currency pair witnessed an increase of 0.4% against the US dollar to reach 156.88, after a slight decline in the yen after the large gains it achieved in the previous session, as this performance indicates a state of uncertainty regarding government intervention.
Despite this improvement, the pair is still far from the 34-year high of 160.245 hit in the previous session.
Japanese officials deny intervention rumors, but Masato Kanda, Japan’s chief currency diplomat, signals readiness to address currency market challenges.
Mixed Japanese data weighed on the yen on Tuesday, as industrial production numbers showed a higher-than-expected rise in March, while retail sales fell significantly below expectations, casting a shadow over expectations for future consumer spending and inflation.
The CNY/USD currency pair rose 0.1% to 7.2416, as mixed PMI data pointed to some slowdown in economic growth in China.
On the other hand, official manufacturing PMI data revealed a slight slowdown below expectations, while non-manufacturing activity rose at a lower rate than expected.
As for the currency pair, the Australian dollar against the US dollar, it witnessed a decline of 0.6% to 0.6527, as the Australian dollar was negatively affected by weak retail sales data that significantly exceeded expectations.
