Summary:
The dollar fell against most major currencies on Tuesday after better-than-forecast growth data from China. Gold rebounded after dipping below $2,000 an ounce.
The dollar fell against most major currencies on Tuesday after better-than-forecast growth data from China. Gold rebounded after dipping below $2,000 an ounce.
China's economy expanded 4.5 percent in the first quarter of 2023, marking the highest growth since the first quarter of last year.
A key driver of the rise was a pickup in consumption after Beijing abandoned Covid-19 curbs. The sign of relief came as other Asian economies largely disappointed in Q1.
European shares closed higher on strong China recovery with STOXX 50 at 17-month high and CAC 40 smashing record.
Markets have recovered from the panic ignited by recent banking turmoil. Recession fears also eased despite worsening global outlook.
Another quarter-point hike in May followed by a pause in June has been basically priced in, according to the CME FedWatch Tool.
Atlanta Federal Reserve President Raphael Bostic said Tuesday he envisions the central bank approving one more interest rate increase before pausing to see how policy tightening is impacting the economy.
‘There is too much earnings, political, geopolitical and central bank risk on the table,’ Edward Moya, senior market analyst at OANDA, said in a note, adding that only a couple of risks need to rattle markets to trigger safe haven flows towards gold with the metal’s path towards record territory still present.
But oil markets remained silent after OPEC+ surprise cuts fueled a price spike. Chinese oil refinery throughput surged to a record in March, data showed on Tuesday.
Most traders believe that the recent crude price rally is in need of a correction, said Dennis Kissler, senior vice president of trading at BOK Financial.
Speculative traders have roughly doubled their short positions in the dollar since mid-March, according to calculations by Refinitiv based on CFTC data, indicating that hedge funds are betting that the dollar will fall further.
‘The view on the dollar getting a bit weaker from here against the majors is predicated on a strong China,’ said Thierry Wizman, Macquarie global FX & rates strategist in New York. ‘When you have the rest of the world doing well or better than U.S. in terms of activity ... that's usually bad for the dollar.’
The Canadian consumer prices rose 4.3% year over year in March, following a 5.2% increase in February. This was the smallest increase since August 2021. This cements BOC’s decision to leave interest rates on hold last month.
Oil prices steadied on Friday, set for a weekly loss, as the Fed and ECB's cautious stance fueled global economic concerns.
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US stocks plunged, with the Dow Jones hitting a record low. Many strategists see potential for further gains, while Tesla's stock hit a new high.
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