Summary:
The dollar rose on Thursday as weaker-than-expected U.S. economic growth in the first quarter is viewed as not likely to deter the Federal Reserve from raising interest rates next week.
The dollar rose on Thursday as weaker-than-expected U.S. economic growth in
the first quarter is viewed as not likely to deter the Federal Reserve from
raising interest rates next week.
However, core PCE inflation is in the limelight, which is expected to rise 4.5% for the 12 months through March.
A separate report showed initial claims for unemployment benefits decreased 1,6000 to a seasonally adjusted 230,000 for the week ending April 22.
The tech-heavy Nasdaq led a Wall Street rally on Thursday as a strong quarterly report from Meta overshadowed concerns over slowing U.S. economic growth.
Commodities
Analysts see weak refinery margins as a major drag on oil prices. Backwardation in the Bent futures curve continued easing.
Russian deputy Prime Minister Alexander Novak said OPEC+ does not see the need for further oil cuts but is always able to adjust its policy.
‘The small increase in oil prices has been caused by short-covering from the sell-off over the last several days,’ said Andrew Lipow, president of Lipow Oil Associates in Houston.
Forex
Lackluster growth, couple with resilient inflation, will leave the Fed in the lurch at May’s meeting. Markets’ biggest concern is still whether the next rate hike will end current tightening cycle.
‘The weaker growth outlook is telling us that the Fed is going to struggle to keep on hiking interest rates without crushing the economy,’ said Amo Sahota, director at FX consulting firm Klarity FX in San Francisco.
Eurozone outperformance has been a key factor for the euro. Germany revised upward growth forecasts on Wednesday, creating renewed downward dollar pressure.
Oil prices steadied on Friday, set for a weekly loss, as the Fed and ECB's cautious stance fueled global economic concerns.
2024-12-20
The October PCE price index rose 2.3% YoY, as expected. Excluding food and energy, core inflation climbed 2.8% compared to last year.
2024-12-20
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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