iFOREX Daily Analysis : April 29, 2016
iFOREX | Apr 29, 2016 06:40AM ET
The dollar pared losses against the other major currencies on Thursday, after the release of mixed U.S. economic reports, although the Federal Reserve’s most recent policy decision to leave interest rates unchanged close to zero continued to weigh.
The Bureau of Economic Analysis said that U.S. economic growth slowed to an annual rate of 0.5%, from the 1.4% expansion registered in the fourth quarter of 2015; that was the slowest pace of growth since the first quarter of 2014, and missed consensus expectations for a 0.7% increase. At the same time, the U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending April 23 decreased by 9,000 to a seasonally adjusted 257,000 from the previous week’s revised total of 248,000; while analysts had expected jobless claims to rise by 12,000 to 260,000 last week.
On the other hand, the yen remained broadly supported after the Bank of Japan kept the deposit rate at minus 0.1% and its asset purchases at ¥80 trillion per year. It also pushed back the expected data for reaching its 2% inflation target.
Earlier Thursday, official data showed that Germany’s unemployment rate remained unchanged at 6.2% this month, in line with expectations.
Today markets in Japan will be closed for a national holiday. The euro zone is to publish preliminary reports on consumer inflation and first quarter growth. Germany is to report on retail sales. Swiss National Bank Chairman Thomas Jordan is to speak at an event in Bern. Canada is to publish its monthly report on GDP. The U.S. is to round up the week with a report on personal spending and revised data on consumer sentiment.
EUR/USD
The euro extended its rally, one day after the Federal Reserve held interest rates steady for a third straight meeting, as the dollar fell sharply against the yen on Thursday when the Bank of Japan surprisingly followed suit.
The currency pair traded in a broad range between 1.1296 and 1.1368, before settling up 0.26% on the session. With the slight gains, the euro closed higher against the dollar for a fourth consecutive session and for the seventh time over the last 10 trading days. Over the last month of trading, the euro is up by more than 1.5% against its American counterpart.
Today investors’ focus will be on the euro zone reports’ on consumer inflation and first quarter growth, but also on Germany’s retail sales data, for further information on the strength of the single currency.
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Gold
Gold surged more than 1% on Thursday, reaching near one-month highs, as investors continued to digest dovish signals from the Federal Reserve on the gradual path of tightening it will pursue in the coming months, after the U.S. central bank's latest decision to leave short-term interest rates unchanged.
The precious metal traded in a broad range between $1,239.00 and $1,268.45 an ounce before settling up $15.85 or 1.27%% on the session. With the sharp gains, gold has closed higher in four straight sessions and eight of the last 10. The precious metal has surged nearly 20% since the start of the year and is on pace for one of its strongest first halves in decades.
Today gold traders will focus on US data on personal spending and on consumer sentiment, for further information on the strength of the greenback.
WTI Oil
Crude oil prices hit 2016 yearly-highs for the second consecutive session on Thursday, amid a broadly weaker dollar, as investors continued to digest signs of massive reductions in U.S. production, somewhat easing concerns related to the current global supply glut.
WTI crude for June delivery traded in a broad range between $44.95 and $46.12 a barrel, before settling up 0.69 or 1.52% on the session. Both Brent and WTI have rallied more than 70% since their respective 2016 lows in January and February.
U.S. Energy Information Administration data showed that crude production fell to 8.94 million barrels per day last week, down almost half a million bpd from last year.
Analysts also evaluate immediate supply risks from Venezuela, which is facing a severe electricity crisis that needed to be factored in.
Today energy traders will focus on data on oil rigs count from Baker Hughes.
US 500
U.S. stocks closed down on Thursday, as the Bank of Japan's shocking call to cap monetary stimulus continued to rattle investors, while a late day decline in Apple shares (NASDAQ:AAPL) on remarks by billionaire investor Carl Icahn added to selling pressure.
The benchmark S&P 500 had its worst day in three weeks, losing 19.34 points, or 0.92%, the Dow Jones industrial average fell 1.17% and the Nasdaq Composite dropped 1.19%.
Nine of the major S&P 500 sectors were lower, with information technology's 1.4% fall leading the decliners. Consumer staples rose 0.03%.
Today investors await the release of key U.S. inflation data, for a more accurate gauge of price stability in the world's largest economy.
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