U.S. dollar sparked to a two-week high against its major counterparts. After economic data showed the labor market remained on a solid footing, giving the Federal Reserve a possible cushion to continue raising interest rates. Dollar index settled at 103.3520, up by 0.35%.
Important highlights from yesterday
– Weekly initial jobless claims decreased 26,000 to a seasonally adjusted 239,000, the largest drop in 20 months and below the expectation of 265,000 by economists polled from Reuters.
– In addition, the Commerce Department revised its estimate of first-quarter gross domestic product to 2%, up from the 1.3% reported in May and above the 1.4% previous estimate.
– Federal Reserve Chair Jerome Powell, speaking on Wednesday at a European Central Bank (ECB) conference, did not rule out a rate increase at the Fed’s July meeting, noting that more rate hikes were coming from the central bank.
– He said he did not see inflation coming down to the Fed’s 2% target until at least 2025.
– In addition, Atlanta Federal Reserve President Raphael Bostic said on Thursday the Fed will have to increase rates if prices growth moves away from target, or inflation expectations start to move in “a difficult way”.
– Other central bank heads at the meeting, including ECB President Christine Lagarde and Bank of England Governor Andrew Bailey, also supported more rate hikes, with the exception of Bank of Japan (BOJ) chief Kazuo Ueda.
Gold Prices recovered from the day’s low 57651 and settled at 58021. Silver prices recovered from the day’s low 68872 and settled at 69590.
Copper prices retreated from the day’s high 706.90 and settled at 704.95.
Crude oil had a neutral trade, as markets weighed fears that rising interest rates could dent global economic growth and crude demand against a larger-than-expected fall in U.S. inventories. MCX crude oil settled at 5749 up by 0.35%.
Economic data and events to watch
Japan
At 5.00-Tokyo Core CPI y/y. The forecast is to increase by 3.4% from 3.2%.
At 5.20am – Prelim Industrial Production m/m. The forecast is to have a contraction by 0.9% from an expansion of 0.7%.
At 10.30am – Housing Starts y/y. Forecast to have a contraction by 2.6% against the previous contraction of 11.9.
Both data could have a negative impact on Yen.
China
At 7.00am – Manufacturing PMI. The forecast is to have an expiation by 49.0 from 48.8.
Non-Manufacturing PMI. Foreseen at 53.7 slightly lower from 54.5.
Both data could have a mixed impact on Yuan.
Eurozone
At 11.30am – German Import Prices m/m. Data is forecast to have a contraction by 1.5% from contraction of 1.7%.
– German Retail Sales m/m, data is foreseen at 0.0% from 0.8%.
At 12.15pm – French Consumer Spending m/m. Forecast is 0.7% from -1.0%.
– French Prelim CPI m/m. Forecast is 0.2% from -0.1%.
At 1.25pm – German Unemployment Change. Forecast is 14k from 9k.
At 1.30pm – Italian Monthly Unemployment Rate. Forecast is 7.9% from 7.8%.
At 2.30pm – CPI Flash Estimate y/y. Forecast is 5.6% from 6.1%.
– Core CPI Flash Estimate y/y. Forecast is 5.5% from 5.3%.
Above data could have a volatile impact on the Euro.
U.K.
At 11.30am – Current Account. Data is forecast to have a contraction by 9.8B from contraction of 2.5B.
– Final GDP q/q, data is foreseen at 0.1% from 0.1%.
– Nationwide HPI m/m. The forecast is -0.3% from -0.1%.
CANADA
At 6.00pm – GDP m/m. The forecast is 0.2% from 0.0%.
Above data could have a positive impact on the dollar.
U.S.
At 6.00pm – Core PCE Price Index m/m. Data is forecast to come slightly lower from by 0.3% from 0.4%
– Personal Income m/m. Foreseen at .3% from 0.4%
– Personal Spending m/m. Foreseen at 0.2% from 0.8%.
At 7.30pm – Revised UoM Consumer Sentiment. Data is foreseen at 63.9, unchanged from previous.
All above data will have a negative impact on the dollar.