After statistics revealed that China’s recovery is stalling and European inflation is cooling more quickly than anticipated, the dollar spiked over its two-month high.
The dollar index, which compares the value of the dollar to six important peers, increased to 104.63, reaching its highest level since March 16. At 104.570, it was last up 0.509%.
As increases in the price of energy and food slowed, France’s inflation fell to its lowest point in a year in May. Tomorrow we anticipate data on inflation across the Eurozone.
Data made public earlier on Wednesday revealed that Chinese manufacturing activity declined in May for a second consecutive month and at a faster rate than in April.
The world’s second-largest economy’s overall increase in business activity shrank as a result of the vital manufacturing sector’s weakness, which is a major contributor to local GDP. This reduced risk sentiment, which benefited the safe haven dollar.
According to government figures released on Wednesday, India’s economic growth increased to 6.1 per cent in the fourth quarter of 2022–2023 from 4.4 per cent in the third quarter (October–December).
However, the Ministry of Statistics and Programme Implementation’s data indicated that the real GDP growth during 2022–2023 is expected to be lower, at 7.2%, than it was in 2021–2022 (9.1%).
Bullions were able to gain slightly followed by lower Treasury yields. However, gains remained limited as the dollar index sparked to another high. Gold prices settled at 60198 up by 0.42%. Silver gained nearly 1.50% and settled at 72102.
Base Metals had a negative trade following the weak China numbers. Copper prices settled at 709.30, down by 0.20%, and Zinc prices down by 1.32% and settled at 206.10. Aluminium prices were able to gain 0.68% and settled at 207.65.
A strong U.S. dollar and weak data from top oil importer China raised demand fears which witnessed another drastic fall in crude oil prices yesterday.
Brent crude futures were down by 1.53% to $72.66. U.S. West Texas Intermediate crude was at $68.11 a barrel, down 1.64%. MCX crude oil plunged by 1.15% and settled at 5690, making a low of 5567.
Economic data and events to watch
Eurozone
At 11.30 am- German Retail Sales m/m is to be released. Data is foreseen at 1.0%, from -2.4% previously.
At 12.45 pm – Spanish Manufacturing PMI, data is foreseen at 47.9 against 49.00
At 1.15 pm – Italian Manufacturing PMI data is foreseen at 45.8, lower than the previous 46.8.
At 1.20 pm – French Final Manufacturing PMI, data is foreseen at 46.1, unchanged from the previous.
At 1.25 pm- German Final Manufacturing PMI, data is foreseen at 42.9, unchanged from the previous.
At 1.30- Final Manufacturing PMI, data is foreseen at 44.6, unchanged from the previous.
Italian Monthly Unemployment Rate, data is foreseen at 7.8%, unchanged from the previous.
At 2.30 pm – Italian Prelim CPI m/m, data is foreseen at -0.1% lower than 0.4%.
At 2.30 pm – The market will react strongly to the CPI Flash Estimate y/y. Data is foreseen at 6.3%, lower than the previous 7.0%.
Core CPI Flash Estimate y/y, data is foreseen at 5.5%, lower than the previous 5.6%.
Unemployment Rate, data is foreseen at 6.5%, unchanged from the previous.
At 3.00 pm – ECB President Lagarde Speaks.
At 5.00 pm – ECB Monetary Policy Meeting Accounts.
All the above data may have a volatile impact on the Euro.
U.K.
At 11.30 am – Nationwide HPI m/m. Data is foreseen at -0.5% lower than 0.5% previously.
At 2.00 pm – Final Manufacturing PMI, data is foreseen at 46.9, unchanged from the previous.
At 2.00 pm -Mortgage Approvals, data is foreseen at 54K, higher than the previous 52K.
Net Lending to Individuals m/m at the same time, data is foreseen at 1.6B, unchanged from the previous.
Canada
At 6.00 pm- Manufacturing PMI is set to release. Data is foreseen unchanged at 48.5 from the previous.
Above data could have a neutral impact on the Canadian dollar.
U.S.
At 5.45 pm – ADP Non-Farm Employment Change, data is foreseen at 173k, lower from the previous 296k.
At 6.00 pm – Unemployment Claims, data is foreseen at 236k, higher than the previous week’s 229k.
Revised Unit Labor Costs q/q. Data is foreseen at 6.2%, lower than the previous reading of 6.3%.
At 7.15 pm – Final Manufacturing PMI. Data is foreseen at 48.5, unchanged from previous
At 7.30 pm – ISM Manufacturing PMI, data is foreseen at 47.00, slightly lower from the previous 47.10
At the same time, Construction Spending m/m. Data is foreseen at 0.2%, lower than the previous 0.3%.
At 8.00 pm and 8.30 pm – Natural Gas Storage and Crude Oil Inventories.
At 10.30 pm – FOMC Member Harker Speaks.
All the above data could have a volatile impact on the dollar.