Dollar index had a neutral trade yesterday. Currency struggled for direction as growing fears of more interest rate hikes by major central banks, while concerns over slowing economic growth also kept traders wary of risk-driven assets.
Dollar came under slight pressure from gains in the euro and the pound following strong inflation reports in the UK and the euro zone.
Gold prices were able to recover by 0.42%, and settled at 60548 compared to previous day’s close of 60288. Silver prices struggled for direction and after swinging in between gain and loss, settled at 75554, up by 0.11%.
Copper prices fell by 1.57%, Aluminum settled down by 0.70%, ZINC down by 0.81% while Lead slipped slightly by 0.30%.
Base metal came under pressure, as the Yuan fell 0.1% after the People’s Bank held its key lending rates at record lows for an eighth straight month. While the move boosts local liquidity and potentially, economic growth, it also makes the yuan appear less attractive as interest rates increase across the rest of the globe.
Signs of an uneven economic recovery in China also weighed on the yuan, even as data showed the country’s GDP grew more than expected in the first quarter. But China’s manufacturing sector – a bellwether for economic growth, continued to struggle with slow demand.
Crude oil prices plunged drastically for the second day, dropped their lowest level since late March on Thursday, dragged lower by fears a possible recession could dent fuel demand and after a rise in U.S. gasoline inventories.
Economic data and events to watch
U.K.
At 11.30am – Retail Sales m/m. Data is expected to have a contraction by -0.5% from the previous reading of 1.2%.
At 2.00pm – Flash Manufacturing PMI. Data is foreseen at 48.3, slightly higher from previous 47.9.
Flash Services PMI. Data is foreseen at 52.9, unchanged from previous.
All above data expect to have a mixed impact on Pound and Base metals.
Eurozone.
At 12.45pm – French Flash Manufacturing PMI. Data foreseen at 47.9 slightly higher from previous reading of 47.3.
French Flash Services PMI. Data is foreseen at 53.3, slightly lower from previous 53.9.
At 1.00pm – German Flash Manufacturing PMI, data is foreseen at 45.6 higher from 44.7 previous.
German Flash Services PMI. Data is foreseen at 53.3, slightly lower from previous 53.7.
At 1.30pm – Europe Flash Manufacturing PMI, data is foreseen at 47.9 higher from 47.3 previous.
Europe Services PMI. Data is foreseen at 54.6 slightly lower from previous 55.0
All above data expect to have a positive impact on Euro and Bullions.
Canada
At 6.00 pm – Core Retail Sales m/m, data is foreseen at 0.0% lower from previous reading of 0.9%.
Retail Sales m/m, data is foreseen at -0.6% lower from previous 1.4%.
All above data expect to have a negative impact on dollar and base metals.
US
At 7.15 pm – Flash Manufacturing PMI, data is foreseen at 49.0 slightly lower from 49.2 previous.
Flash Services PMI. Data is foreseen at 51.5 lower from previous 52.6
All above data expect to have a negative impact on the dollar.