Market 1 week ahead: Money Soaring, dollar soaring, euro/usd and GBP/USD slump
US inflation soars, expectations for interest rate cuts subside significantly
Expectations for a US interest rate cut continue to be pushed back to the third quarter after the latest US Consumer Price Index (CPI) report showed inflation refusing to fall. A rate cut at the June FOMC meeting seems very unlikely, but a rate cut at the July meeting is only partially priced in. The market also expects only two 25 basis point rate cuts this year. The repricing sent the U.S. dollar soaring and pushed U.S. Treasury yields to multi-month highs.
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US dollar index daily chart
Against this backdrop of prolonged high interest rates in the United States, gold continued to hit new highs until it plummeted during the day in the second half of Friday. Gold recorded a new ATH at $2,431/oz. Before paying back about $90 per oz. The week ends at $2,343/oz. Silver also traded very volatile on Friday, hitting a high of $29.79 per ounce. before closing the session at $27.84/oz.
Silver daily price chart
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The renewed strength of the US dollar was seen in many US dollar pairs, with both EUR/USD and GBP/USD hitting five-month lows on Friday (for further commentary and outlook, see EUR and GBP weekly (see predictions).
Next week’s economic calendar features a series of key data releases and events from several countries, with US retail sales, UK inflation and labor figures, and Germany and eurozone ZEW figures standing out.
For all the economic data and events that move the markets, DailyFX Calendar
This week’s chart – Apple
Apple rebounded on Thursday after nearing its late October lows after news hit the screens that the company announced it would update its Mac Book product line with a new M3 chip. Apple is now re-approaching its former support area that provided resistance around $179.
All charts using TradingView
Technical and fundamental forecasts – including April 15th
USD Forecast: USD continues to be supported by Fed and ECB policy divergence
Robust growth, inflation and employment data will keep US interest rates on hold, while disinflation and stagnant growth in the EU will lead to a full-fledged rate cut in June.Policy divergence likely favors USD
British Pound Forecast – Will UK data help arrest the latest GBP/USD decline?
UK jobs and inflation data to be released next week could give cable broadcasters a reprieve after a recovery in the US dollar sent GBP/USD to multi-month lows.
Dovish ECB, euro outlook darkens due to geopolitical risks – EUR/USD, EUR/GBP
The euro has suffered a significant depreciation this week, mainly against the US dollar. The European Central Bank’s dovish leadership laid the foundations for the common currency’s decline, but rising geopolitical risks in the Middle East also weighed on it.
Gold price outlook: Bull market under control, but bearish risks increase in tense market
Gold rose this week, hitting new highs near $2,430. However, the price eventually retreated from that level, closing near $2,345 on Friday.
All articles are written by DailyFX analysts and strategists
