This Week: USDInd remains traded around its highest levels since November

The US dollar index (USDInd) measures the greenback’s fortunes against 6 major peers, with the Euro alone making up 56% of the index.

USDInd Has just ended a run of two straight weekly gains, amid fears that the US economy is headed for a "stagflation" and forecasts for just one Fed rate cut in 2024. 
 

Still, USDInd remains traded around its highest levels since November, with a year-to-date gain of more than 1%.
 

Those year-to-date gains could be extended this week, if markets believe the Fed can keep interest rates higher for longer, compared to its G10 peers throughout the rest of this year.
 

Events Watchlist:
 

• Monday, April 29: Germany April consumer price index (CPI)

The inflation data out of the Eurozone’s largest economy serves as a precursor to the broader bloc’s own CPI print due the next day.

Economists forecast that Germany’s CPI ticked up in April (2.3% year/year; 0.6% month/month). Lower-than-expected CPI may weigh on EUR while potentially boosting USDInd higher past 106.

 

• Tuesday, April 30: Eurozone April CPI; 1Q GDP

Economists predict that the Eurozone’s CPI was flat at 2.4%, but its 1Q GDP rose by 0.1% year/year and 0.2% month/month.

Slowing inflation, coupled with better-than-expected GDP growth would lend a rosier outlook for the bloc economy, potentially boosting the euro while having USDInd test support at its 21-day moving average.

 

• Wednesday, May 1: FOMC rate decision

The Federal Reserve is roundly expected to leave US interest rates unchanged this week.

Yet, markets remain eager for any clues out of Fed Chair Jerome Powell about the prospects of rate cuts later in 2024.

Markets now expect just one 25-basis point cut in 2024, perhaps in November - a far cry from the 6 rate cuts initially predicted.

Restored hopes for more-than-one US rate cut this year may prompt USDInd to falter closer to the 105 level.

 

• Friday, May 3: US April jobs report

Economists predict that the US economy added 250,000 new jobs in April, the unemployment rate held steady at 3.8%, while wage growth stayed mostly flat. Stronger-than-expected jobs data, which underpin US inflationary pressures, may force the Fed to maintain rates at their current peak: a scenario that’s set to push USDInd higher.
 

Here’s a comprehensive list of other key economic data and events due this week:
 

Monday, April 29

• SG20 index: Singapore March unemployment rate
   
• CN50 index: Earnings by all four Chinese megabanks
   
• EUR: Germany April CPI; Eurozone April economic confidence
   
• SPN35 index: Announcement by Spanish Prime Minister Pedro Sanchez on political future
   

Tuesday, April 30

• JPY: Japan March jobless rate, retail sales, industrial production
   
• CNH: China April PMIs
   
• AU200 index: Australia March retail sales
   
• EU50 index: Eurozone April CPI, 1Q GDP
   
• TWN index: Taiwan 1Q GDP
   
• US30 index: US April consumer confidence
   
• Amazon, HSBC earnings
   

Wednesday, May 1

• NZD: New Zealand 1Q unemployment
   
• USD: FOMC rate decision
   

Thursday, May 2

• AUD: Australia March trade balance
   
• JPY: Bank of Japan meeting minutes
   
• USD: US weekly initial jobless claims
   
• Apple earnings
   

Friday, May 3

• SGD: Singapore March retail sales
   
• EUR: Eurozone March unemployment rate
   
• NOK: Norway rate decision
   
• US500 index: US April nonfarm payrolls report; speech by Chicago Fed President Austan Goolsbee