29/03/2024 - 09:19 UTCThe US Dollar traded between gains and losses on Thursday, ending the session unchanged once more, as traders look ahead to key U.S. inflation data due later in the day. The report comes after hotter than expected consumer and price inflation releases for January and February and now, investors will most likely look for new signs on whether the Fed remains on track to cut rates in June as expected. A speech by Fed’s chairman Jerome Powell could also attract some attention later in the day with bets for a rate cut in June currently being at 61% according to the CME Fedwatch tool on Thursday.
In Wall Street, sentiment remains strong following data on Thursday that showed the U.S. economy growing faster than previously estimated in the fourth quarter, supported by strong consumer spending and business investment in nonresidential structures such as factories. At the end of the session, the US 30 was up by 0.85%, the US 500 showed gains of 0.53% while the US tech was almost unchanged. As quarter end approaches, the market appears to be notching its best first-quarter performance since 2009 as the recent rally broadened beyond the tech sector amid optimism on rate cuts.
In corporate news Walgreens Boots gained 3% at the end of the session, after the pharmacy chain reported fiscal second-quarter sales that beat expectations but lowered the high end of its full-year adjusted earnings outlook. Apple Inc fell 11% in Q1, pushing its valuation well below five-year averages, as concerns about weak iPhone demand and regulatory headwinds weighed on its price.
Some price action could be observed later in the session, upon the release of personal consumption expenditures (PCE) and speeches from Fed’s chairman Jerome Powell and FOMC committee member Mary Daly. Other releases that could attract part of the market’s attention are the US goods trade balance, personal spending, personal income and preliminary wholesale inventories.
The Euro extended its losses against the US Dollar on Thursday ending the session 0.20% lower.
ECB's Villeroy said that core inflation decline is rapid but still high. He added that the 2% ECB inflation goal is within reach, while he saw increasing downside risks if the ECB didn’t cut rates. On the data front in the Eurozone, German Retail Sales plunged below estimates.
Recent data from the United States showed the economy remains resilient after the Gross Domestic Product for Q4 2023 was revised from 3.2% to 3.4%. Moreover, the number of Americans filing for unemployment benefits was below estimates. Further data revealed that the University of Michigan Consumer Sentiment hit its highest level since 2021, coming at 79.4.
Markets will be closed today but investors will keep an eye on the release of the US Core Personal Consumption Expenditures price index data.
Gold prices climbed on Thursday and were set to log their best month in over a year, bolstered by strong safe-haven demand, U.S. interest rate cut expectations and central bank buying.
Gold hit a record high last week after the U.S. Federal Reserve anticipated three rate cuts in 2024. Traders are currently pricing in a 64% chance of a June rate cut, according to CME's FedWatch tool.
The U.S. core personal consumption expenditure (PCE) price index report is due on Friday, which could help investors gauge the Fed's policy stance.
Oil prices jumped more than $1 a barrel on Thursday, closing out the month higher on the prospect of OPEC+ staying the course on production cuts, ongoing attacks on Russia's energy infrastructure and a falling U.S. rig count tightening crude supply.
Investors will watch for cues from a meeting next week of the Joint Monitoring Ministerial Committee of producer group the Organization of Petroleum Exporting Countries (OPEC).
Increased geopolitical risk has raised expectations of possible supply disruption, but OPEC+ is unlikely to make any oil output policy changes until a full ministerial gathering in June.
The US 30 and US 500 ended the session higher on Thursday, notching its best first-quarter performance since 2019 as the rally broadened out beyond tech amid optimism on rate cuts and data signalling a soft landing for the economy remains within in reach. US Tech 100 ended the day with minor losses of 0.09%.
The U.S. economy grew faster than previously estimated in the fourth quarter, with data released earlier Thursday showing gross domestic product increased at a 3.4% annualized rate in the fourth quarter, revised up from the previously reported 3.2% pace.
While U.S. equity markets will be closed for the Good Friday holiday, the focus will be on the release of the Personal Consumption Expenditures Price Index (PCE), the Fed's preferred inflation gauge, for clues on the timing and size of rate cuts this year from the central bank.
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