On Thursday, Stock futures are trading slightly lower as investors keep an eye on the start of corporate earnings season and the latest inflation data. The focus is on what the inflation numbers suggest about the economy and how they may impact interest rates. Dow Industrial Average futures have lost 42 points, while S&P 500 futures are slightly below the flatline, and Nasdaq-100 futures have shed 0.1%.
The March producer price index, which measures the prices paid by companies, declined by 0.5% from the previous month, even though economists had expected prices to remain the same. This decline has supported a trend of easing inflation seen in the March consumer price index report. Investors will also pay close attention to data on retail sales, import prices, and the industrial sector, which will provide more insights into the state of the economy.
Investors will keep a close eye on today’s big-bank earnings, with JPMorgan, Wells Fargo, and Citi set to report before the bell. In addition, they will monitor data on retail sales, import prices, and the industrial sector, which will provide additional insight into how the economy is doing.
On Thursday, all sectors experienced gains in the stock market, with the Communication Services and Consumer Discretionary sectors leading the way with a 2.33% and 2.31% increase respectively. The Real Estate sector was the only one that saw a decline with a decrease of 0.41%. The utility sector had the smallest increase of 0.02%.
This data shows that the overall stock market experienced positive growth on this particular day, with the majority of sectors seeing increases in stock prices. The strong performance of the Communication Services and Consumer Discretionary sectors could suggest positive news for companies in those areas, while the decrease in the Real Estate sector may indicate some struggles for companies in that industry.
Major Pair Movement
The EUR/USD currency pair reached a 1-year high as investors believe the US Federal Reserve may only raise interest rates by 25 basis points once more before beginning a series of rate cuts later in the year. This follows a fall in US PPI in March, which was greater than anticipated. While the data points to a cooling economy, it does not suggest enough weakness for the Federal Reserve to abandon its focus on inflation just yet.
Markets forecasted that a series of aggressive rate hikes and tighter bank credit, combined with a shrinking pool of savings due to the pandemic, may lead to economic weakness later in 2023 and 2024. Despite reports suggesting a 25bp hike in May by ECB policymakers, markets still project a 41% chance of a 50bp increase and a total of 78bp of tightening by October. Sterling rose 0.3% after hitting new 10-month highs, and the Aussie surged 1.4% amid risk-on flows, strong jobs data, and positive China growth prospects.
Technical Analysis
EUR/USD (4 Hours)
The EUR/USD currency pair is rising due to support from both currencies after a period of consolidation below 1.1050 in the Asian session. The US Dollar is facing pressure as the market expects the Federal Reserve (Fed) to act on inflation sooner than anticipated after the softening of the US Producer Price Index (PPI). The S&P500 futures indicate cautious market sentiment despite bullish activity on Thursday. The Euro is gaining strength as investors debate the scale of a potential interest rate hike by the European Central Bank (ECB), with options of 25 and 50 basis points being considered for the May policy meeting. ECB Governing Council member Bostjan Vasle noted concerns over core inflation continuing to move in the wrong direction.
Looking at the technical analysis, the EUR/USD price has been increasing but there are indications of easing, as seen from the Bollinger band where the lower band is becoming narrower. Our support level has been adjusted to 1.1031, as the market is expected to consolidate for today, despite the release of US retail sales. The RSI has entered the overbought level, which suggests there may be limited higher movement potential.
Resistance: 1.1076, 1.1136
Support: 1.1031, 1.0977
XAU/USD (4 Hours)
Gold prices rose to their highest level since March 2022, reaching $2,048.67 per troy ounce on Thursday, despite an optimistic market outlook. This was due to speculation that the US economy would avoid a severe contraction if the Federal Reserve (Fed) ends its tightening cycle. The Producer Price Index (PPI) in the US declined 0.5% month-on-month in March, which was lower than expected, and annual readings also fell. This news caused the US dollar to fall and stock indexes to rise. The weekly unemployment claims also rose, indicating a weaker labor market. The Nasdaq Composite was up 1.57%, while the Dow Jones Industrial Average and S&P500 also saw gains. The 10-year Treasury note yields remained unchanged at 3.42%, while the 2-year note yields decreased by 3 basis points.
Looking at the technical analysis, the XAU/USD price is still increasing and attempting to surpass the upper band of the Bollinger band. There is currently a high demand for gold in the market due to the release of some weak US data. We have adjusted our key support level to $2,039, which was previously a resistance level. The RSI is entering the overbought level, which suggests a potential correction lower today, particularly since it is the end of the week.
Resistance: $2,053, $2,068
Support: $2,039, $2,020
Economic Data
| Currency | Data | Time (GMT + 8) | Forecast |
| USD | Core Retail Sales (Mar) | 20:30 | -0.40% |
| USD | Retail Sales (Mar) | 20:30 | -0.40% |
| USD | Prelim UoM Consumer Sentiment | 22:00 | 62.0 |
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