Stocks Erase Gains to End Lower, Dollar Soars

Stocks Erase Gains to End Lower, Dollar Soars


Major US indices rose ahead of the US session as a senior Trump administration official said that the President will use the Committee on Foreign Investment in the US (CFIUS) to monitor China’s investments in the tech sector, instead of implementing tougher measures. The Dow Jones Industrial Average was having its biggest point gain since February and reached a high of 24564. However, the White House economic advisor, Larry Kudlow, declared that Trump announced a plan that is going to be very comprehensive and very effective at protecting the US tech sector. The Dow Jones Industrial Average ended the day down 0.7% at 24117, and the SPX down 0.9% at 2699. The tech-heavy Nasdaq Composite was the worst performer and lost 1.5% to settle at 7445.


The dollar index rose for the second day to tackle 2018 highs. DXY was able to set its highest close since July 2017 at 95.29. USDCAD rose to 1.3386, the highest level since June 2017. In terms of data, the first quarter GDP from the United States is due today. On the other hand, the second quarter GDP is widely expected to reach 4%, which shows the growth-gap between the United States economy and its major peers. This growth differential is providing support to the US dollar.


The British pound suffered its biggest daily loss against the United States dollar in two weeks. During the Asian session, GBPUSD fell to a fresh 2018 low of $1.3065. The sterling is facing pressure due to the Brexit talks and the interest rate path of the Bank of England. The Bank of England reported yesterday that the Brexit remain as the main domestic risk to financial stability. Moreover, the risks arising from trade tensions could hurt the global growth and delay any tightening measures.


The New Zealand dollar extended sell-off against the United States dollar post the Reserve Bank of New Zealand interest rate decision and reached the lowest level since June 2016. NZDUSD traded at a low of $0.6765 during the Asian session. The RBNZ kept interest rates unchanged at %1.75 and confirmed that they are well-positioned to manage change in either direction, up or down, as necessary. The statement was bearish for the NZD as it highlighted the rising global risks which could delay any tightening measures. 


Gold prices drifted lower for the third consecutive day and tested a new 2018 low of $1250 ahead of the European session. The silver ounce traded below $16 for the first time since December 2017 and posted a low of $15.97.


Oil prices surged for the second consecutive day where the West Texas Intermediate traded at $73.03, the highest level since late 2014. The rally in oil prices is finding support from the supply disruption from Libya and Canada and the US-Iran conflict. On the other hand, the Energy Information Administration (EIA) reported yesterday that the US weekly crude oil inventories fell by 9.891 million barrels last week.  

Major Economic Events

GMT Country Event Expectation Previous
12:30 US GDP (QoQ) (Q1) 2.2% 2.2%
12:30 US Initial Jobless Claims 220 218


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