Market Focus: Dollar Surges, Gold Up After UoM Report

UoM consumer sentiment is steady at 77.9, but inflation expectations rise. The dollar surges, and gold rebounds. Retail sales and manufacturing data are eyed.

The University of Michigan (UoM) has unveiled its initial findings on consumer sentiment for April, revealing a steady sentiment level of 77.9. Despite this overall stability, specific indicators have notable shifts, notably in inflation expectations.

According to the report, year-ahead inflation expectations have risen from 2.9% in the previous month to 3.1%. This increase comes from recent Consumer Price Index (CPI) and Producer Price Index (PPI) data indicating elevated economic inflationary pressures.

Dollar Index Surges as Consumer Sentiment Remains Stable

Last Friday witnessed a remarkable surge in the Dollar Index (DXY), propelling it above the 106 level. This surge marked its most significant weekly gain since May 2023, jumping by 1.7%. The release of the UoM’s consumer sentiment report likely influenced the robust performance, driven by stable sentiment levels and rising inflation expectations.

Asia Session Outlook

In the aftermath of last week’s bullish momentum, the Dollar Index (DXY) may experience a pullback as profit-taking by dollar bulls could come into play. As Asian markets reopened, the DXY dipped below 106 while gold prices surged, potentially indicating a cautious sentiment towards the greenback.

Market Focus: Dollar Surges, Gold Up After UoM Report

Key Events Today

During the US session, anticipate that the retail sales report and Empire State Manufacturing Index will inject volatility. Retail sales, which have shown mixed results over recent months, are expected to maintain steady growth. Manufacturing activity in New York might signal a slowdown, albeit at a reduced pace.

Central Bank Insights

The Federal Reserve’s decision to maintain the Federal Funds Rate target range at 5.25% to 5.50% for the fifth consecutive meeting reflects its cautious approach towards balancing inflation risks with economic expansion. The Committee remains focused on achieving maximum employment and stabilizing inflation, closely monitoring incoming data to guide future policy adjustments.

Market Bias in the Next 24 Hours

Investors expect mixed retail sales data and manufacturing indicators to drive gold to exhibit a weak bullish bias. Meanwhile, the Australian Dollar (AUD) and New Zealand Dollar (NZD) show weak bullish biases, with the former rebounding from previous losses and the latter poised for a retracement after last week’s decline. The Japanese Yen (JPY) demonstrates a medium bullish bias amid significant weakness, and the Euro (EUR) reflects a weak bullish bias influenced by industrial production data. The Swiss Franc (CHF) shows a medium bullish bias, supported by recent monetary policy easing, while the Pound (GBP) exhibits a weak bullish bias amid uncertainty surrounding future monetary policy. Lastly, the Canadian dollar (CAD) displays a weak bearish bias as USD/CAD maintains upward momentum, while oil’s bias remains weakly bearish despite geopolitical tensions.

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