Market Watch: Dollar Gains Momentum, Gold Prices Dip

UK retail sales disappointed, the dollar index gained momentum, and gold prices declined. Central bank actions influence currency markets.

The UK retail sales figures for March fell short of market expectations, remaining flat for the month, marking the second consecutive month of poor sales. Despite this disappointing result, the Pound strengthened following the news release. The GBP/USD rose as high as 1.2468 during the US session before retracing to end the week at 1.2369.

Dollar Index (DXY) Registers Second Weekly Gain, Gold Drifts Lower

Demand for the dollar returned last Friday, as reflected in the Dollar Index (DXY) rebound from 105.85 to 106.11, marking a second consecutive weekly gain. In contrast, spot prices for gold dipped lower, trading around $2,375/oz at the opening of the Asia session. Notably, the dollar and gold exhibited a positive correlation, a deviation from the norm, which traders should monitor closely.

Asia Session Outlook: DXY Slides, Gold Continues to Drift Lower

The DXY slid lower at the start of the Asia session, dipping below 106, while spot prices for gold continued to edge lower. This unusual positive correlation between the dollar and gold may persist in the initial trading hours, warranting traders’ attention until normal correlations resume.

Market Watch: Dollar Gains Momentum, Gold Prices Dip

Central Bank Notes and Market Bias for Major Currencies

Federal Reserve: Maintained the Federal Funds Rate target range at 5.25% to 5.50%, with a weak bearish bias.

Reserve Bank of Australia (RBA): The RBA kept the cash rate target unchanged at 4.35%, with a medium bullish bias.

Bank of Japan (BoJ): Implemented monetary policy adjustments with a weak bullish bias.

European Central Bank (ECB): Maintained interest rates unchanged, with a weak bullish bias.

Bank of England (BoE): The Official Bank Rate was maintained at 5.25%, with a weak bullish bias.

Swiss National Bank (SNB): Eased monetary policy by lowering the key policy rate, with a weak bullish bias.

Bank of Canada (BoC): The overnight rate was 5.0%, with a medium bearish bias.

Expectations for Crude Oil Prices

Despite ongoing geopolitical tensions, crude oil prices declined over the last few weeks, with WTI oil losing 4.3%. This downward trend is expected to continue, driven by weaker crude demand in the US amid inventory builds reported by the API and EIA in recent weeks.

Factors, including central bank actions and commodity price movements, influence market dynamics in the Asia session. Traders should closely monitor currency correlations and central bank announcements for potential market opportunities.

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