Daily Market Update

Dollar Down as Risk Rises; Euro Jumps on ECB

April 10, 2018

The U.S. dollar is broadly weaker against its major counterparts, save the Japanese yen, on renewed risk appetite following Chinese President Xi’s speech at the Boao Forum.

USD

This morning’s economic data has been unable to bailout the greenback. U.S. producer prices rose 0.3% in March, slightly higher than expected. Prices are up 3.0% from a year ago showing inflation and giving the Fed the scope to raise rates more this year. Later, wholesale inventories will cross the wires.

Attention will now likely shift to tomorrow’s release of consumer prices and the Federal Reserve’s minutes. In the meantime, we will continue to watch headlines regarding trade, more developments with the legal trouble of the President’s inner circle and Facebook CEO Mark Zuckerberg’s testimony on Capitol Hill.

 

EUR

The Euro jumped and moved above a key technical indicator overnight following hawkish comments from European Central Bank official Ewald Nowotny. Nowotny indicated it may be time to start tightening monetary policy. In an interview with Reuters, the policy maker said “I would have no problem with moving from -0.4% to -0.2% and then, as a second step, including the main refinancing policy rate.” The Euro immediately leapt higher against the greenback as the comments hit the wire.

Nevertheless, the trend of poor European economic data continued today. Both French industrial production and manufacturing data missed estimates and Italy reported a decline industrial production as well.

 

JPY

The Japanese yen fell across the board as global stocks rose on the backs of Chinese President Xi’s speech. President Xi reiterated plans to open up sectors of the Chinese economy and address issues such as imports and intellectual property. Xi did not mention President Trump by name and held a conciliatory approach to the ongoing trade spat. As a result, Asian stocks rallied, European equities ticked higher and American futures show the DOW will open 400 points higher.

 

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