Dollar Dips as Chinese Data Fuel Investors' Risk Appetite

USD                                                                                  

The dollar index which measures the greenback against a basket of major currencies erased yesterday's gains as solid Chinese economic data spurred risk sentiment. DXY retreated from a high of 97.12 to trade lower at 96.84. The data showed that Chinese economic activity was better than expected in the first quarter of 2019. Moreover, strong corporate earnings encouraged investors to jump into riskier assets and dump the dollar which was seen as a safe haven lately. The Australian dollar was among the top gainers against the United States dollar following the release of the Chinese data and the pair AUDUSD logged a nine-week high of 0.7205. Market participants await the release of February's trade balance and the Beige book which gives us a hint about the economic performance of 12 Federal districts.

NZD

The New Zealand dollar fell to a three-and-a-half month low against the United States dollar of $0.6666 following soft inflation data. The first quarter Consumer Price Index YoY came in at 1.5% versus an expectation of 1.7% fueling the chances of an interest rate cut by the RBNZ. The probability of a rate cut on the next monetary policy of the RBNZ which takes place on the 8th of May rose to 55.6% versus a reading of 29.1% earlier this week. On the other hand, the solid Chinese economic data supported the Kiwi in recovering partial losses to trade at $0.6735 at the moment. 

Metals

Gold prices fell to a fresh 2019 low of $1272 weighed down by rising investors risk appetite. Gold is historically well-known as investors’ safe haven during rising market risks and uncertainties. Therefore, the ongoing optimism over trade and the US economic outlook following strong corporate earnings forced investors to dump safety and rush to riskier assets. On the other hand, the silver ounce rose to a high of $15.06 following better than expected industrial manufacturing figures from China. Also, palladium hovered above $1360.

Oil

Oil prices surged to a new five-month high supported by strong Chinese data and a drop in US oil stocks. The economic data suggests that the Chinese economic activity picked up during the first quarter of 2019 which reduces the worries of a global economic slowdown. On the other hand, the American Petroleum Institute reported that the weekly US crude oil stock dropped by 3.096 million barrels last week. The Energy Information Administration will report the official inventory data later today. The West Texas Intermediate crude futures rose to a high of $64.55, while Brent futures raced to $72.08, the highest since early November 2018.

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Disclaimer

The prices and news mentioned in this outlook are absolutely no guarantee of future market performance and do not represent the view of ICM.COM. Financial markets can move in either direction causing profits to be made or complete losses to be incurred by the trader. Each trader must decide for themselves what their risk appetite is and ensure that correct risk management procedures are in place before placing any trades.