Forex News

The yield on the 10-year German Bund rose to 2.6%, the highest since late November, following a surge in US bond yields after recent GDP data reinforced the view that the Fed will need to wait longer with interest rate cuts. On one hand, US economy grew much less than expected in Q1 but on the other inflationary pressures remained elevated. Still, in Europe, investors expect three ECB rate cuts this year with the first cut potentially delivered as soon as June as inflation is slowing down and economic activity is improving. Eurozone business activity grew in April by the most in nearly a year, driven by a surge in service sector output. In particular, services in Germany, Europe's largest economy, expanded for the first time in 10 months, although the manufacturing sector remained deeply in contraction territory.

The Baltic Exchange's main sea freight index, a measure of global shipping costs, was down 1.8% to 1743 points on Thursday, a fourth consecutive day of losses, hitting the lowest level in ten days. The capesize index, which typically transports 150,000-ton cargoes such as iron ore and coal, declined 4.9% to 2,230 points, also the lowest since April 10th. Concurrently, the panamax index, which usually carries about 60,000-70,000 tons of coal or grain cargo, eased by 14 points to 1,896 points. On the other hand, the supramax index edged up by 32 points, or 2.2%, to 1,488 points.

Lowe's Companies decreased to a 9-week low of 225.31 USD. Over the past 4 weeks, Lowe's Companies lost 10.23%, and in the last 12 months, it increased 12.41%.

US stocks were sharply lower on Thursday, with the S&P 500 losing 1.4%, the Dow Jones sinking 540 points and the Nasdaq falling 2.2%, after recent GDP figures for the US showed the economy slowed sharply and price pressures mounted. The US economy expanded an annualized 1.6% in Q1 2024, below forecasts of 2.5% but core PCE prices increased by 3.7%, above expectations. Additionally, disappointing earnings reports from companies like Meta and IBM put further pressure on investors. Meta sank about 15% after the company issued a weak revenue guidance for the second quarter, which outweighed better-than-expected first quarter results. IBM also declined almost 8% after a revenue miss. On the other hand, Honeywell International gained about 0.6% after the company's earnings beat forecasts, led by the company’s aerospace franchise. Microsoft, Alphabet and T-Mobile are due to report their quarterly results today after the closing bell.

The core price index for personal consumption expenditures in the United States, which excludes food and energy, rose by an annualized 3.7% in the first quarter of 2024, accelerating from the 2% increase in the previous three-month period and above an estimate of 3.4%. Also, the headline index rose by an annualized 3.4%, accelerating from a 1.8% increase in the previous three-month period.

Chevron increased to a 26-week high of 163.92 USD. Over the past 4 weeks, Chevron gained 4.63%, and in the last 12 months, it decreased 3.12%.

Deere & Company decreased to a 5-week low of 386.27 USD. Over the past 4 weeks, Deere & Company lost 2.95%, and in the last 12 months, it increased 3.24%.

P&G increased to a 4-week high of 162.97 USD. Over the past 4 weeks, Procter & Gamble gained 1.59%, and in the last 12 months, it increased 4.05%.

The Mexican peso depreciated past 17.1 per USD in late April, marking an over five-month low as investors digested a slew of economic data both domestically and in the US for insights into future monetary policy by the central banks. April's mid-month inflation data in Mexico showed signs of persistence, with the gauge accelerating from the previous month to 4.63%, exceeding expectations. Additionally, Mexico's economic activity surged by 4.4% year-on-year in February 2024, marking the strongest growth since October and a significant acceleration from the revised 1.9% growth in the previous month. However, despite these indicators supporting a hawkish stance from the Bank of Mexico, the market's attention was primarily on the US Fed's hawkish outlook. While the US economy grew much less than expected in Q1, inflationary pressures remained elevated, coupled with a robust US labor market, increased hawkish bets and supported the greenback.

European stocks tumbled further on Thursday, with the STOXX 50 losing 1.1% and the STOXX 600 falling 0.6%, as fresh US data reinforced concerns over the robustness of the bloc's economy and the persistence of inflationary pressures. Nestle, the world's largest packaged food company, saw a 2.7% decline after missing estimates for first-quarter organic sales growth. The luxury sector also took a hit, with the giants Hermes (-4.8%) and LVMH (-3.6%) among the biggest laggards. On the other hand, Sanofi rose 3.5% after the company confirmed its full-year guidance and its first-quarter sales and profit beat analysts' expectations. Meanwhile, Deutsche Bank surged 6% while BNP Paribas added 0.7% after the euro zone's biggest lenders posted upbeat first-quarter profits.

Average weekly earnings of non-farm payroll employees in Canada increased by 4.5% year-on-year to $1,232 in February 2024, with 13 out of 20 sectors reporting gains. The largest increases were seen in public administration (+6,600; +0.5%), finance and insurance (+6,400; +0.8%), health care and social assistance (+5,200; +0.2%) and real estate, rental and leasing (+900; +0.3%). These gains were partially offset by declines in accommodation and food services (-10,000; -0.8%), manufacturing (-9,500; -0.6%), and retail trade (-8,200; -0.4%). The remaining nine sectors recorded little change.

US wholesale inventories dropped by 0.4% month-over-month in March 2024, defying market epectations of a 0.2% rise and following a downwardly revised 0.4% increase in February, preliminary estimates showed. Durables inventories were unchanged, after a 0.9% growth in the prior period, whereas nondurables stocks saw a decrease of 1.1% compared to a previous 0.4% slip. Yearly, wholesale inventories went down by 2.1% in March.

Stock futures in the US extended losses on Thursday, as concerns mount about the robustness of the US economy and the persistence of inflationary pressures. The US economy expanded an annualized 1.6% in Q1 2024, below forecasts of 2.5% but core PCE prices increased by 3.7%, the first quarterly rise in a year. Additionally, disappointing earnings reports from companies like Meta and IBM put further pressure on investors. Shares of Meta sank about 15% before the opening bell after the company issued a weak revenue guidance for the second quarter, which outweighed better-than-expected first quarter results. IBM also declined almost 10% after a revenue miss. On the other hand, Honeywell International gained about 1% in premarket trading after the company's earnings beat forecasts, led by the company’s aerospace franchise. Microsoft, Alphabet and T-Mobile are due to report their quarterly results today after the closing bell. The three major averages were down over 1%.

The US 10-year Treasury note yield rose to above 4.7%, the highest since early November, as recent GDP data reinforced the view that the Fed will not cut interest rates soon. On one hand, US economy grew much less than expected in Q1 but on the other inflationary pressures remained elevated. The US economy expanded an annualized 1.6% in Q1 2024, the least since a contraction in Q2 of 2022, and below forecasts of 2.4%. Meanwhile, the GDP price index grew 3.1% above market expectations of 3% and 1.7% in Q4. Also, the core PCE price index, which excludes food and energy, surged by 3.7%, accelerating from the 2% increase in the previous three-month period and above the estimate of 3.4%.

The US trade deficit in goods widened to $91.83 billion in March 2024, the largest in 11 months and from a revised $90.30 billion in February, according to an advance estimate. The gap was also above the estimates of $91.2 billion. Imports declined by 1.7%, weighed by purchases of automotive vehicles (-10.8%), foods, feeds & beverages (-3.6%), industrial supplies (-3.2%), and other goods (-2.9%). Conversely, arrivals rose for consumer goods (4.7%). In the meantime, exports fell by faster 3.5% due to reduced sales of foods, feeds & beverages (-9.4%), capital goods (-3.7%), and industrial supplies (-3.9%).

The number of people claiming unemployment benefits in the US fell by 5,000 to 207,000 in the week ending April 20th, the lowest in two months, and below market expectations of 214,000. This unexpected downturn provides more support for the notion of a tight labor market, adding leeway for the Federal Reserve to delay interest rate cuts to tackle stubborn inflation. The four-week-moving average, which reduces week-to-week volatility, declined by 1,250 to 213,250. In the meantime, the non-seasonally adjusted claim count eased by 7,363 to 201,619, as declines in New York (-4,174) and Pennsylvania (-2,796) offset increases in Massachusetts (3,565) and Rhode Island (1,719).

Germany 10 Year Government Bond Yield increased to a 21-week high of 2.60%. Over the past 4 weeks, Germany 10Y Bond Yield gained 23.00 basis points, and in the last 12 months, it increased 19.40 basis points.

The US economy expanded an annualized 1.6% in Q1 2024, compared to 3.4% in the previous quarter and below forecasts of 2.5%. It was the lowest growth since the contractions in the first half of 2022, the advance estimate showed. A slowdown was seen for consumer spending (2.5% vs 3.3%), mainly due to a fall in goods consumption (-0.4% vs 3%) while spending on services rose faster (4% vs 3.4%). Non-residential investment also eased (2.9% vs 3.7%), due to structures (-0.1% vs 10.9%) while investment in equipment rebounded (2.1% vs -1.1%) and the one on intellectual property products (5.4% vs 4.3%) accelerated. Looking further, government spending rose way less (1.2% vs 4.6%), and exports slowed sharply (0.9% vs 5.1%) while imports soared (7.2% vs 2.2%). Meanwhile, private inventories subtracted 0.35 pp from the growth (vs -0.47 pp). On the other hand, residential investment jumped at a double-digit pace (13.9% vs 2.8%).

Japan 10 Year Government Bond Yield increased to a 23-week high of 0.90%. Over the past 4 weeks, Japan 10Y Bond Yield gained 15.90 basis points, and in the last 12 months, it increased 44.20 basis points.

LVMH decreased to a 11-week low of 775.10 EUR. Over the past 4 weeks, LVMH lost 5.6%, and in the last 12 months, it decreased 11.38%.