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Markets Week Ahead: Gold Spikes, Dollar Soars, EUR/USD and GBP/USD Slump
US Inflation Jumps, Rate Cut Expectations Pared Back Sharply
US interest rate cut expectations continue to be pushed back into Q3 after the latest US CPI report showed inflation refusing to move lower. A rate cut at the June FOMC meeting looks highly unlikely, while a move at the July meeting is only partially priced in. Markets are also predicting just two 25-basis point rate cuts this year. This re-pricing has seen the US dollar rally sharply, while US Treasury yields hit multi-month highs.
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US Dollar Index Daily Chart
Despite this higher-for-longer US rate backdrop, gold continued to print new all-time highs before a sharp, intra-day sell-off late Friday. Gold posted a new ATH at $2,431/oz. before giving back around $90/oz. to end the week at $2,343/oz. Silver also had a very volatile session Friday, making a high of $29.79/oz. before ending the session at $27.84/oz.
Silver Daily Price Chart
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The US dollar’s renewed strength was seen across many USD pairs, with both EUR/USD and GBP/USD hitting five-month lows on Friday (See the Euro and British Pound Weekly forecasts for further commentary and outlooks).
Next week’s economic calendar has a range of high-importance data releases and events from several countries, with US retail sales, UK inflation and labor data, and German And Euro Area ZEW readings the standouts.
For all market-moving economic data and events, see the DailyFX Calendar
Chart of the Week – Apple
Apple turned sharply higher Thursday after closing in on the late-October low, after news hit the screens that the company said that it would update its Mac Book line with the new M3 chip. Apple is now closing back in on an old area of support turned resistance around $179.
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Technical and Fundamental Forecasts – w/c April 15th
US Dollar Forecast: USD to Remain Supported via Fed, ECB Policy Divergence
Strong growth, inflation and jobs data keeps US rates on hold, while disinflation and stagnant growth in the EU tees up a June rate cut. The likely policy divergence favours USD
British Pound Forecast – Will UK Data Help Stem the Latest GBP/USD Sell-Off?
UK jobs and inflation data released next week may give cable a reprieve after a resurgent US dollar sent GBP/USD tumbling to a multi-month low.
Euro’s Outlook Darkens on Dovish ECB, Geopolitical Risks – EUR/USD, EUR/GBP
The Euro suffered a major setback this week, primarily against the U.S. dollar. The European Central Bank’s dovish guidance laid the groundwork for the common currency’s downturn, but rising geopolitical risks in the Middle East also weighed.
Gold Price Outlook: Bulls in Control but Bearish Risks Grow on Stretched Markets
Gold climbed this week, setting a new all-time high near $2,430. However, prices eventually backed off those levels, closing near $2,345 on Friday.
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