The Dollar Rebounds Ahead of the Long Weekend

The Dollar Rebounds Ahead of the Long Weekend

18 Apr 2019

The dollar is mostly stronger against the major currencies as riskier assets declined. In Asian, the Nikkei fell 0.8%, while the Shanghai Composite declined0.4%.  European shares are mixed while US futures are pointing to a lower open.  US 10-year yields are down 3 basis points at 2.56%, commodity prices are mixed, with crude oil flat, copper down 1.6%, and gold up 0.1%.

Eurozone Flash PMI Fell

Eurozone flash PMI readings for April were reported.  The composite reading declined to 51.3 versus expectations that it would come in at 51.8 expected.  Manufacturing PMI rose to 47.8 but was offset by a larger than expected drop in the services PMI to 52.5.  Looking at the country breakdown, Germany’s composite rose to 52.1 versus expectations of 51.7 due to a higher manufacturing PMI of 44.5 and a higher services PMI of 55.6. 

Strong UK March retail sales were reported earlier, which initially buoyed the pound.  Both headline and ex-auto fuel were expected to fall -0.3% m/m.  The headline retail sales increased by 1.1% and ex-autos increased by  1.2%. They both were expected to decline by 0.3% month over month.  Warmer weather apparently boosted spending. 

Australia reported strong March jobs data.  Employment rose 25.7k versus expectations of a rise of 15k. The report showed that 48.3k full-time jobs were added and only partially offset by a -22.6k drop in part-time jobs.  The unemployment rate ticked up to 5.0%, as the participation rate rose a tick to 65.7%. 

The US Trade Deficit Narrowed Due to Lower Imports

The US trade deficit narrowed in February to $49.4 billion in February, its lowest level since June 2018 and well below estimates according to the Commerce Department. Expectations were for the trade deficit in February to increase to $53.8 billion from $51.1 billion in January. The drop was due to a 28.2% decrease in its deficit with China as exports to the nation surged. Exports to China rose $1.6 billion to $9.2 billion while imports fell $1.5 billion to $39.3 billion.

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