Weekly Market Report: Dollar Continues Bearish Trend

2021-04-26_6-46-48

Here is an excerpt from the ABS Advisor Market Report.  It is a professional report designed to help financial advisors and investors save time, cut through the noise, and out-perform.

The FOMC meeting will be the focal point for global markets this week even as investors face busy calendars in the U.S., the Eurozone, and Asia. No changes are anticipated to the Fed’s stance. Equities will have to wade through the usual flood of earnings results that characterize the heart of the season.

The markets also will grapple with diverging virus and vaccine developments globally, with improving conditions in the West while Asia, and especially India and Japan, have become covid hotspots. Key data from around the world is slated too, with attention on growth and inflation reports. The BoJ meets, but no change to policy is expected.

The dollar ebbed to a nearly eight-week low by the measure of the narrow trade-weighted DXY index, at 90.68. We remain concerned about the decreasing US Dollar value as it has broken through support and looks to continue a strong bearish trend (see chart above). Obviously, this will be good for exports, but not good for the US long term.

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The markets have a plethora of data and events to digest this week, though none are really likely to alter the outlook of robust U.S. growth. The FOMC meets but is universally seen on hold. Additionally, there are earnings, key data on GDP and inflation, along with $183 bln in shorter-dated coupon auctions.

Stocks rebounded Friday and the NASDAQ and S&P 500 climbed 1.44% and 1.09%, respectively, largely on optimism over the economy. Evidence of that is expected this week with the Advance Q1 GDP report. The rally in risk weighed on Treasuries, as did the advent of this week’s supply. The wi yields cheapened moderately, leaving the 2-year at 0.170%, the 5-year at 0.840%, and the 7-year at 1.275%.

Key Drivers for the Week of April 26

TIP – This is a 1-minute brief bullet-point summary. It is a tool that gives investors and financial a fast and simple list of what to watch for and talking points for the week.

  • FOMC expected on hold, unlikely to hint at thoughts of tapering
  • U.S. heavy calendar of earnings; data on GDP, income, inflation; Treasury supply
  • Canada awaits monthly GDP report, retail sales after BoC announced QE tapering
  • Japan monitors virus, restrictions; BoJ expected steady; big month-end data slate
  • Asian calendar includes Q1 GDP, CPI, trade, manufacturing, and sentiment reports
  • Eurozone has preliminary Q1 GDP, CPI, ESI Economic Confidence, unemployment data
  • Germany reports Q1 GDP, Ifo Business Climate, HICP, PPI, and jobless numbers
  • UK economy picking up, but concerns over new virus variants, Scottish independence
  • Switzerland reports March retail sales, KOF leading indicator for April
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Today’s calendar features some important earnings releases from Tesla, Canadian National Railway, Southern Copper, NXP Semi, Cadence Design, SBA Communications, Ameriprise Financial, SS&C Technologies, Sun Communities, Check Point Software, Brown & Brown, Lennox International, and Universal Health Services. The March durables report is the data focus where orders are expected to rebound 1.0% versus the previous -1.2% outcome. The April Dallas Fed index should improve slightly to 29.0 from 28.9. The Treasury auctions $60 bln of 2-year notes, and $61 bln of 5-year notes.

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Have a great week!

 

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