US retail sales beat expectations in March
US retail sales rose 0.7% in March, beating estimates of a 0.4% increase, while down from 0.9% in the previous reading.
Core sales, excluding automobiles, rose 1.1%, above estimates of 0.5%, and up from 0.6% in the previous reading.
Gold resumes gains near record highs
Gold prices rose in European trade on Monday, resuming gains after a hiatus on Friday and approaching record highs once more as the dollar slowed down.
The gains are curtailed however as risk appetite improves in the market, with concerns about a war between Iran and Israel receding as both countries scale back their rhetoric.
Prices
Gold prices rose 1.2% to $2372 an ounce, with a session-low at $2344.
Prices lost 1.25% on Friday on profit-taking off recent record highs at $2431 an ounce.
Prices rose 0.6% last week, the fourth weekly profit in a row as major investment funds and central banks buy up the precious metal.
The Dollar
The Dollar index fell 0.15% on Monday off five-month highs at 106.11, on track for the first loss in four days on profit-taking.
The dollar is currently losing ground amid positive sentiment in the market, and ahead of important US retail sales data.
US Rates
The odds of a 0.25% Federal Reserve interest rate cut in June stand at just 32%, while the odds of such a cut in July stand at 52%.
Retail sales data will provide a fresh perspective and could change the pricing for such odds.
Haven Demand Declines .. Why?
Haven demand receded worldwide as the prospects of a war between Israel and Iran vanish.
Iran launched drones and missiles towards Israeli land this week, in response to an alleged Israeli attack on the Iranian consulate in Syria.
Iran said the military response has been done, while US President Joe Biden informed the Israeli government that the US won’t support an Israeli counterattack on Iran.
Actual Market
Actual demand in China has surged on gold prices with the central bank aiming to stabilize the yuan through it, while record prices in India forced traders to initiate discounts for the sixth week in a row.
The SPDR
Gold holdings at the SPDR Gold Trust fell 4.03 tonnes on Friday to a total of 826.72 tonnes, the lowest since April 5.
Euro tries to recoup from five-month trough amid bearish outlook
Euro rose in European trade on Monday against a basket of major rivals amid attempts to recoup from five-month lows against the dollar, with the risk sentiment improving worldwide.
Even as the euro currently improves, the bearish outlook remains as investors expect multiple interest rate cuts by the ECB as inflation approaches the 2% target.
The Price
EUR/USD rose 0.3% to $1.0665, with a session-low at $1.0630, after losing 0.8% on Friday, the third loss in a row, plumbing a five-month trough at $1.0622.
Heavy Weekly Loss
The EUR/USD pair tumbled 1.8% last week, the fourth weekly loss in five weeks, and the largest such weekly loss since September 2022 amid concerns about the interest rate gap between Europe and the US.
The latest ECB’s policy meeting bolstered the odds of an early 0.25% interest rate cut in June, while conversely, strong US inflation data in recent data hurt the odds of such a cut by the Federal Reserve.
Rate Gap
The current US-Eurozone interest rate gap stands at 100 basis points, and could widen to 125 basis points in June.
Positive Sentiment
Positive sentiment is spreading in the markets as the prospects of a full-scale war between Iran and Israel wane.
Iran launched drones and missiles towards Israeli land this week, in response to an alleged Israeli attack on the Iranian consulate in Syria.
Iran said the military response has been done, while US President Joe Biden informed the Israeli government that the US won’t support an Israeli counterattack on Iran.
Downward Outlook
The City Index company said the EUR/USD pair is facing a bearish outlook after piercing major supports such as $1.0795, then $1.0725.
Their analysts now expect the pair to hit $1.06 initially, and then potentially head towards $1.05, and finally to reach October lows at $1.0448.
Wall Street collapses, Dow Jones slides below 38,000
US stock indices fell on Friday as markets assess latest inflation data released this week.
Today, the season of the quarterly earnings results for corporations officially commenced, starting with banks.
Earlier government data showed producer prices rose 0.2% m/m in March, while surging 2.1% y/y.
US unemployment claims fell to 211 thousand last week from 222 thousand, while analysts expected 216 thousand.
Other data showcased the accelerating inflation with consumer prices in March, which hurt the odds of a Fed interest rate cut in June.
US consumer prices rose 3.5% y/y in March, above estimates of 3.4%.
On a monthly basis, consumer prices rose 0.4%, while analysts expected a rise of 0.3%.
On trading, Dow Jones fell 1.2%, or 457 points as of 18:10 GMT to 37,998, while S&P 500 fell 1.4%, or 72 points to 5126, as NASDAQ shed 1.6%, or 263 points to 16,178.