US Dollar Hangs in Balance As Crucial Data Looms
Risk Appetite Improves, Focus Shifts to Today’s US Data
The market sentiment has remained bullish in recent sessions, with US equity indices recording their sixth consecutive green session yesterday. This is the longest streak of positive daily performance since late November 2024, when the markets were feeling exuberant following Trump’s win in the US Presidential election. Despite the optimism, the improvement in risk appetite may be tested today as investors look for confirmation or easing of concerns about the immediate growth outlook.
Key US Data on the Menu Today
The market focus has now shifted to the US economy, with a plethora of data releases that could shape up next week’s FOMC meeting. The first quarter GDP is expected to show a weak 0.3% QoQ growth increase, which is miles below the Q4 number of 2.4%. On the other hand, the GDP deflator is seen rising to 3%, which is the highest print since the first quarter of 2024. The personal consumption data will also be closely scrutinized, with consumer spending attracting extra interest in an effort to gauge the US consumers’ response to March’s tariff shenanigans.
ADP Employment Report and Q2 Refunding Plan
The ADP employment report is due at 12:15 GMT, showing a slight increase of 115k. This will be the first key labour market-related figure for April, reflecting the April 2 reciprocal tariffs announcements and the subsequent back-and-forth by President Trump. Additionally, with the 10-year US yield dropping to a 3-week low, the Q2 quarterly refunding plan will be announced at 12:30 GMT.
Trump’s Comments May Prove Crucial
In the absence of Fed speakers, Trump is expected to comment on the various US data prints as he has a series of appearances scheduled to celebrate his 100 days in charge. Trump will likely take credit for a positive set of data today, and most probably blame the Fed and Chair Powell if the data disappoints. Trump’s criticism of the Fed could prove even tougher if today’s eurozone data widely opens the door to another ECB rate cut.
The Fed Prepares for Next Week’s Meeting
Fed members are focused on incoming data, with doves craving a dovish tilt at next week’s meeting. However, there is still a heightened risk of a US recession ahead. In this context, WTI oil has quickly dropped below the $60 threshold again, potentially revealing renewed market concerns about the growth outlook.
Gold and Bitcoin Range-Trade
Meanwhile, gold continues to hover around the $3,300 level, with the $3,260 barrier acting as a floor. China’s holiday until May 5 may remove one of the biggest tailwinds for gold. Similarly, bitcoin is maintaining its recent significant gains, trading a tad below the $95k level.
Conclusion
The market sentiment remains bullish, but the improvement in risk appetite may be tested today as investors look for confirmation or easing of concerns about the immediate growth outlook. The US data releases will play a crucial role in shaping up next week’s FOMC meeting, and Trump’s comments on various US data prints may prove to be decisive.
