USD Eases on Friday, Sentiment Improves
29 April 2022
Traders booked some profits from this week's massive US dollar rally, bringing the greenback lower on Friday. On the other hand, equity markets have erased this week's losses.
Dollar is king
The US dollar climbed broadly on Thursday, despite a surprising fall in inflation-adjusted economic activity in Q1 2022, according to the latest GDP data. However, Friday's trading saw a sharp reversal in sentiment, sending the greenback lower against all of its major peers.
Earlier in the week, the USDJPY pair rose to fresh 20-year highs above 131 amid a massive divergence in monetary policies between USA and Japan after the BOJ's promised to acquire as many bonds as it needed on a daily basis. On the other hand, the yen dropped over 7% in April, the worst month since November 2016.
Thursday, the Bank of Japan's ultra-dovish decision further distanced Japan from the United States, where markets are pricing in 150 basis points (bps) of rises in only three meetings and spurred a fresh rush of capital into the dollar ahead of all else. Meanwhile, the EURUSD fell below 1.05 for the first time in five years.
The Australian dollar was down 4.4 percent in April. The New Zealand dollar will book its worst month in seven years, which has lost about 6% against the US dollar in April.
More econ data on agenda
Later today, German and European GDP figures are due, expected to improve slightly year-on-year. Additionally, HICP inflation indices from the euro zones are on schedule, with investors anticipating further increases in inflation according to this metric.
Personal income and spending data will be eyed during the US session, along with the consumer sentiment index for April. In addition, the Chicago Purchasing Managers Index will also be released.
Oil advances again
The WTI benchmark jumped more than 5% this week. It returned above the 105 USD threshold as oil benefited from Germany's greater chance to join other European Union member states in imposing a Russian oil embargo. Despite the severe impact on the economy and global supply chains, oil prices have remained fluctuating as China's COVID-19 lockdowns continue.