USD trades steadily in a week full of central banks’ announcements, rising commodity prices hindered US factory activity, and EUR temporarily helped by German retail sales data

Daily News May 4, 2021 at 02:50 am (GMT)

USD trades steadily traders eyeing on central banks’ announcements
US national factory activity index went down due to rising prices on commodities
EUR temporarily up followed by swift decline based on German retail sales
Indian rupee continues to be in pressure

USD trades steadily on Monday after its bounce at the month end, as investors make a more cautious start to embrace more data ahead. Currently DXY Index trades around 91.052, up about 0.09% since opening but slightly down from the Friday peak. The Index dropped about 2% through April as positive views on global recovery lifted risk-favored currencies at the dollar’s expense. However, consumption data released on Friday has helped it rebound. This week will be full of central bank announcements and markets are waiting for clues on global inflation outlook and corresponding responses from policy makers. Trade in Japan, China and Britain is relatively thin due to holidays, leaving USD much room to maintain at the high level without much disturbance from major rivals.

US manufacturing activity grew at a slower pace in April, primarily restrained by wide-scale shortage on basic materials. The survey from ISM released on Monday show that, most factories face record-long lead times and shortages on critical materials, the prices of which have been on the rise since earlier this year. ISM’s index on national factory activity fell to 60.7 in April after surging to 64.7 in March. Regardless, the reading still shows much momentum in the positive direction.

EUR started the day on a positive note but quickly lost strength. German retail sales for March turned out to be significantly higher than expected, up 7.7% versus the previous release at 2.7% after some adjustments. This is potentially due to the loosened lockdown restrictions in March. However, given the less promising outlook compared with other major economies, there is likely to be little momentum for EUR.

In emerging markets, Indian rupee has been in focus. The country consistently refreshes its own record on daily deaths from COVID, putting the currency under great pressure. Various Indian states held elections over the weekend and the current majority party under Prime Minister Narendra Modi appeared to have suffered a strong backlash due to his poor handling of the crisis.