The stronger USD weighs on market sentiment across equities and commodities

Tuesday, May 05, 2015

The USD rebounded and climbed higher for third consecutive session as the USD index rose towards 96.0 against a basket of currencies. The stronger dollar has weighed on market sentiment, limiting any strong upside potential across the global equity and commodity markets.

USD index rebounds towards 97.0

DXY Curncy (DOLLAR INDEX SPOT)   2015-05-05 09-09-10

Asian equity markets were fairly mixed overnight. The Hang Seng index remained under pressure and slid lower overnight towards 27,670 (-1.6%) following the recent disappointing Chinese manufacturing data, while the Nikkei index consolidated around 19,530. China’s HSBC Manufacturing PMI was reported at 48.9 in April compared to 49.2 previously missing analysts’ estimates of 49.4.   

European equity markets opened the session lower as risk appetite has been limited due to the ongoing uncertain economic conditions in Greece. The CAC, DAX, IBEX and Italian equity benchmark indices posted renewed losses this morning after retreating between 0.3% and 0.5% in early trade. The euro extended losses for third consecutive session towards 1.1050 against the USD after having tested a high on Friday at 1.1290. Support could hold near the 10-day MA at 1.1009.

EURUSD

EURUSD Curncy (EUR-USD X-RATE)   2015-05-05 09-10-20

However, the London equity benchmark index bucked the downtrend and edged higher trading above 7,000 while this week the main focus will be on the UK elections on Thursday 7th May 2015. The pound sterling has been under pressure after trading near 1.51 against the USD, below the 10-day MA. Market participants will be keeping an eye on the release of the UK Markit/CIPS construction PMI later this morning.

Precious metal prices remain in negative territory with gold hovering around $1180/ounce and silver consolidating around $16.30 in early trade this morning. Platinum and palladium have also extended recent losses.

   

Events for today:

0930

UK

Apr

Markit/CIPS Construction PMI

1000

EZ

Mar

PPI

1330

US

Mar

Trade Balance

1445

US

Apr

Markit Services PMI

1500

US

Apr

ISM Non-Manufacturing

1500

US

May

IBD Sentiment

 

All times UK Local Time

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