The US dollar is still on a tear, wreaking havoc against majors and minors in the beginning of the week as stocks took a dive. The preparation of the market towards higher rates continues to be a stress, as well as increasing restrictions in China against the spread of Covid-19. A mass-testing event in Beijing spooked financial markets and led to one of the biggest daily declines in oil prices since the start of the Russo-Ukrainian war.

The US session was the market-turning event though, with stocks rallying after the news that Elon Musk is buying Twitter to take it private. NASDAQ outperformed, Twitter being a tech stock, but overall sentiment is likely to remain negative as the above-mentioned issues take center stage.

In other news, Japan announced a new fiscal package of measures aimed at lowering inflation, while the BoJ is set to continue with its aggressive easing of monetary policy in the form of yield curve control bond-buying operations. Speaking of easing, the Bank of China has embarked on an easing cycle, and couples it with some relief via the USDCNY exchange rate which is signaling financial distress in the country.

Economic data highlights

Tuesday 26^th April

·         US Durable Goods, Consumer Confidence
·         US House Prices, New Home Sales

Wednesday 27^th of April

·         AU Consumer Price Index
·         GER, FRA Consumer Confidence
·         ECB Lagarde Speech
·         US Trade Balance, Pending Home Sales

Thursday 28^th of April

·         JP Central Bank Interest Rate decision & BoJ Press Conference
·         GER, SPA Consumer Price Index
·         EU Business Climate, Consumer Confidence
·         US Jobless Claims, Q1 GDP

Friday 29^th of April

·         CN Manufacturing PMI
·         UK House Prices
·         EU Consumer Price Index, Q1 GDP
·         US PCE, Chicago PMI
·         CAN GDP

• US GDP and Housing in Focus

• EU Inflation and GDP Growth for Q1

• Bank of Japan JPY Comments & UK House Prices

 
This week is going to provide more than enough food for thought for traders, especially when it comes to the US dollar and the euro. The single European currency is likely to get central attention as countries from the Eurozone report on inflation and growth figures to wrap up the first quarter from a data standpoint. The storm of data however starts on Tuesday with several key releases from the US.
 

US Data Inbound

 
A busy calendar in the US this week is starting on Tuesday with durable goods orders, consumer sentiment, home prices, and new home sales. Wednesday brings in our attention onto second tier, less important data, and concludes the week with the first estimate of the Q1 GDP report alongside the Fed’s preferred measure of inflation – the Personal Consumption Expenditures (PCE) index.
 
Every bit of US data strength should keep the Fed’s plan for a rather brink increase in interest rates intact, which could be positive for the U.S. dollar and keep a lid on stocks, and risk assets in general.
 

Gold loses its luster

 
Gold has been one of the very few assets that retained value over the past several trading sessions, but towards the end of last week the yellow metal started to trend lower in tandem with stocks. Silver and copper followed, leading the way for material declines across metals on Monday morning. Continuing war-related tensions aren’t enough to prop up demand for gold, while the lockdowns across China could’ve exacerbated the trend lower.
 
While real rates (interest rates, minus inflation) are still negative, the price of gold has remained bid as precious metals are traditionally seen as a hedge against risk. With stocks selling off materially last week however, the gold and silver markets started tanking with them.
 

Key Euro Area Data Starts Wednesday

 
The main data posts for the EU this week are taking center stage on Wednesday with German and French consumer sentiment data, followed by a speech by the ECB’s President Lagarde. Further impetus to the European markets should come from consumer prices data from Germany and Spain on Thursday, and broader measures of inflation and GDP growth on Friday.
 

Bank of Japan and Yen Weakness

 
The Bank of Japan will be in focus on the European morning on Thursday, as officials comment on the levels of the JPY, and speculation that the finance ministry could intervene in the market remains ample. Despite the calls for intervention, the market has not been shy to clobber the JPY lower across the board over recent weeks. Paying attention to the Bank of Japan on Thursday is certain to provide some answer to the question whether or not the slump if the Japanese currency continues and how much further can it run.