- USD Strengthens Close to New High
- Dovish ECB Prompt Euro Drop
- Stocks Post Losing Holiday Week
The Dollar forex market moved higher again following some very short-term weakness on Wednesday. The continually strengthening Dollar is still creating pressure for other major currencies as it gains momentum. These include both the Pound and Euro which have both weakened even further moving into the Easter holiday. The Euro has not been helped by dovish comments from the ECB President in relation to inflation and rate hikes. These have seen traders move even more into the safe haven USD. Stocks on Wall Street also struggled, closing out another losing week on Thursday with markets closed on Friday to start the holiday.
USD Index at Two Year High
The US Dollar Index, a measure of the currencies strength against a basket of other major currencies, hit a two-year high on Thursday as it touched above the 100-point mark for the first time since early 2020. The move was propelled by traders moving in increasing numbers toward the safe-haven Dollar as equities continued to decline, and US Treasury yields moved in the opposite direction. The only data on the docket for the end of the week is industrial production figures that are unlikely to move the needle.
With risk aversion the dominant force across the market, those forex trading the Dollar may yet see even more strength with nothing of note coming from Europe or the other major economic powers to suggest otherwise. There is still much uncertainty around key issues like inflation and geopolitical tension.
Euro Falls Even Further
The Euro has been one of the major casualties with forex brokers as the Dollar continues to apply downward pressure. This was evident again on Thursday and seems as though it will be the key theme to end the week. The common currency dropped to its weakest level since April 2020 against the greenback.
Trading at below 1.08, the Euro has failed to gather any support or momentum at all in recent weeks. This was not helped yesterday by more dovish comments from ECB President Christine Lagarde. While confirming that QE would cease in the third quarter, her tone did not sit well with Euro buyers with her comments marking a major dip in the currency.
Wall Street Ends Week Lower Again
It was another tumultuous week on Wall Street, this time shortened by the Easter break with the NYSE remaining closed on Friday. Overall for the week, the S&P 500 and NASDAQ are both down more than 2% with the Dow Jones performing relatively better but still losing out almost 0.8%.
Several factors are combining to create a challenging environment for stocks. Not least of these are the red hot inflation numbers with the fastest annual gain in CPI numbers being reported earlier in the week. Big bank earnings also failed to impress while there are more important earnings to be reported next week.