PMIs Key to Forex Market as CGT Hike Shakes Wall Street

• A Busy Calendar Day of PMIs
• Major Currencies Remain Strong Against USD
• Stock Market Dips on Biden Tax Plans

It has been a rollercoaster week for markets in the US with a strong swing evident yesterday as new plans to increase capital gains tax began to emerge. This gave some strength to the Dollar yet other major currencies like the Euro managed to meet the move head on. Today brings a busy end to the week with many key data figures to assess for the forex market and those trading.

Upbeat PMIs the Focus of the Day

With US PMIs due later in the day, early focus in the session for those forex trading has been on the Eurozone and UK data releases. These both came in with positive numbers and provided strength to both currencies despite more demand for the Dollar in the wake of yesterday’s news on a possible tax hike.

The Euro maintained its position of strength above 1.20 as the preliminary PMIs show that the economic recovery continues to pick up around the region. The composite number was 53.7 for April which moves above the March number by 0.5. In the UK although Sterling dropped back, the damage appears to have been limited by impressive PMI readings. Their composite number came in at 60.0 which is a huge leap from the month prior.

Pressure Eases as Currencies Hold Firm

There had been some initial pressure as forex brokers noted a strong move back to the Dollar yesterday following a market sell-off that hit both Wall Street and the cryptocurrency markets. The latter has shed more than $200 billion of value in a single day as Bitcoin and other currencies retreated. Traders also moved back to the Dollar initially though today has brought back some positivity and movement back away from the safe-haven currency has ensued.

The hardest hit of the major currencies has been the GBP despite their huge retail sales figures and equally impressive PMIs. The pair has managed to recover some losses but is still trading below 1.39 with many looking to US PMI figures later in the day. Positive data in a similar vein to that of Europe is expected to re-inject some positivity today.

Stock Market Recovering After Rocky Day

Plans for a leap in the capital gains tax rate caught markets on Wall Street off guard yesterday. They had been coasting quietly along without much activity in either direction until news broke. This sent all the major indices sharply downwards and closed on their worst day of the month with the feeling clear about the proposed jump to a 39.6% CGT rate for high earners of over $1 million.

Today looks to bring some silver lining though during a busy earnings season and the early hours trading looks like leading to a positive opening across the board. First-time unemployment claims have also continued to drop with a new pandemic-era low.