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weekly digest

US economic data disappoints the markets [Weekly Digest]

Tue, 04/25/2023 - 08:01

17.04.23 - 21.04.23

Results of the previous week

PL +5.12%            

NG +4.75%


COCOA +2.26%


HO -5.78%


XU -3.48%


NQ -1.06%


US indices saw a moderate drop. Their growth is being hindered by mixed corporate reporting. Macroeconomic reports are not particularly encouraging, either. The real estate market data was worse than expected, and the number of unemployment benefit claims for the week was higher than forecast as well. It goes without saying that the US Federal Reserve can't raise the rate sharply off the back of weak data. But at this point in time, the markets aren't able to develop an upwards rally.         

The currency market recorded mixed dynamics. European currencies have stagnated, which appears to be a more technical correction. At the same time, in the second half of the week after the publication of Thursday's data, USD began to fall. The fact is that the reports cause the market to expect the Fed to take a pause on raising the rate in June.     

Brent crude prices have moved away from the recent local high. Weak economic performance and concerns about interest rate hikes across a number of central banks are putting pressure on energy. All of this adds to uncertainty about the recovery of oil demand this year.

Key events of the current week


The US. Durable goods orders










The indicator for durable goods orders does not show a uniform trend. But in the last two months it has remained in the negative zone, signalling a decline in interest in high-value goods. And this is a rather alarming signal, since in such a situation, there is usually no need to invest in production. However, the negative trend is expected to reverse and the indicator could then show growth. If the report matches the forecasts, this could benefit the real sector and stock indices.For example, the S&P 500 (ES) could return to the 4191.50 mark.


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The US. GDP growth rate










Despite the tightening of monetary policy by the Fed, the US economy shows relative stability. However, inflation is still above the target set by the regulator. And this means that, at the very least, the Fed will keep the rate at current levels. That said, it is the state of the economy that will be the decisive factor for the Fed in making a decision on monetary policy. Economic growth is expected to slow down somewhat. And this means that the regulator will still have to act less aggressively than before.This would put the greenback under pressure, In this case, GBP/USD could take aim at the 1.2500 mark.




The eurozone. GDP growth rate










The sanctions imposed by the EU on Russia have not gone without consequences for the European economy. In addition to high inflation, it has faced a slowdown in growth, partly due to the fact that a number of companies have downsized amid relatively high energy prices. In addition, rising prices and slower growth in wages lead to a decline in real household earnings, which has a negative impact on consumer activity. Against this backdrop, a decline in GDP growth to 1% from 1.8% seems entirely justified. If the report matches expectations, the euro could find itself under short-term pressure.In such a scenario, the EUR/USD pair is capable of targetting a move towards 1.0830.




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