The US dollar continues to struggle through April. Following a 2.25 per cent drop in March, the US Dollar Index, a measure of the value of the greenback against a weighted basket of major currencies, is currently 0.77 per cent lower at the time of writing.
The index now finds itself preparing for another test of those one-year lows at 100.80, where it previously found strong support in March.
Since my last column, markets seem to be positioning more towards a Federal Reserve pivot, or a shift in policy.
While much of the rhetoric through to the end of 2022 and early 2023 was focused on how a hawkish Fed would drive rates to control inflation, the overall market sentiment now is that a pivot is even more entrenched.
Of course, last time around, we had the news of the Silicon Valley Bank collapse, which was a cause for concern in the recent Federal Open Market Committee minutes but inflation data from the US has showed signs of a slowdown.
The consumer price index dropped to an annualised 5 per cent in March, down from 6 per cent previously — the lowest level since May 2021.
Meanwhile, core CPI year on year ticked higher to 5.6 per cent versus a previous reading of 5.5 per cent.
This was the first time since 2020 that the core print came in higher than the overall reading.
Recall that the core CPI is stripped of energy and food prices. So the fact that this reading was higher means that the overall CPI may not hint at such a slowing of US prices.
At last glance, markets are currently pricing in an 86.7 per cent chance that the Fed will raise interest rates to either 5 per cent or 5.25 per cent — this is up from a 65.2 per cent probability a week ago.
While markets are pricing in a 25 basis point hike in May — this is on the back of more than 400 bps of hikes over the past year — they seem increasingly optimistic of pauses in rate rises in subsequent meetings.
Ultimately, this will yield a more risk-on mode in markets, with more anaemic conditions for dollar-long positions and the greenback expected to trade sideways with a bearish bias into the start of the summer.
Also adding to the risk-on mood has been a strong start to first-quarter earnings.
The big banks were the first to report earnings last week, with heavyweights Wells Fargo, Citi and JP Morgan Chase all reporting stronger-than-expected earnings.
Keep an eye out for more earning reports this week, with stronger results expected to continue adding weight to US indices.
The US500, better known as the S&P 500 index, has been on its own mini renaissance since mid-March, a period in which it gained more than 7.8 per cent.
Fundamentally, momentum will continue to be driven by Fed action and earnings, while technically the index looks good to test 4,300 levels before June.
One of the other key talking points has been the performance of gold.
The precious metal has been on an absolute tear in April — smashing through $2,000 to print a high of $2,048.
Watch: US Federal Reserve chief warns of 'pain' in reducing inflation
That’s the highest level in 13 months and just 1.3 per cent off its all-time intraday high of $2,075 experienced in August 2020.
The movement in gold has been particularly intriguing. Traditionally, the precious metal is seen as a hedge against inflation.
With inflation showing signs of slowing over the past two months, we would expect more anaemic gold prices.
However, it is the risk-on mood that has resulted in a breakout from the channel of $1,900.
At the time of writing, the precious metal was holding above $2,000.
While it could not sustain more than $2,030 for very long, I expect choppy trading, with the metal to bounce around in the channel between $1,980 and $2,050 in the weeks ahead.
Gaurav Kashyap is risk manager at Equiti Securities Currencies Brokers. The views and opinions expressed in this article are those of the author and do not reflect the views of Equiti Securities Currencies Brokers
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Torque: 400Nm at 1,750-4,000rpm
Transmission: 8-speed auto
Fuel consumption: 9.1L/100km
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House-hunting
Top 10 locations for inquiries from US house hunters, according to Rightmove
- Edinburgh, Scotland
- Westminster, London
- Camden, London
- Glasgow, Scotland
- Islington, London
- Kensington and Chelsea, London
- Highlands, Scotland
- Argyll and Bute, Scotland
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Director: Joseph Kosinski
Rating: 4/5
Tailors and retailers miss out on back-to-school rush
Tailors and retailers across the city said it was an ominous start to what is usually a busy season for sales.
With many parents opting to continue home learning for their children, the usual rush to buy school uniforms was muted this year.
“So far we have taken about 70 to 80 orders for items like shirts and trousers,” said Vikram Attrai, manager at Stallion Bespoke Tailors in Dubai.
“Last year in the same period we had about 200 orders and lots of demand.
“We custom fit uniform pieces and use materials such as cotton, wool and cashmere.
“Depending on size, a white shirt with logo is priced at about Dh100 to Dh150 and shorts, trousers, skirts and dresses cost between Dh150 to Dh250 a piece.”
A spokesman for Threads, a uniform shop based in Times Square Centre Dubai, said customer footfall had slowed down dramatically over the past few months.
“Now parents have the option to keep children doing online learning they don’t need uniforms so it has quietened down.”
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The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
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7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
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Conflict, drought, famine
Estimates of the number of deaths caused by the famine range from 400,000 to 1 million, according to a document prepared for the UK House of Lords in 2024.
It has been claimed that the policies of the Ethiopian government, which took control after deposing Emperor Haile Selassie in a military-led revolution in 1974, contributed to the scale of the famine.
Dr Miriam Bradley, senior lecturer in humanitarian studies at the University of Manchester, has argued that, by the early 1980s, “several government policies combined to cause, rather than prevent, a famine which lasted from 1983 to 1985. Mengistu’s government imposed Stalinist-model agricultural policies involving forced collectivisation and villagisation [relocation of communities into planned villages].
The West became aware of the catastrophe through a series of BBC News reports by journalist Michael Buerk in October 1984 describing a “biblical famine” and containing graphic images of thousands of people, including children, facing starvation.
Band Aid
Bob Geldof, singer with the Irish rock group The Boomtown Rats, formed Band Aid in response to the horrific images shown in the news broadcasts.
With Midge Ure of the band Ultravox, he wrote the hit charity single Do They Know it’s Christmas in December 1984, featuring a string of high-profile musicians.
Following the single’s success, the idea to stage a rock concert evolved.
Live Aid was a series of simultaneous concerts that took place at Wembley Stadium in London, John F Kennedy Stadium in Philadelphia, the US, and at various other venues across the world.
The combined event was broadcast to an estimated worldwide audience of 1.5 billion.
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Ain Dubai in numbers
126: The length in metres of the legs supporting the structure
1 football pitch: The length of each permanent spoke is longer than a professional soccer pitch
16 A380 Airbuses: The equivalent weight of the wheel rim.
9,000 tonnes: The amount of steel used to construct the project.
5 tonnes: The weight of each permanent spoke that is holding the wheel rim in place
192: The amount of cable wires used to create the wheel. They measure a distance of 2,4000km in total, the equivalent of the distance between Dubai and Cairo.
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UAE currency: the story behind the money in your pockets
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
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- DLD registration fee can be paid through banks or credit cards at zero interest rates