The US Nasdaq and S&P 500 continued their upward trend and once again hit all-time highs. The rise in stock prices was driven by strong interest in artificial intelligence. Shares of chip manufacturers also gave the indices' performance a big boost. The US stock market also received a boost from investor expectations about a potential ceasefire deal between Iran and the United States.
The forex market saw mixed dynamics. New US strikes against Iran provided the dollar with moderate support as investors' risk appetites wane. The New Zealand dollar was an exception. It strengthened against its US counterpart following hawkish rhetoric from Reserve Bank of New Zealand (RBNZ) officials regarding monetary policy.
Brent crude prices fell to around $91 per barrel, losing approximately 5%. Hopes for the signing of an agreement between the US and Iran and the potential reopening of shipping lanes through the Strait of Hormuz put pressure on oil prices.
Eurozone: Inflation rate
Energy prices remain high. The blockade of the Strait of Hormuz is leading to fuel shortages and, consequently, rising fuel prices. This inevitably impacts the cost of goods and services. The Eurozone has also felt the effects of this factor. Global analysts expect inflationary pressures in the region to intensify. Rising inflation is fuelling expectations that the European Central Bank will raise its key interest rate, which would be good news for the euro. In this context, the EUR/USD could rise to 1.1780.
United States: Services PMI
The US services sector remains fairly resilient, with the Purchasing Managers' Index remaining in the growth zone. This is a positive sign since the sector accounts for approximately 75% of the country's GDP. Analysts nevertheless expect the index to stay above 50 (the growth zone) but decline versus the previous period. With inflation rising, it won't prompt the Fed to cut its key interest rates. However, a decline in this key indicator is negative for the dollar in the short term. In this scenario, USD/JPY could decline towards 158.40.
United States: Non-Farm Payrolls
The US labour market appears to be beginning to show signs of a cooldown. Global analysts expect the pace of new job growth to slow and the unemployment rate to rise. The labour market's health continues to be a key factor for the Federal Reserve's monetary policy decisions. However, with inflation moving higher due to rising energy prices, the regulator won't cut its key interest rate. Lower macroeconomic indicators are bad news for the dollar. At the same time, the US dollar's weakening is supporting assets denominated in it, particularly gold. In this context, XAU/USD could return to around 4,575.00.