Dollar off, stocks up amid dovish Fedspeak
Updated Updated Thu, 2025 April 24 09:44
- China denies high level trade talks with US
- Fed officials argue for patience while gauging tariff impact
- Wall Street extends rally on tech boost, easing tariff tensions
- Gold gains amid bargain hunting, all eyes on trade updates
FX: USD sold off after two straight days of buying; that hadn’t been seen since April 4. Stocks were bid which was didn’t help the buck. There was an ABC News report that the Trump administration is reportedly weighing exceptions for some Chinese auto parts. However, there were mixed signals regarding if any high-level trade talks were going on. We had some dovish Fed remarks, with Hammack noting the central bank could move in June if data is clear about the economy’s state. The Fed’s blackout period starts this weekend, ahead of the FOMC meeting on May 7. The key pivot point remains 99.57.
EUR rebounded after two days of selling. The single currency was a middling performer in the majors’ pack. A couple of ECB officials hinted at more policy easing to come due to the disinflationary impact of US tariffs. Key support remains at 1.1274. The recent top is 1.1572.
GBP has followed similar price action to the euro this week. The high is at 1.3423 with support below at 1.3148. But the pound is marginally outperforming on the week. The Times reported that BlackRock CEO Fink is buying up ‘undervalued’ UK assets, and he is more confident about the investment prospects for the UK than this time last year.
USD/JPY moved lower as the yen saw some strength though it pulled back from more gains. US Treasury Secretary Bessent indicated that the US wouldn’t be seeking a specific exchange rate target in its negotiations with Japan. The comments imply a desire for JPY strength (USD weakness) as the US administration seeks to unwind the dollar’s supposed ‘overvaluation’ resulting from its reserve currency status. Resistance is 144.33 and a major support zone just below 140.
AUD moved higher but is consolidating between 0.6350 and 0.6439. The Antipodeans outperformed on the better risk tone. CAD found resistance again around 1.39. The federal election is looming but may not have too much impact on CAD sentiment in the short run, with tariffs front and centre.
US stocks: The S&P 500 gained 2.03% to settle at 5,485. The tech-laden Nasdaq finished up 2.79% at 19,214. The Dow closed 1.23% higher at 40,093. Tech, consumer discretionary and communication services were once again the standout leaders, all rising more than 2%. Only defensive consumer staples were in the red. Alphabet was up over 5% in after hours as it shattered Q1 estimates, raised its dividend 5% and authorised $70bn in buybacks. Q1 profit surged 46%, driven by another strong performance in its search business and a boom in AI-related demand for cloud computing power. Core search and ad business grew nearly 10%. The stock has fallen about 17% this year. IBM sold off as it reported it lost 15 government contracts amid DOGE cuts, although the latest quarter was a strong one.
Asian stocks: Futures are positive. APAC stocks were ultimately mixed despite the positive handover from Wall Street as trade uncertainty lingered. The ASX 200 was led higher by outperformance in mining stocks and tech, with gold producers buoyed by a rebound in bullion. The Nikkei 225 advanced at the open but gradually pared most of its gains. That came after a report that the US told Japan it cannot give it special treatment regarding tariffs during talks held earlier this month. The Hang Seng and Shanghai Comp were subdued following mixed trade negotiation signals from the US. White House officials declared they are not considering something unilaterally, but other reports suggested differently.
Gold found a bid after two days of heavy selling. Treasury yields and the dollar both eased back helping bugs.
Day ahead – UK Retail Sales
We haven’t had much news out of the UK recently, though disappointing government borrowing figures brought the likelihood of more tax hikes in the autumn. Retail sales today will give us a guide on consumer activity with some pullback probable after two resounding beats in January and February. Seasonal issues may also play a part in subduing sales figures.
Otherwise, watching and listening to the wires and trade war headlines is the only name of the game. One investment house kind of summed up well the current back-and-forth dialogue around US-China trade talks – “Calculated China vs Unpredictable US”. Messaging from the Trump administration remains chaotic and confusing. On the other hand, Beijing is staying patient and has less of a need to put a positive spin for trade deals. In this current environment, it’s therefore no surprise that the dollar remains unloved, as it trades around key support/resistance.
Chart of the Day – S&P 500 makes back half its losses…
It’s obviously been a hugely volatile month for the benchmark, blue-chip major stock market index in the US. Prices are now actually down on a little over 2.2% on the month, after dropping into bear market territory at the lows on April 7. That classic capitulation day, of forced selling on high volumes appears to have marked a major low, for the time being.
Prices have made their way back to the 50% retrace of this high to low move at 5,491. The major Fib level (61.8%) sits at 5,646, along with the 50-day SMA. The death cross seen around April 11 appears to have given a false signal. The move higher has also broken a couple of declining trendlines. Support resides at 5,336.
