Incoming US data to keep the pressure on the USD – DBS

Source Fxstreet

The DXY Index depreciated by 0.5% to 98.9 overnight after failing to push above 100 in the past three sessions. The Fed has entered a blackout period ahead of next week’s FOMC meeting. Expect US President Donald Trump to complain about Fed Chair Jerome Powell again when the committee maintains rates at 4.50% for the third consecutive meeting. Trump’s inability to refrain from interference was evident in his call for Canadians to vote for the '51st State' during their federal election on April 28, DBS' FX analyst Philip Wee reports.

DXY retreats from 100

"Today, consensus will likely be wrong-footed in expecting the US trade deficit to narrow to USD145bn in March from USD147.8bn in February. The Atlanta GDPNow model only started predicting in March that US GDP could contract in 1Q25 from a frontloading of imports to beat Trump’s tariff announcement on Liberation Day (April 3). The same could be said for tomorrow’s advance estimate for 1Q25 GDP growth, which consensus expects will still be positive at an annualized 0.3% QoQ saar vs. 2.4% in 4Q24."

"The expectation for today’s US Conference Board consumer confidence index to decline to 88 in April from 92.9 in February should align with the shocking stock market sell-off triggered by Trump’s tariffs. Expect consumers to worry more about emptying supermarket shelves raising prices and mortified businesses slowing investment and hiring plans. Friday’s nonfarm payrolls are expected to slow to 134k in April from 228k in March. However, consensus sees tomorrow’s PCE inflation slowing to 2.2% YoY in March from 2.5% in February, as businesses have not yet factored in the larger-than-expected tariffs announced on Liberation Day." 

"US Treasury Secretary Scott Bessent wants to push the bill to extend Trump’s 2017 Tax Cuts and Jobs Act (TCJA) by Independence Day (July 4). He may announce a new X-date by the end of this week or next week and advocate increasing the federal debt ceiling by USD 4-5 trillion. The Congressional Budget Office has estimated that the Treasury could exhaust its borrowing authority around August-September, while the Bipartisan Policy Centre estimated a broader window between mid-July and early October."

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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Spot gold closed Friday at $4,378.39, up 0.84% on the day and about 0.8% for the week — its first weekly gain in four weeks — with the intraday high of $4,399.67 leaving it 33 cents shy of the $4,400 line. Gold ETFs have now logged eight straight sessions of inflows, but with the 10-year back above 5% and the dollar index near 100, here is what decides whether this is a reversal or a bounce.
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The US labour market faces its densest data week of the month. JOLTS job openings land Tuesday (7.2 million expected), ADP on Wednesday (70,000 expected), initial claims on Thursday and the September non-farm payrolls on Friday (100,000 expected, down from 162,000). Markets price a 64%-70% chance of another quarter-point Fed hike on October 28. The dollar index sits at 100.77 and the S&P 500 at 7,729.8.
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The 30-year Treasury just hit a 22-year high — and the bond market is not pricing the Fed, it is pricing the deficitThe 30-year Treasury yield closed at 5.56% on 28 September, the highest since June 2004, while the 10-year reached 5.24% and the 20-year 5.60%. The curve has steepened roughly 30bp in eight sessions even as October hike odds sit at 70.3%. That gap is the story: the long end is repricing fiscal and inflation risk, not policy. With PCE on Wednesday and payrolls on Friday, here is what the long end is really saying.
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