Equity markets looked to be heading into the abyss during yesterday’s morning session but US stocks turned green and all closed higher, snapping a three-day losing streak. The Dow and S&P are still on track for their worst week since late January even though the former enjoyed its best day in six weeks, while the Nasdaq remains around 7% below its all-time high. European bourses are all pointing to a better final session in what has been a tumultuous week for risk markets.

Dollar downtrend still intact

The dollar’s jump higher after Wednesday’s knockout inflation data paused below the 91 level in the DXY and sellers are in this morning as US bond yields pare their week’s move higher. While surging prices are a global issue, Fed officials have been sticking to the party line so far with speakers overnight again reassuring markets about the transitory nature of inflation. They also signalled that rates won't rise until policymakers see inflation either above target for a long time or excessively high.

DXY printed a narrow range day yesterday and failed to push higher with the 100-day moving average sitting just above the 91 psychological mark. The end of March highs look a lifetime away with the down trendline still in play. Bears will be targeting the end of April low around 90.45 to confirm the route back to this week’s lows.

US Retail sales and industrial production data are in focus today with sales expected to remain strong after the blockbuster report in March. Stimulus checks from March have been carried over into April with analysts expecting a reading of 1.1%.

GBP holding onto gains

GBP/USD has come off the levels not seen since February, but the pair crucially found support above the 1.40 floor/ceiling. Sellers tried to push prices through here yesterday but the performance by stocks and dollar selling has held up cable. Progress on the Indian variant of the virus and any potential new lockdown measures is not having an effect as yet. Otherwise, the next phase of reopening is due to happen this coming Monday in the UK, with sterling the top major performing currency so far on the week.

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