Crypto Comeback, USD Attempts to Stabilize
Yesterday we wrote that “the high CPI print couldn't keep the dollar bid, neither will the minutes” and that was exactly what unfolded. The dollar gave back all its FOMC minutes gains and more in a broad slump.
US economic data is also beginning to draw some concern on signs of flagging reopening momentum. The Philly Fed was at 31.5 compared to 41.5 expected. To be fair, that's still an extremely strong reading but numbers are beginning to consistently undershoot economist forecasts. That dynamic has pushed the Citi US economic surprise index into negative territory for the first time since early in the pandemic.
Weekly initial jobless claims were very close to expectations at 444K versus the 450K consensus but that's still a stubbornly high level historically and will need to be much closer to pre-pandemic levels near 250K to signal a recovery.
In the crypto market there was a remarkable comeback. Bitcoin hit $42,500 which corresponds nicely with the early week lows that repeatedly provided support before breaking down in spectacular fashion. After touching that level it fell back to $38,500 before steadying around $40,000. Bitcoin continues to be a remarkable example of a chart following the technicals and that makes sense given the dearth of fundamentals news.The week closes with some important economic data points including the US services and manufacturing reports from Markit along with Canadiaan retail sales for March along with the advance April estimate. We'll mostly key on the Markit services report as we fear another substantial miss could quickly change the narrative towards US economic disappointment.
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