Dollar strengthens amid strong US economic growth

The S&P experiences largest drop in over a year, but futures show some recovery

By Nadia Elbilassy | @Nadia Elbilassy | 16 April 2024

Market close
  • Mary Daly of the San Francisco Fed sees no urgency for rate cuts, citing strong economic indicators.

  • Sterling stays at five-month low against dollar after UK unemployment rate exceeds expectations.

  • US stocks extend decline on rising yields and Middle East tensions.

On the Market Watch:

In currencies

The dollar strengthened as yields on US 10-year bonds reached fresh peaks for the year, contributing to a 4.6% year-to-date increase in the dollar index.

Markets are growing cautious as the likelihood of rate hikes, rather than cuts, increases due to robust economic growth and persistent inflation. Which in turn strengthens the dollar further.

Mary Daly, president of the San Francisco Fed, restated the perspective that there is currently no pressing need to implement rate cuts, citing the strong economic growth, resilient labor market, and sticky inflation.

The Sterling remained at a five-month low against the dollar following reports of a higher-than-expected increase in Britain's unemployment rate. The GBP/USD pair was last seen hovering near 1.2450.

UK data

The UK's unemployment rate to 4.2% from 3.9%, a figure surpassing economists’ forecasts. However, the Office for National Statistics noted some volatility in its data due to ongoing survey updates.

Regular wages excluding bonuses grew by 6.0% year-on-year, albeit slightly lower than the previous period's 6.1% increase. Indicating a slowdown in wages as well.

Wall Street

Yesterday, US stocks extended their decline amidst increasing yields and apprehensions surrounding the conflict in the Middle East. The S&P registered a 2.6% drop over two days, marking its most significant decline in over a year.

Futures turned green today with the S&P holding steady near 5,070 and the Dow near 37,961.