On April 22nd, data released by the US Department of Commerce showed that total retail sales for March increased by 1.7% month-on-month, surpassing the market expectation of 1.4% and exceeding the revised February growth of 0.7%. Rising fuel prices, driven to their highest level since 2022 due to the Iran conflict, led to a significant 15.5% surge in spending at gasoline stations, which was the primary driver of the overall figure. Excluding autos and gasoline, sales still rose by 0.6% month-on-month, also beating the expected 0.3%. The "control group" sales, which track core consumption contributions to GDP, increased by 0.7%, marking the highest growth since last August and indicating that the uptrend was broad-based rather than solely driven by oil prices. This better-than-expected performance alleviated some market concerns about the resilience of US consumer spending. Analysts at Bank of America attributed the strength to continued injections of tax refunds related to stimulus measures and the relatively limited impact of stock market declines from the Iran conflict, which have not yet substantially affected consumption among higher-income groups through wealth effects.
Furthermore, according to informed sources, influenced by the uncertainty stemming from the Iran situation, the Bank of Japan is currently leaning towards keeping interest rates unchanged at its upcoming monetary policy meeting next week. Despite this, policymakers remain committed to raising borrowing costs in the coming months. The sources indicated that, given the highly volatile situation in the Middle East and the ongoing uncertainties for Japan's economic outlook, the Bank of Japan appears in no rush to act at its April 28th meeting. However, as financial conditions remain extremely accommodative, even if the overnight call rate is maintained at 0.75% this month, the bank is likely to maintain its consistent stance that the benchmark interest rate must continue to be raised as long as conditions permit. This stance is expected to further reinforce market expectations for a potential rate hike in June.
Key data to watch today includes the UK's March CPI year-on-year, UK March Retail Price Index year-on-year, UK March unadjusted Input PPI year-on-year, and the Eurozone's preliminary April Consumer Confidence Index.
Gold/USD Gold declined in a volatile session yesterday, falling below the 4700 level to hit a 6-day low, and is currently trading around 4770. Besides profit-taking exerting downward pressure, a rebound in the US dollar index, supported by lingering Middle East uncertainty and robust economic data, was also a significant factor pressuring gold lower. Resistance is noted near 4850 today, with support around 4700.
USD/JPY USD/JPY edged higher in a choppy session yesterday, closing with modest gains and is currently trading around 159.20. The primary support for the pair's climb was a rebound and gain in the US dollar index, bolstered by strong economic data and safe-haven demand. Additionally, expectations that the Bank of Japan will stand pat in April also provided some underlying support for the pair. Resistance is eyed near 160.00 today, with support around 158.50.
USD/CAD USD/CAD moved higher in a fluctuating trade yesterday, closing slightly up and is currently trading near 1.3650. Aside from short-covering providing some support, a rebound and gain in the US dollar index, fueled by factors including positive economic data, also contributed to the pair's strength. However, rising crude oil prices limited the pair's upward momentum. Resistance is seen near 1.3750 today, with support around 1.3550.
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