US Dollar Advances as Oil, Gold Declines Weigh on Commodity Dollars

On the economic front, downward pressures persist for the US as weakness seeps throughout the labor market. Indeed, fresh data showed that Initial Jobless claims increased 378K from 353K, with Continuing claims accelerating to a four year high as the number of unemployment claims rose to 2865K from 2835K. Growth prospects remains low as the Leading Indicators index fell for the fifth consecutive month to minus 0.3 percent from minus 0.1 percent. The only positive outcome was the Philadelphia Fed survey, which rose to minus 17.4 from minus 24.0, but did little to lift the growth outlook as it remains in negative territory for the fourth straight month, signaling contraction in the manufacturing sector. 

The stock markets recovered yesterday’s decline as Nike’s better than expected earnings lifted spirit - with the markets looking to post its first weekly gain this month. As a result, the DJIA rose a bolstering 261.66 points to bring the average to 12,361.32, with only five of the big 30 declining. Among the broader indices, the S&P500 gained 31.09 points to raise the index to 1,329.51, with advancing issues more than doubling the decliners.

As the securities market picked up, investors turned away from the safe haven of risk free bonds – pushing US Treasury prices lower. Consequently, the benchmark 10-Year yield edged up to 3.34 percent from 3.33 percent, while the 2-Year yield surged to 1.61 percent from 1.46 percent.

Looking ahead, we expect the markets to remain silent till Monday as Good Friday shortens the eventful trading week. For Monday, we expect volatility to pick up as the US dollar snapped back before the long weekend, and may see upward pressures to persist as accumulation of the US dollar picks up.