Dollar consolidates Thursday’s gains as focus shifts to PMI data, Fedspeak

The greenback managed to outperform its rivals on Thursday as the benchmark 10-year US Treasury bond yield hit its highest level since early April at 1.706%. The cautiously optimistic market mood, however, seems to be limiting the dollar’s gains against its rivals on Friday with the US Dollar Index staying flat around 93.70 after snapping a six-day losing streak. IHS Markit will release the preliminary Manufacturing and Services PMI reports for Germany, the euro area, the UK and the US. San Francisco Fed President Mary Daly and FOMC Chairman Jerome Powell will be delivering speeches at 1400 GMT and 1500 GMT, respectively.

Macro data: The data from the US showed on Thursday that the weekly Initial Jobless Claims declined to 290,000, the lowest reading since March 2020. On a negative note, the Philly Fed Manufacturing Index fell to 23.8 in October, missing the market expectation of 25. In the euro area, the Consumer Confidence Indicator dropped to -4.8 in October’s advanced reading from -4. On Friday, the UK’s Office for National Statistics reported that Retail Sales and Retail Sales ex-Fuel decreased by 0.2% and 2.6%, respectively, in September.

Wall Street: Heightened hopes for US lawmakers reaching a deal on US President Biden’s spending bill provided a boost to US stocks on Thursday and the S&P 500 notched a new record high of 4,551. US stock index futures are trading mixed in early European session despite reports revealing that the Chinese real-estate giant Evergrange made a payment of $83.5 million on bond interest.

EUR/USD failed to break above 1.1670 in the first half of the week and closed in the negative territory below 1.1650 on Thursday. The pair stays relatively quiet as investors await October PMI figures. European Central Bank (ECB) Governing Council member Ignazio Visco said that supply bottlenecks could last longer than expected.

Gold is struggling to gather bullish momentum but continues to trade in the upper half of its weekly range above $1,780. XAU/USD could have a difficult time clearing $1,800 unless fueled by falling US T-bond yields.

GBP/USD seems to have lost its footing following the disappointing Retail Sales data early Friday and the pair is posting small daily losses below 1.3800.

Cryptocurrencies: Following the record-setting rally, Bitcoin staged a correction and lost more than 5% on Thursday. Nevertheless, BTC continues to hold above $60,000 ahead of the weekend. Ethereum reversed its direction after coming within a touching distance of its all-time high of $4,385 but looks to regather bullish momentum with buyers defending $4,000.

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