FX.co ★ Positive US economic data may put pressure on the US dollar

Apparently, the markets are no longer focusing on the dynamics of US government bonds, shifting all their attention again to the situation around the COVID-19 pandemic, as well as to the plans of US President J. Biden to almost double capital gains taxes. In fact, we can say that he has begun to fulfill his earlier commitments during the election campaign to raise taxes in the country.

The US stock market is still attempting to set the mood for all global financial markets. However, that didn't work on Thursday. If profit-taking was clearly observed in the United States after reaching new highs of local stock indices, then on the contrary, there was an increase in demand for company shares in Europe amid strong corporate reporting data of local companies.

The US dollar has been consolidating against the basket of major currencies in the currency market for four consecutive days, which is manifested in the almost sideways dynamics of the dollar ICE index slightly above the level of 91.00 points.

As expected, ECB's final decision did not bring any surprises. All monetary policy parameters were left unchanged.

Today, the market will focus on the publication of a large volume of data on production indicators in both Europe and America. It is expected that the indices of business activity in the manufacturing sector (PMI) of the Euro zone leader, Germany, will plunge from 66.8 points to 65.8 points. Generally in the whole Euro area, it will fall to 62.0 points from 62.5 points. Contrary to the expected values from Europe, the US is expected to increase this indicator for the month of April – from 59.1 points to 60.5 points. The figures of the business activity index in the services sector will also be released, where it is also expected to increase to 61.9 points from 60.4 points.

In addition to these data, the values of new home sales for the month of March will be published, from which positive dynamics is also expected.

We believe that if the American data does not disappoint and turns out to be no worse than forecasts, then this will push up the US stock indexes again after their yesterday's decline, while the national currency will be under pressure.

Forecast of the day:

The AUD/USD pair is consolidating above the level of 0.7700. We believe that the growth in demand for risky assets will support high-yielding currencies, which include the Australian dollar. In this context, the pair may rise to 0.7800.

The USD/CAD pair remains at the lower border of the range of 1.2470-1.2630. If the positive dynamics in the oil market continues today, the lower border of the range may be broken and this will lead to the pair's decline to the level of 1.2400.