Market Wrap – Dollar Doldrums

The US dollar continued to lose ground during the US trading session as the EURUSD pair firmed above the 1.1000 level and the GBPUSD pair continued to build strength.   

Weakness in the US dollar currency added to risk taking, although the Nasdaq was weighed down by Tesla as the electric automobile makers share price sank to its lowest of the year so far.

Naturally, the move lower in Tesla’s share price dragged down the Nasdaq100, as it feels close to 1%. The S&P500 also started to move lower as tech-related stocks sank.

The US Commerce Dept also issued benchmark revisions to retail sales and that’s led to a positive change to the March data, with Retail sales -0.6% vs -1.0% initially.

Ex autos were adjusted to -0.4% vs -0.8% initially, and Ex autos and gas from0.3% vs -0.3% initially. And Ex autos, gasoline, building materials and food service -0.3% vs -0.3% initially.

Elsewhere, the Dallas Fed manufacturing PMI came in at -23.4 vs -15.7 prior. This is the lowest reading since July, but the underlying numbers aren’t as bad as the headline as there are bright spots.

The first quarter came in about as expected, although all markets weakened with the exception of automotive. There are signs that inventories are building quickly in auto, so expect that market to weaken soon.

The initiators of the survey said “Almost all of our customers have high inventories from overbuying last year. So, they are all cutting back on ordering new inventory.”

They added that “We hear from many others in our industry, and they are all saying the same thing: that it’s gotten slower without any signs of turning around in the near term.”