Forex Analysis: 20 May 2024 FX And Stocks Weekly Review

by | May 20, 2024 | Forex Analysis

World Currency Notes with text Forex Analysis 20 May 2024 - ForexTabs

Forex Markets Analysis 20 May 2024

Currencies:

Last week saw significant movements in the forex markets, driven by key economic developments:

  • U.S. Dollar: The Dollar Index (DXY) fell sharply following softer-than-expected consumer price index (CPI) figures, reinforcing beliefs that disinflation trends may resume.
  • Federal Reserve: The optimistic inflation report spurred speculation about the Federal Reserve potentially easing its monetary policies earlier than expected, possibly as soon as this fall.
  • EUR & GBP: Both the euro and the British pound reached multi-month highs against the U.S. dollar, bolstered by the shifting expectations in U.S. monetary policy.
  • Precious Metals: In the commodities sector, gold approached record highs, while silver hit its highest price since 2013.

Upcoming Economic Events: This week’s economic calendar is lighter, featuring the FOMC minutes and May S&P Global PMI results. Markets may see some consolidation as traders anticipate more significant catalysts.

  • UK Focus: The release of April’s inflation data on Wednesday will be pivotal. A higher-than-expected inflation rate could diminish the likelihood of a Bank of England rate cut in June, while a lower rate may confirm it.

Stock Market:

Last week was record-setting for U.S. stock markets, buoyed by cooling inflation fears:

  • Major Indices: The Nasdaq Composite rose over 2%, the S&P 500 grew by more than 1.5%, and the Dow Jones Industrial Average broke the 40,000 mark for the first time.
  • Key Earnings: Attention this week is on Nvidia, with its earnings expected to highlight a significant increase. Also, results from Target, Palo Alto Networks, and Lowe’s are on the radar.

Economic Updates:

  • Inflation and Interest Rates: Core CPI rose by 3.6% from the previous year, marking the lowest annual increase in three years, leading investors to expect up to two rate cuts this year.
  • Fed’s Projections: Market sentiment is aligning with the Fed’s outlook of two to three rate cuts in 2024. BMO Capital Markets anticipates the S&P 500 to close the year at 5,600, indicating a 7% rise.

Analyst Insights:

  • Fed Meeting Minutes: Scheduled for release on Wednesday, these are expected to offer insights into the Fed’s policy discussions, with Bank of America’s Michael Gapen suggesting they might reveal a more hawkish stance than anticipated.
  • Equity Strategy: Deutsche Bank’s Binky Chadha has adjusted his year-end S&P 500 target up to 5,500 from 5,100, driven by strong earnings and a favorable macroeconomic landscape.

Cryptocurrencies:

  • Bitcoin: Remained stable at $62,341.
  • Ether: Gained 1.71%, rising to $3,000.

Stay tuned to ForexTabs.com for daily updates and in-depth analysis of forex, stocks, and cryptocurrencies as you navigate through the financial landscape.