NAGA’s Weekly Recap | May 1 — May 5 — 2023

This week, the US Federal Reserve made a significant announcement, raising interest rates by 25 basis points while hinting at a pause in further rate hikes.

We'll explore how this decision affected US Stocks, the US Dollar, and Gold. Additionally, we'll take a closer look at Apple's strong second-quarter earnings report, and how it impacted the company's stock price.

Finally, we'll examine the performance of the $EUR/USD pair in light of the recent European Central Bank meeting and the US Dollar's decline.

Stay tuned! 

US Fed hikes interest rates by 25 basis points, signals a pause

On Wednesday, May 3, the US Federal Reserve increased interest rates by 0.25%, while also indicating that it may hold off on further rate hikes. The move was made in order to allow officials to evaluate the impact of recent bank collapses, wait for the resolution of the political stalemate over the US debt ceiling, and monitor inflation trends.

The decision was unanimous and brought the Fed's benchmark overnight interest rate to a range of 5% to 5.25%, marking the 10th successive increase since March 2022.

How did US Stocks, the US Dollar, and Gold react to this? 👉 Dive into our market analysis!

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Apple ($AAPL) shares gained after a strong second-quarter earnings report

Apple shares rose after the company reported an all-time high for services revenue and iPhone sales in the first quarter and announced a $90 billion stock buyback.

Apple’s cash flow statement showed an $874 million gain in its investing activities, after a $25.3 billion loss in the same quarter last year. This boosted the company’s second-quarter results as, unlike other tech firms, Apple has not been on a cost-cutting drive, with operating expenses up around $1 billion over the same quarter last year.

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Gold price remains steady at a record high

Buyers are pushing the price of Gold ($XAU/USD) higher, with the metal approaching the $2,050 threshold. The recent increase in Gold's value may be due to the US Dollar's inability to maintain the gains seen in the previous session, as conflicting indicators regarding the country's banking and debt ceiling issues remained.

Additionally, gold's climb can be linked to a dovish Fed’s rate hike and ambiguous US data. Fed Chair Jerome Powell's prudent statements about the current monetary policy being restrictive enough have weighed on the US Dollar, offering a boost to the price of Gold.

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$EUR/USD extends recovery to near 1.1040 as US Dollar Index drops further

Despite a weaker US Dollar, the $EUR/USD pair experienced a decline after the European Central Bank (ECB) meeting on Thursday. The pair briefly dipped below 1.1000 before rebounding and moving away from the 1.1100 level.

The Euro faced difficulties as European bond yields dropped, while the US Dollar weakened despite a drop in equity prices on Wall Street. The Greenback is facing downward pressure due to the decline in US yields, as the market reevaluates its expectations for Federal Reserve (Fed) rate cuts in the latter half of the year.

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This concludes our weekly recap. Have a great weekend and see you next week! 👋