'Macro Commentary'May 2024

Financial Report Summary: U.S. Dollar Index ® Performance in May 2024

The U.S. Dollar Index ® closed at 104.57 with a loss of 1.54% to mark the first monthly decline since December 2023 after the demand for the U.S. Dollar weakened.

Market Highlights:

U.S. Dollar Index ® Performance and Economic Indicators:

  • On May 1st the Federal Open Market Committee (FOMC) unanimously agreed to maintain the federal funds rate within the range of 5.25% - 5.50%, after March inflation data accelerated causing concern as policy makers kept their target set at returning inflation to 2%. This news contributed to the bearish sentiment on the day and after reaching a high of 106.38, the U.S. Dollar Index ® closed with a loss of 0.55% at 105.63.

  • Nonfarm Payrolls recorded an unexpected fall after 175,000 new jobs were added in April, short of the anticipated 243,000 and significantly below the upwardly revised March numbers of 315,000. Following this news the U.S. Dollar Index ® closed the day with a loss of 0.24% at 104.92.

  • Annual Core Inflation, excluding food and energy, eased to a three-year low at 3.6% for the period 12-month ending April, matching market expectations and down on the

prior month’s release of 3.8%. The Consumer Price Index (CPI) data eased as expected to a rate of 3.4% in April (12-month ending) from 3.5% in March, matching market forecasts. The U.S. Dollar Index ® recorded the worst daily performance of the month when it closed with a loss of 0.69% at 104.21.


Daily and Weekly U.S. Dollar Index ® Futures Performance:

May Performance of the U.S. Dollar Index ® (USDX)

May was a month of fluctuating fortunes for the U.S. Dollar Index ® (USDX), characterized by mixed economic data releases, Federal Reserve policy decisions, and global market sentiments. The month commenced on a disappointing note as weak employment and manufacturing data, coupled with the Fed's decision to maintain interest rates unchanged, weighed on the U.S. Dollar. However, the following weeks witnessed intermittent rallies and setbacks influenced by inflationary concerns and economic indicators. Despite moments of resurgence, particularly after the release of hawkish FOMC minutes, the U.S. Dollar faced headwinds towards the month-end, leading to its first losing month in 2024. Throughout May, market participants closely monitored economic data releases and central

bank communications for insights into the trajectory of the U.S. Dollar amid evolving macroeconomic conditions.


Detailed Summary:

  • Disappointing Start (May 1st - 3rd): Mixed economic data and the Federal Reserve's decision to maintain interest rates at 5.25%-5.50% contributed to a weak start for the U.S. Dollar Index ® (USDX). After ADP Employment change data fell short of expectations (192,000 new jobs), and ISM Manufacturing PMI disappointed, U.S. Dollar Index ® fell to 105.65 (-0.55%). This downward trend continued on May 2nd and 3rd, with Nonfarm Payrolls missing expectations (175,000 new jobs) and ISM Services PMI reflecting contraction (49.40).

  • Recovery and Setbacks (May 6th - 17th): Following support, U.S. Dollar Index ® rose for three consecutive days but fell on May 9th after retesting the midpoint of the daily Bollinger Bands (20 SMA). However, a rebound on May 10th, despite weak Michigan Consumer Sentiment data, led to a modest gain of 0.09%. The subsequent weeks saw fluctuations influenced by the Producer Price Index data, showing unexpected inflationary pressures, and declining Core Inflation and Consumer Price Index, causing the

  • largest single-day decline in the month (-0.69%).

  • Resurgence and Market Reactions (May 20th - 31st): A resurgence in demand for the U.S. Dollar occurred, particularly after the FOMC minutes signalled a hawkish tone, leading to a gain of 0.29% on May 22nd. Positive S&P Global PMI data on May 23rd further strengthened U.S. Dollar Index ®. However, market sentiment turned bearish towards the month-end after the release of GDP Annualized Q1 report, which indicated lower-than-expected growth (1.3%), resulting in a loss of 0.42%.

  • Month-end Performance: Despite intermittent gains, the U.S. Dollar Index ® closed May at 104.57 (-1.54%), marking the first losing month in 2024, ending the streak of consecutive bullish monthly closes.

May's movements in the U.S. Dollar Index ® were shaped by a mix of economic data releases, Federal Reserve communications, and global market sentiments regarding inflation, interest rates, and economic growth prospects, influencing the trajectory of the U.S. Dollar throughout the month.

June 2024 High Impact Events:

  • Future upcoming high-impact events include, ISM Manufacturing PMI (3rd), ADP Employment Change (5th), ISM Services PMI (5th),

  • Non-Farm Payroll (7th), Consumer Price Index (12th), Fed Interest Rate Decision & Press Conference (12th), Producer Price Index (13th), Retail Sales (18th), Bank Stress Test Info (26th), and GDP Q1 (27th), with potential to influence the U.S Dollar Index.

In summary, May witnessed an overall weak performance on the U.S. Dollar as demand fell significantly throughout the month, influenced by economic data, Fed decisions, and global events, resulting in a notable consecutive monthly increase for the U.S. Dollar Index ®.

S&P (ES) Futures:

  • Closed at 5295.50, experiencing a gain of 4.86% in May 2024.

  • On May 1st, the Fed unanimously agreed to maintain the federal funds rate within the range of 5.25% - 5.50% this contributed to the ES closing lower on the day.

  • Nonfarm Payrolls fell significantly short of expectations and the prior months release, this led to the ES gaining 0.87% on the day, closing at 5154.75.

  • Core Inflation eased, resulting in a gain of 1.22% on the day.

CoinDesk Bitcoin Futures (BMC):

  • Bitcoin moved toward the all-time high at the $74,000 level after almost reaching the $72,000 level in the first three weeks of the month. The price closed at $68,8

up 10.5% for the month.

  • U.S. President Joe Biden vetoed a House Joint Resolution to overturn the Securities and Exchange Commission's (SEC) Staff Accounting Bulletin 121 (SAB 121). This bulletin would require financial institutions holding digital assets for customers to include them on their balance sheets. Critics argue that this guidance makes it challenging for financial institutions to collaborate with digital asset companies

Mini Crude Futures (QM):

  • Mini-Crude closed the month at $77.00 with a loss of 5.49%.

  • The market opened at $81.475 and after reaching a high of $81.55 it dropped to close out the month with a loss.

·         The prospect of delays in cutting the United States Federal Reserve interest rate, weak demand in the United States, and an unexpected rise in U.S. fuel inventories led to downward pressure on the price of crude oil in May.

  • OPEC+ is expected to roll over the current 2.2 million barrels per day (bpd) voluntary production cuts into the second half of 2024 according to oil market analysts. This was to be on the table when producers meet online on Sunday, 2nd June, originally planned to be held in Vienna on Saturday, 1st June.

The voluntary production cuts were expected to expire at the end of June, and they included producers from Algeria, Iraq, Kazakhstan, Kuwait, Oman, Russia, Saudi Arabia, and the United Arab Emirates.


Risk Considerations and Restrictions:

  • Caution for retail investors regarding risks associated with Bitcoin Futures.

  • Warning about potential legal restrictions on distribution in certain jurisdictions.


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The report covers various futures indices, providing an overview of their performance, market conditions, and upcoming events. Investors are advised to consider the associated risks and legal restrictions.