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Markets Update: Nikkei at 33 Year High as Fed's Powell Speaks Later
Today's important market events:
[CAD] Core Retail Sales (MoM - Mar) - 14:30 CEST
[USD] Fed Chair Powell Speaks - 17:00 CEST
[EUR] ECB President Lagarde Speaks - 21:00 CEST
Asia-Pacific stocks were mostly higher on Thursday, following the tech-led gains on Wall Street where the Nasdaq outperformed and the S&P 500 printed a 9-month high. U.S. President Joe Biden held a call with the debt ceiling negotiation team and his team said that steady progress is being made in talks. European equity futures are indicative of a higher open, with the Euro Stoxx 50 up 0.4% after the cash market closed up 1.0% yesterday.
The US dollar index (DXY) was steady around a 2-month high above 103.00, supported by strong US data and hawkish Fed speak. The focus now turns to Fed Chair Powell's panel discussion later to see if he adds further to the hawkish momentum.
The euro (EUR/USD) languished at the prior day's lows beneath 1.0800 after recent dollar strength. ECB's de Guindos said that there is still scope to keep raising rates, but most of the tightening has already been done.
The British pound (GBP/USD) failed to make any meaningful recovery and sits just below the 1.24 mark after yesterday's selling pressure. The recent slew of BoE commentary provided very little to shift the dial.
The Japanese yen (USD/JPY) took a breather after recent advances, but with the pullback limited by the risk tone and yield differentials.
The Australian dollar (AUD/USD) and New Zealand dollar (NZD/USD) were kept afloat due to their high-beta statuses and with New Zealand Trade Balance at a surplus.
The People's Bank of China (PBoC) set the USD/CNY mid-point at 7.0356, slightly weaker than expected.
The Mexican Central Bank kept its policy rate unchanged at 11.25%, as expected. Banxico stated that inflation expectations for 2023 decreased, but those for the longer-term remained relatively stable at levels above target. Inflation is still projected to converge to the 3% target in Q4 2024.
In fixed income, 10-year US Treasury yields were contained after falling to their lowest levels since March. This was in the aftermath of strong Philadelphia Fed data, a fall in jobless claims, and hawkish comments from Fed officials Logan and Bullard.
German bund yields remained depressed after prices trickled beneath the 134.00 level. 10-year Japanese government bond (JGB) yields suffered amid spillover selling from global counterparts and after weaker demand at an enhanced liquidity auction for long- to super-long JGBs.
Crude oil futures gained in tandem with the constructive mood, but with upside limited by recent dollar strength. Hawkish Fed rhetoric and firm US data releases spurred bets for a Fed rate hike in June. Saudi Arabia's Energy Minister said coordination with OPEC+ countries is a cornerstone of the efforts to enhance the stability of oil markets and maintain their balance. Spot gold prices eked mild gains, but upside was restricted by a steadfast dollar and lack of haven demand. Copper futures eventually edged higher amid the mostly positive risk environment, atoning for some of yesterday's weakness which was mainly a function of the advances in the greenback.
Looking ahead, key economic data and events include:
German producer prices (0.3% actual)
ECB Economic Bulletin - 10:00 CEST
Speeches from Bank of England (BoE) Chief Economist Huw Pill, European Central Bank (ECB) President Christine Lagarde and ECB Executive Board member Fabio Panetta, and Federal Reserve (Fed) Chair Jerome Powell, Fed Governor Lael Brainard, and Fed Governor Christopher Waller.
Investors will be closely watching these events for any signs of how central banks are planning to tighten monetary policy in the face of rising inflation.
General news - Information source from multiple newswires.
The article and the data is for general information use only, not advice!
The Trade Academy Team
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