- The Japanese yen remains under the spotlight after trading to a fresh 34 year low against the US dollar on Friday to finally breach 160. This came after further solid US data at the end of the week and follows Friday’s BoJ policy meeting where rates were left unchanged as expected. Overnight, USDJPY has reversed, with markets witnessing local banks selling as traders suspect official intervention may be on the cards or possibly already occurred. Markets are confused, as today is a bank holiday in Japan, making intervention less likely but not impossible, so investors will continue to monitor.
- Euro area inflation data is on the docket this week, with markets eagerly awaiting the data to see if a June ECB rate cut is finally a done deal. CPI inflation for April is expected to hold steady at 2.4%, held up by higher energy costs. We also look forward to the release of euro area GDP data for the first quarter to see if the region has exited the mildest of technical recessions. After contracting by just 0.1% in both the final quarters of 2023, markets expect the report to show the euro area expanding by 0.1% in the first three months of the year.
- It’s a busy week ahead for US data, with a plethora of labor market data and a Fed policy meeting in the coming days. March’s hot CPI and PCE data has pushed the first rate cut out to the final quarter of the year and markets will look to Chairman Powell to see if he makes a hawkish pivot at the Apr 30 – May 1 meeting. Tuesday sees the release of the much-anticipated Consumer Confidence report, which is expected to soften a touch as inflation remained elevated and the job market cooling. The JOLTs job openings report is out on Wednesday, initial jobless claims Thursday and April’s Non-farm Payroll released on Friday.
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