Quiet trading day ahead, will ECB and Fed steer the forex markets?



With only two class data on the agenda, yesterday brought a session of business led, technology. Both the ECB and the Fed spokesmen kept the new records largely under wraps. As a result, the US yield curve has reversed slightly with the 2-y yielding slightly while the 10 and 30-yi yield slightly below 2.5 bps. US housing data published with housing was better than expected (1420k) but admittedly less than expected (1413k). Fed’s Bostic He avoided March points supporting one more rate hike in May and kept the policy rate above 5% for some time. The Fed’s Bullard maintained a hawkish tone in an interview with Reutersbecause he likes the way the policy is extended 5.5%/5.75%. That’s one push back on the idea that the US economy is headed for a recession, with a strong labor market and health care used to support spending. of the German region showed a similar, lower trend with the 2y yield adding 2.7 bps. The 30-year yielded 1.8 bps. Lane is the ECB’s chief economic officer indicated that the May rate hike is reasonable, with data to determine the extent of the move. He does not rule out a 50 bps step. In equity markets, Europe (Eurostoxx 50 + 0.60%) outperformed the US (major numbers did not change). The money no profit was made from Bullard’s words. Elsewhere, the DXY eased from 102.10 to 101.75. The EUR/USD rebounded to close at 1.0972. Sterling Earlier attempts were made to use strong labor market data, but the opportunity slowly disappeared. EUR/GBP closed the day low at 0.883.

There is no high quality (eco) news to guide trading this morning. Asian balance most trade with low losses. US yields are rising (1-3 bps) following the expected high UK CPI data (cf infra). The currency is gaining a few ticks (USD/JPY 134.35; EUR/USD 1.0965). After today, there is little eco data in the US and EMU. The comments of ECB’s Lane, Knot, de Cos and Schnabel should be taken seriously. Later this evening, the Fed will publish the Beige Book, preparing for the May 3 policy meeting. The EUR/USD trade for now is driven by a short-term consolidation factor between 1.0831 and 1.1076 . In stock markets, the US 2-ya and 10-y yields are facing sharp resistance near 4.25% and 4.64%.

March UK price data came in well ahead of expectations. The increase in the headline CPI rose to 0.8% M / M and 10.1% Y / Y (0.5% and 9.8% expected). Inflation was recorded at 6.2% while a decrease of 6% was expected. The PPI was higher than expected. Combined with yesterday’s strong labor market data, the report gives the BoE little choice but to continue its hike at the May 11 meeting. Sterling soon after the release. The EUR/GBP fell to the 0.882 zone. However, yesterday’s price action showed caution to draw early conclusions.

News and comments

Virag is the deputy governor of the central bank of Hungary It said that the “multi-step” interest rate normalization could begin at next week’s monetary policy meeting. The MNB may in the first instance change the width of the interest rate curve by cutting the upper limit “by a large margin”. This high collateralized loan rate stands at 25%. A change in the O/N 18% tender rate, the de facto policy rate, is only on the agenda in the upcoming policy meetings. Hungarian inflation decreased slightly from 25.4% in February to 25.2% last month. Virag, however, expects disinflationary activity to accelerate from April. Helping to fight the MNB’s expansion is the HUF’s efforts. Increased by 18% premium, The forint has appreciated from a short time above EUR / HUF 400 in mid-March to a low of 370 yesterday. At EUR/HUF 371.09, the currency closed its strongest level since April 2022.

EU negotiators yesterday approved a final version of a €43bn plan to turn Europe into a major player in the market of semiconductors. after “only” 14 months. The country is very interested in increasing its own products after the pandemic and disruption of supply chains and in the context of increasing geopolitical tensions. The European Union aims to make up 20% of global production by 2030, up from 10% now. The Chips Act allows EU member states to provide financial support for “first-of-a-kind” semiconductors. It is the first of many business plans to let governments get more involved in the supply chain.

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