FOREX News Today

BoJ refrained from easing policy, causing widespread disappointment in markets given the backdrop of a strong yen and low inflation. Data today showed April headline CPI unexpectedly falling back into deflation at -0.1% y/y, while the core reading — which the BoJ is mandated to target at 2% — dove to a three-year low of -0.3% y/y, down from 0.0% in March. The central bank left the deposit rate at -0.1% and the annual pace of QQE purchases at Y80 tln. The BoJ has left policy on hold in both of the meetings since its Jan-29 gathering, when it decided to introduce NIRP (implemented on Feb-12). The central bank once again pushed back its forecast for driving inflation to its 2% target to “during fiscal 2017” (once upon a time it was 2015). The statement maintained that the economy has “continued its moderate recovery trend,” but warned that growth would be lower due to weak export performance and kept the door ajar for further easing.

Reserve Bank of New Zealand held rates steady at 2.25% after cutting by 25 bps to 2.25% in March. The 2.25% rate setting is a record low. The March cut was driven by a concern over eroding inflation expectations. Low headline inflation was again noted, with a material decline in shorter term expectations still front and center at the Bank. Despite the lack of action in April, more rate cuts could be in store: Governor Wheeler said “Further policy easing may be required to ensure that future average inflation settles near the middle of the target range.” That’s a repeat from March.

Fed Stuck in Neutral All Over Again: The Fed had a few tricks up its rhetorical sleeves in April, but made few meaningful changes to the economic or policy outlooks in its steady decision. Growth and inflation remained finely balanced and any reference to the “balance of risks” was accordingly left out of the statement, as the FOMC continues to straddle the fence on the next move. Some excitement came with the apparent departure of “global economic and financial developments,” though this snuck back in later in the statement. A closer look at the details shows the Fed is cognizant of the poor outlook for Q1 GDP “even as growth in economic activity appears to have slowed.” It was also a little more downbeat on inflation “inflation has continued to run below the Committee’s 2% longer-run objective,” compared to “inflation picked up in recent months” previously.

Main Macro Events Today

• US GDP The first release on Q1 GDP is out today and should reveal a 0.5% (median 0.7%) headline clip for the quarter. This would follow a 1.4% pace in Q4 of last year and 2.0% in Q3. We expect the ongoing inventory unwind to weigh on the headline but the advance trade report yesterday revealed a big 3.4% import decline which is likely an extension of this unwind. Import weakness will likely benefit net exports for the quarter which will help prop up the headline.

• US Jobless Claims Claims data for the week of April 23rd should remain steady with a 247k (median 255k) headline that matches last week’s headline. Claims look poised to leave a 255k average in April which would follow a 264k average in March and 261k in February. The monthly employment report is expected to show a 210k headline from 215k in March with the unemployment rate ticking down to 4.9% from 5.0% last month.

• German Unemployment
  German jobless numbers have fallen to very low levels, but with growth slowing down, the improvement on the labour market is also running out of steam and we are looking for a slight uptick in the German sa jobless number for April of 4K, which should leave the jobless rate at a low 6.2% (medians same). The tight labour market has been pushing up wages and is underpinning consumption but the integration of the large number of refugees will be the main challenge for coming years.

Janne Muta

Chief Market Analyst

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Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

FOREX News Today

European Outlook: Most Asian stock markets are down on the day, disappointing earning results added to Yen strength weighed on Japanese markets. Oil prices are higher and the front end WTI future is comfortably above USD 44 per barrel, but investors remain cautious ahead of this week’s round of central bank decisions, which kicks off with the Fed announcement today, which will be followed by the BoJ tomorrow. Fed is unanimously expected to maintain and unchanged rate stance (there is no press conference). Hence, the focus will be on the nuances of the policy statement and we see some risk that it will be more hawkish than markets expect. In Europe, the focus is on the first release of UK. Q1 GDP data, which is expected to confirm that growth moderated somewhat at the start of the year. The UK. also has CBI reported sales data for April.

Australian CPI much weaker than expected: The headline figure for the quarter (q/q) -0.2% expected  +0.2%, previous reading  +0.4%. The yearly y/y 1.3% from previous 1.7% and expectations of 1.7%. The ‘trimmed mean’ (Core inflation) also lower at 0.2% (0.5% expected and 0.6% q/q) and 1.7% y/y expectations were for 2.0% previously 2.1%. This is a very large variance over one fifth lower than expectations.  Low inflation is effectively a tightening of interest rates so this poor number raises the expectations of the RBA having to cut rates. The RBA next meet  May 3.  AUDUSD fell over 1.7% and is currently trading at 0.7610.

ECB’s Coeure: Only sharp EUR appreciation would be concern. The Executive Board member seems to suggest that current levels are not a problem and won’t trigger further ECB action on their own. At the same time Coeure hit out at critics of the ECB’s policy, seeing that some of them miss the bigger picture. Especially Germany has been very critical of the central bank’s policies, but Coeure stressed that these critiques do not hamper the central bank’s ability to function, which implies that political pressure won’t prevent further action if the ECB sees the necessity to act.

US Weak Sentiment Signals: Revealed a weak round of March durable goods figures thanks to weak equipment data, and an expectations-led April consumer confidence drop. Yet, the April decline in the Richmond Fed index to 14 from 22 translated to a surprisingly strong 55.7 on an ISM-adjusted basis, while the Markit Services flash PMI rose to 52.1 from 51.3. Thanks to the weak equipment data, the mix lowered our GDP growth forecast to a flat figure from 0.3% in Q1 and a 2.0% clip from 2.2% in Q2. The factory sector remained weak through March despite the bounce for factory sentiment, and we still expect an upturn in the factory figures in Q2.

Main Macro Events Today

• FOMC Rate Decision: 18:00 GMT – No change expected and as there is no press conference the actual words in the Monetary Policy Statement released at 18:30 GMT will be scrutinized very closely.

• UK – GDP Prelim:.    08:30 GMT – A fall to 0.4% is expected from 0.6% last quarter and the y/y figure is expected to shrink to 2% from 2.1% last time. GBPUSD has been in a strong uptrend recently.

 

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our Top Forex Brokers official website:

http://www.topforexbrokerscomparison.com

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.