Who’s working late ’cause they’re a ̶s̶i̶n̶g̶e̶r̶ trader?
No need to be espresso today because we have all the deets on how the major financial assets moved yesterday.
With no major market movers on the scene on Wednesday, it was a perfect chance for the key assets to respond to their individual catalysts.
Headlines:
- BOJ Gov. Ueda told parliament that they “may need to respond with monetary policy” as exchange-rate moves affect the economy and prices
- Germany’s industrial production for March: -0.4% m/m (-0.6% expected, 1.7% previous); -3.3% y/y (vs. -5.3% previous)
- Italy’s retail sales for March: 0.0% m/m (0.2% expected, 0.1% previous)
- EIA’s crude oil inventories dipped by 1.4M barrels in the week ending May 3, more than the 1M decrease expected and the previous week’s 7.3M barrel uptick
- FOMC voting member Lisa Cook shared that U.S. households, businesses, and banks seem well-positioned to absorb potential financial shocks
- RICS U.K. house price balance indicator unchanged at -5% in April
- Japan’s average cash earnings only grew by 0.6% y/y (1.5% expected, 1.4% previous)
- Japan’s real wages fell by 2.5% y/y in March – the fastest drop in four months – against -1.4% y/y estimates
- BOJ’s Opinions Summary showed plans to keep policies accommodative “for a fairly long period” if inflation remains under 2%, but there’s also a willingness to “deepen discussion on the timing and degree of policy interest rate hikes“
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
While the rest of the market stayed within ranges, bitcoin (BTC/USD), crude oil, and the U.S. 10-year bond yields saw volatility.
Crude oil had a bit of a rollercoaster ride, initially taking a hit from a surprising API crude inventories report. But the prices bounced back—probably thanks to news from Russia’s Deputy Prime Minister Alexander Novak saying that OPEC+ isn’t planning any output increases at their upcoming meeting on June 1. Another twist came with the EIA crude inventories missing their mark, which also gave WTI prices a nice lift.
Over in the crypto world, BTC/USD slipped a bit after bumping into resistance at the $63,000 level, which used to be a support zone. Meanwhile, U.S. 10-year bond yields kept on their recovery track. No direct catalysts there, but the fading odds of a September Fed rate cut—from 65% down from 70% earlier this week—seem to be gently nudging yields upwards.”
FX Market Behavior: U.S. Dollar vs. Majors
Overlay of USD vs. Major Currencies Chart by TradingView
The U.S. dollar had a mixed day against its counterparts. In particular, USD/JPY and AUD/USD emphasized the dollar’s strength. AUD likely extended its losses from a less hawkish-than-expected RBA decision earlier this week while the lack of intervention threats probably pushed USD/JPY higher on Wednesday.
The lack of top-tier reports from the U.S. and other major economies is also possibly why USD ended the day mostly unchanged against its other major counterparts.
Upcoming Potential Catalysts on the Economic Calendar:
- Switzerland, France, and Germany’s markets out on holiday
- BOE’s policy decision and revised economic projections at 11:00 am GMT
- U.S. initial jobless claims at 12:30 pm GMT
- BOC’s financial system review at 2:00 pm GMT
- BOC Gov. Macklem to give a speech at 3:00 pm GMT
- BOE MPC member Huw Pill to give a speech at 4:15 pm GMT
- NZ BusinessNZ manufacturing index at 10:30 pm GMT
- Japan’s household spending at 11:30 pm GMT
The Bank of England (BOE) is up today and word around is that we could see its policies unchanged! Bank of Canada (BOC) Governor Macklem will also be under the spotlight so make sure you’re keeping close tabs on your GBP and CAD trades!
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