This week, policy interest rate announcements have followed one after another, with the US FOMC and the ECB Governing Council taking the stage. The FOMC raised interest rates by 25 basis points, suggesting a halt in future rate hikes, but stopped short of explicitly stating so. Hopes for an interest rate cut in the stock market were denied. The ECB Governing Council announced a 25 basis point rate hike, in line with market expectations. However, there was some opinion for a 50 basis point hike. ECB President Lagarde has shown a continued stance towards raising rates. Both the US and Europe showed their stance in responding to inflation amidst financial uncertainty.
Furthermore, the Reserve Bank of Australia, which announced its policy before the others, made an unexpected rate hike. The current challenge is still dealing with inflation, as confirmed. In today’s Reserve Bank of Australia financial report, it was explicitly stated that they will do what is necessary to return to the inflation target.
In the foreign exchange market, selling pressure on the US dollar is dominant. Along with this, there is a movement to buy yen. Although the central bank announcements of each country did not surprise the market much, financial uncertainties such as the failure of US regional banks have been in the spotlight. JPMorgan’s acquisition from the bankruptcy proceedings of First Republic Bank, and the possibility of selling off assets at multiple regional banks such as PacWest Bank and Western Alliance, have been reported. The stock market has become unstable, and the situation is progressing with a stronger yen due to risk aversion.
Today, the US employment statistics for April will be released. Nonfarm payroll employment growth is expected to be around 185,000, a decrease from the previous figure of 236,000. The unemployment rate is expected to rise slightly from 3.5% to 3.6%. The labor force participation rate is expected to remain at the same level as last time, at 62.6%. For the closely watched average hourly earnings related to inflation, both year-on-year and month-on-month are expected to remain at the same level as last time, at 4.2% and 0.3%, respectively.
The market’s reaction will depend on the results, but the impact of a continued robust labor market on the stock market will be in focus. If the market’s view of an end to rate hikes retreats somewhat, the risk aversion movement could spread again, and attention should be paid to market developments leading into the weekend.
This week, while the FOMC and ECB have developed as expected, the unexpected occurrence was the possibility of asset sales emerging at multiple regional banks such as PacWest Bank and Western Alliance. This caused unforeseen fluctuations, and I have not been able to ride the wave well except for GOLD.
Today as well, I plan to focus on trading GOLD, which has a more understandable flow.
Pay attention to the USD movement after the US employment statistics and unemployment rate to be released
