Market Recap – Yen & Gold on a Ride; ECB Today


 Economic Indicators & Central Banks:

  • Stock markets corrected across Asia. US futures are down, and European markets are also trading cautiously in early trade ahead of ECB.
  • Ueda: Chance of reaching target getting higher little by little.
  • BOJ board member Junko Nakagawa:  expressed confidence in Japan’s economy moving steadily towards achieving the central bank’s 2% inflation target sustainably.
  • Reports suggest a BOJ board member could propose removing negative interest rates at the upcoming policy meeting.
  • Yen is the biggest gainer so far, with Yen’s strength contrasting with its weakening trend over the past two years due to diverging interest rate policies.
  • Overnight: Wall Street rebounded and Treasuries extended gains after some weaker employment data (ADP and JOLTS).
  • Chair Powell in his Humphrey-Hawkins testimony repeated the FOMC anticipates cutting rates later this year. There was some angst he might tilt to a more hawkish stance. Powell emphasized the need for more data to ensure sustained progress toward the 2% inflation target.
  • A significant haven bid came from renewed concerns over NY Community Bancorp. Reports the bank is seeking a cash injection have boosted fears as this was the way Silicon Valley Bank imploded (March 10, 2023). NYCB shares plunged to the lows of the day at $2.47, where trading has been halted.
  • Today: The ECB is expected to stay firmly on hold, and even the doves seem to be resigned to wait until June for a cut. The stubbornly high services inflation and uncertainty about the current wage round means that rate cuts are not on the agenda yet.

Market Trends:

  • Stocks recovered most of the selloff earlier in the week after all-time highs last week. The NASDAQ (US100) bounced 0.58%, back to 16,031, and the S&P500 (US500) rallied 0.5% to 5104.76, just shy of Friday’s historic peaks of 16,275 and 5137, respectively. The Dow (US30) advanced 0.2% to 38,661 but is off of the 39,135 top from February 23.
  • Target was a big winner after an earnings beat, while the S&P 500 rose, driven also by strong performances from Nvidia and Meta Platforms.
  • The Nikkei (JPN225) reached a record high briefly but closed down at 39,598.71.

Financial Markets Performance:

  • The USDIndex is underwater at 103.12, still under the 104 level on expectations the FOMC will be cutting rates down the road.
  • EUR and GBP held near 1-month highs against the Dollar. AUD and NZD climbed to multi-week highs.
  • The Yen surged to a 1-month peak against the US Dollar fueled by speculation about the Bank of Japan ending negative interest rates soon. USDJPY is currently at 148.08, as Yen gained also against the EUR and GBP.
  • Gold was up for a 7th day, rising to a new closing high of $2146.48 per ounce. Oil was up 1.25% to $79.13 per barrel.
  • Bitcoin retreated slightly from a recent record high but maintained a significant year-to-date rally. Ether slipped after hitting a 2-year peak.

Click here to access our Economic Calendar

Andria Pichidi

Market Analyst

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