The United States of America

USD is strengthening against EUR and GBP but has ambiguous dynamics against JPY.

Investors are focused on the results of the US Fed meeting that ended yesterday. Economists left the interest rate at 5.25–5.50%, but the comments of the head of the regulator, Jerome Powell, were ambiguous. Thus, he stated that a new tightening of monetary policy looked unlikely and denied the possibility of developing stagflation processes in the national economy since the positive dynamics of the gross domestic product (GDP) persist despite a slight slowdown. At the same time, the official admitted that macroeconomic data do not confirm a sustainable reduction in inflation towards the target of 2.0%, so the current “hawkish” rhetoric will be relevant for a long time, which increased the likelihood of a shift in the timing of the adjustment of borrowing costs to the fall. Meanwhile, initial jobless claims remained at 208.0K, less than expected at 212.0K, and the total claims number is around 1.774M instead of the expected increase to 1.800M, reflecting the strength of the labor market.

Eurozone

EUR is weakening against USD and has ambiguous dynamics against JPY and GBP.

In April, the EU manufacturing PMI fell from 46.1 points to 45.7 points, above the forecast 45.6 points, and the indicator for the largest German economy in the region increased from 41.9 points to 42.5 points, remaining in the stagnation zone. The European new orders index fell from 46.0 points to 44.1 points, the lowest in the last four months. The industry is in decline due to weakening demand for products, forcing companies to cut staff and hampering the overall economic recovery in the Eurozone. Today, the head of the Spanish Central Bank and European Central Bank (ECB) member Pablo Hernandez de Cosa said officials hoped inflation would reach its 2.0% target by mid–2025 despite high energy costs, the end of fiscal relief measures, and sustained growth of consumer prices in the service sector, which may slow down this process.

The United Kingdom

GBP is weakening against USD but has ambiguous dynamics against JPY and EUR.

Due to a lack of significant economic releases, currency movements are due to external factors. The UK will face the slowest economic growth and highest inflation of the G7 countries, excluding Germany, this year and next, according to the Organization for Economic Co-operation and Development renewed forecasts. Department experts have reduced their estimates of British gross domestic product (GDP) from 0.7% to 0.4% this year and from 1.2% to 1.0% next year. Finance Minister Jeremy Hunt noted that such data was expected as the country fights inflation by increasing interest rates, which put significant pressure on the economy.

Japan

JPY has ambiguous dynamics against EUR, GBP, and USD.

Investors are focusing on the second sharp strengthening of the national currency this week. Experts believe it is a consequence of government intervention, which sells the dollar to support the yen. The officials may continue implementing such policies to prevent 160.00 from being exceeded, but it is unknown how long they can implement such measures. The financial authorities are believed to have 1.15T dollars in spending funds, which will allow for up to ten more interventions but their effectiveness is difficult to predict as current monetary conditions remain negative for the currency. Thus, in March, Bank of Japan economists raised the interest rate to 0.10%, and a new increase in borrowing costs is expected no earlier than the second half of the year but, it will be significantly less than in other leading world economies.

Australia

AUD is strengthening against GBP and EUR but has ambiguous dynamics against JPY and USD.

Australian goods exports rose 0.1% in March, following a significant contraction of 3.2% earlier, and imports rose 4.2%, pushing the trade balance down from 6.591B Australian dollars to 5.024B Australian dollars instead of an expected increase of 7.190B Australian dollars. Building approvals adjusted 1.9% MoM, less than the 3.5% expected and down –2.5% from the 5.2% estimate, as the nation’s property market remains under pressure from the Reserve Bank of Australia’s high interest rates (RBA).

Oil

The morning rise in oil prices gave way to a decline.

The sector has partially recovered after the correction caused by the results of the US Fed meeting. Thus, the head of the regulator, Jerome Powell, actually admitted the long-term persistence of high interest rates, saying that macroeconomic statistics do not give officials confidence that inflation will steadily approach the target level of 2.0% this year. According to the Energy Information Administration of the US Department of Energy (EIA), US commercial oil inventories adjusted by 7.265M barrels instead of forecasts of –2.300M barrels: the figure for gasoline added 0.344M barrels, and for distillates decreased by 0.732M barrels.