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May 5th - Markets widely expect the Reserve Bank of Australia (RBA) to raise interest rates again after its May 5th meeting. However, ANZ analysts believe that after the May rate hike, the RBA will shift to a more neutral stance, providing more room to wait and observe the full impact of the Middle East conflict on inflation. The wording in the banks post-meeting statement will be more skewed, opening the door to extending the pause in rate hikes. Even if the RBA raises rates as expected in May, it still believes the cash rate will remain at 4.35% (future). Although RBA Governor Bullock did not explicitly hint at further rate hikes, she maintained a generally hawkish tone regarding keeping policy restrained. Recent signs of continued tightness in the Australian labor market also provide the RBA with more room to raise rates.May 5th - According to a report by the Iranian Students News Agency on May 4th, in response to US President Trumps plan to "guide" ships stranded in the Strait of Hormuz to leave, Ibrahim Rezaei, spokesperson for the Iranian Parliaments National Security and Foreign Policy Committee, stated that if Iran wants to reopen the Strait of Hormuz, it must either accept defeat and reach an agreement recognizing Irans dominance over the strait, or return to the battlefield and bear further consequences.May 5th - According to China Railway Shanghai Bureau Group Co., Ltd., May 5th is the last day of the May Day holiday, and the Yangtze River Delta railway is experiencing its peak return passenger flow, with an estimated 4.28 million passengers transported that day. In addition to implementing the peak-hour train schedule, the railway department plans to add 469 passenger trains, double-unitize 289 high-speed trains, and add 89 carriages to regular passenger trains to fully meet the travel needs of passengers returning home.On its first day of trading, Hong Kong-listed Tianxing Medical (01609.HK) opened at HK$288, a surge of over 192%, compared to its offering price of HK$98.5.On Tuesday, May 5, the Hang Seng Index opened down 150.13 points, or 0.58%, at 25,945.75; the Hang Seng Tech Index opened down 27.58 points, or 0.55%, at 4,949.12; the H-share Index opened down 38.04 points, or 0.43%, at 8,736.35; and the Red Chip Index opened down 8.68 points, or 0.2%, at 4,402.56.

USD / JPY Strikes Above 136.20 As Fed Rate Increase Worries Return

Daniel Rogers

Mar 02, 2023 16:07

 

 

The USD / JPY pair is battling in the Asian session to maintain its auction above 136.40, while the downside looks to be supported around 136.00. The asset is expected to continue rising and surpass the 136.40 resistance mark as investors foresee the Federal Reserve (Fed) raising interest rates to strengthen its defense against persistent inflation.

 

Following a down day on Wednesday, S&P500 futures recorded modest gains during the Asian session, signaling a minor improvement in investors' risk appetite. Despite this, the market as a whole is very risk adverse. The spread of the US Dollar Index (DXY) is expected to narrow after a period of chaotic swings.

 

It indicates that the Federal Reserve's (Fed) officials' hawkish stance has revived US Treasury prices.

 

Raphael Bostic, President of the Atlanta Fed, predicted that the central bank would increase the terminal rate to a level of 5.00% to 5.25% in view of the Consumer Price Index's (CPI) enduring nature. The Fed policymaker also thinks the central bank will continue to have a high final rate after 2023. Additionally, Fed Chief Jerome Powell has reaffirmed that an early rate cut could have disastrous consequences for the inflation scenario.

 

It is clear that a future rise in the price index is expected after Wednesday's release of the US ISM Manufacturing PMI. The New Orders Index and Manufacturers' Prices Paid were able to show that the inflation scenario is getting more complicated despite the February PMI figures' failure to wow the market. Figures increased to 47.0 from 43.7 anticipated and 42.5 earlier published, indicating a strong order book. The Manufacturing Price Paid increased to 51.3 from 45.0, as opposed to the average forecast of 45.0, and from 44.5 in the previous report, suggesting that the Producer Price Index (PPI) may soon show a surprise increase.

 

On the Tokyo front, the Japanese Yen is being impacted by a string of dovish remarks from Bank of Japan (BoJ) officials. Following dovish remarks from BoJ Governor-nominee Kazuo Ueda and BoJ Deputy Governor Ryozo Himino, board member Junko Nakagawa also considered the present monetary policy appropriate. "An expansionary strategy is absolutely essential for maintaining the economy and increasing earnings," he said.


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