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On May 7, Commerzbank said that today the market focus turned to the Federal Reserve FOMC interest rate decision. The Federal Reserve is expected to keep the federal funds rate unchanged in the range of 4.25-4.50%. Federal Reserve policymakers stressed the need to wait and see how the trade policies implemented last month will affect economic growth and inflation. According to federal funds futures pricing, the Federal Reserve will cut interest rates by 8 basis points in June and 24 basis points in July, for a total of 78 basis points by the end of the year. For next year, they expect a 113 basis point cut by June 2026 and a 118 basis point cut by December 2026.New Zealand Reserve Bank Chairman Hawkesby: The threat of a trade war has eased recently, but there is still considerable uncertainty about the direction of events.USD/CNY reported 7.2005, down 3 points (RMB appreciation); EUR/CNY reported 8.1650, up 115 points; HKD/CNY reported 0.92891, down 1.2 points; GBP/CNY reported 9.6153, up 345 points; AUD/CNY reported 4.6876, up 259 points; CAD/CNY reported 5.2327, up 125 points; JPY/CNY reported 5.0345, up 76 points; RMB/RUB reported 11.2936, up 1230 points; NZD/CNY reported 4.3358, up 324 points; RMB/RMB reported 0.58649, up 34.3 points; CHF/CNY reported 8.7196, down 468 points; SGD/CNY reported 5.5908, up 36 points.On May 7, the banking and insurance institutions are currently carrying out various businesses in an orderly manner, and the main regulatory indicators are all in a healthy range. The basic foundation of large financial institutions is stable, and the "ballast stone" role is obvious. The reform and risk reduction of small and medium-sized financial institutions have achieved important phased results. From the first four months, the capital adequacy ratio of banks and the solvency adequacy ratio of insurance companies have maintained a stable and positive trend; the non-performing loan ratio has decreased by about 0.1 percentage points year-on-year, and the provision coverage ratio has increased by about 10 percentage points year-on-year. It can be said that the industrys safety cushion continues to thicken.Li Yunze, director of the State Financial Regulatory Administration, said at a press conference held by the State Information Office on May 7 that the capital replenishment work of large commercial banks is being accelerated.

As investors anticipate US Services PMI, the USD/JPY pair falls to around 134.00

Daniel Rogers

Dec 05, 2022 14:09

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The USD/JPY pair attempted to surpass the immediate barrier of 134.50 during the Tokyo session. As investors anticipate fresh momentum from U.S. Services PMI data, the asset is expected to remain on tenterhooks. As Federal Reserve (Fed) policymakers do not expect the current rate of interest rate hikes to continue, the risk profile remains favorable.

 

Charles Evans, president of the Chicago Fed, was quoted by Reuters as saying on Friday, "We will likely have a little higher Fed policy rate peak even as we slow the pace of rate hikes."

 

The US Dollar Index (DXY) is hovering near its immediate support level of 104.50 and is likely to test Friday's low at 104.40. In the context of a significant decline in the desirability of safe-haven assets, the risk appetite theme is likely to continue exerting pressure on US Dollar bulls.

 

In the interim, 10-year US Treasury rates have increased after falling below 3.50 percent during the Asian session, as market sentiment turns cautious prior to the release of US Services PMI data. The projected economic statistics is 55.6, a decline from the previous report of 54.4.

 

The New Orders Index is expected to rise from 56.5 to 58.5 on the US Services PMI spectrum. This indicates that future demand will be robust, which might de-anchor short-term inflation expectations and ruin the risk-on profile.

 

On the Tokyo front, Governor of the Bank of Japan (BOJ) Haruhiko Kuroda stressed the potential of a decrease in inflation beginning in CY2023. This may encourage the BOJ to continue easing monetary policy in order to keep inflation near the 2% target. Total Household Expenditures statistics will be of the utmost relevance in the future. The economic data are projected to increase annually by 3.4%, up from 2.3% in the previous report.

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