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Market news: Britain will provide more defensive military assistance to Saudi Arabia.Market news: Ukraine claims to have attacked Russias Kubyshev oil refinery.Saudi Arabia, Egypt, Türkiye, and Pakistan held a quadrilateral meeting in New York on September 22 local time.On September 22nd, RSM UK analyst Thomas Pugh stated that UK net public borrowing in August rose sharply compared to the same period last year, meaning the upcoming budget will be more challenging than anticipated by new Prime Minister Andy Burnham or Chancellor of the Exchequer John Healy when they took office months ago. A new round of tax increases seems inevitable in October. Cumulative borrowing so far this fiscal year has reached £77.3 billion, far exceeding the £69.2 billion previously predicted by the budget oversight body, the OBR. Given rising inflation and the potential for increased spending in the budget, borrowing is expected to continue to significantly exceed expectations. However, with UK government bond yields high, investors are closely watching every borrowing figure for clues about the governments seriousness regarding fiscal discipline.On September 22, Novo Nordisk CEO Mike Dustdale stated that the company must take more steps to rebuild investor confidence, given that its flagship drugs, such as Ozempic, will face patent expirations early in the next decade. Dustdale said, "What weve learned over the past few years is that over-promising and under-delivering quickly erode trust." Investors "want to know whats next." Novo Nordisks stock price fell on Monday as investors were disappointed by the lack of detail in its turnaround plan during the companys Capital Markets Day. Novo Nordisk is facing patent expirations for Ozempic and Wegovy in the US and Europe, a product portfolio that currently accounts for about three-quarters of its sales. Novo Nordisk has pledged to launch more than five blockbuster drugs by 2030 and achieve more than $23 billion in new sales by 2035. These goals are widely considered to be in line with investor expectations. BMO Capital Markets analysts stated that Novo Nordisk is still in a phase where it needs to prove itself with results. Investors need a clearer understanding of the companys next-generation drugs and their potential market acceptance in order to rebuild confidence.

EUR/USD Expects Fourth Weekly Gains Above 1.0900 Despite The US Dollar's Rebound Advance Ahead Of US NFP

Daniel Rogers

Apr 07, 2023 11:42

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Despite a recent retreat, the EUR/USD bulls maintain control around 1.0920. This reflects the typical Good Friday inactivity and apprehension ahead of the US Nonfarm Payrolls (NFP) report released early in the day. The major currency pair was volatile on Thursday as a result of the US Dollar's initial rebound on fears of a recession, but ended the day unchanged as disappointing US data contrasted with stronger Eurozone data.

 

Fears of a recession in the world's largest economy were prompted by consecutive lackluster US data and falling US Treasury bond yields, giving USD bears a reprieve on Thursday morning. As traders prepared for the all-important NFP, the dollar's subsequent gains were reversed by another disappointing US employment report.

 

Despite this, US Initial Jobless Claims for the week ending March 31 rose to 228K from 200K anticipated and an upwardly revised 246K the prior week. Notable is the increase in Challenger Job Cuts from 77,77K to 89,703K in the given month.

 

Notably, Reuters fanned fears of a recession by citing the most recent decline in the preferred bond market indicator of Federal Reserve (Fed) Chairman Jerome Powell. The most reliable bond market indicator of an imminent economic contraction, according to Federal Reserve research, is the "near-term forward spread" between the forward rate on Treasury bills 18 months from now and the current yield on three-month Treasury bills.

 

According to Reuters, International Monetary Fund (IMF) Managing Director Kristalina Georgieva stated in prepared remarks on Thursday that the global economy is projected to expand by less than 3% in 2023, a decrease from 3.4% in 2022.

 

In other news, Germany's Industrial Production (IP) increased 0.6% year-over-year in February, versus market predictions of -2.7% and previous readings of -1.7%. Additionally, the monthly figures exceeded expectations by 0.1%, coming in at 2.0% compared to 3.7% previously. On Wednesday, Germany Factory Orders for February improved to -5.7% YoY from -12.0% previously revised down and -10.5% market expectations, while MoM growth came in at 4.8% compared to 0.3% expected and 0.5% previous readings.

 

Wall Street and US Treasury bond yields have both reduced weekly losses as a result of these strategies, but investors remain skeptical.

 

In the context of less liquidity surrounding the March US employment report, sporadic activity on the major markets can keep the EUR/USD inactive and prone to abrupt price swings. Notable is the fact that recent dovish Fed forecasts and disappointing US data generate expectations for a positive surprise and enormous price volatility thereafter.


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