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On July 22, Joseph Lavorgna, chief U.S. economist at Sumitomo Mitsui Banking Corporation, stated that policymakers will lose hard-won credibility if inflation does not slow. In a report, Lavorgna noted that in the past 70 years, core inflation has only declined by 0.9% or more year-on-year six times. In each of those instances, the slowdown in inflation was due to the Federal Reserve tightening policy. Lavorgna said, “The longer the Fed waits, the greater the probability that interest rates will have to rise above what is necessary. That’s why so many tightening cycles have ended tragically. Chairman Warsh understands this.” Both WTI and Brent crude oil prices rose by nearly $1 in the short term, currently trading at $87.6 per barrel and $91.06 per barrel respectively.July 22 - On July 22, the Bulgarian Parliament voted to approve the deployment of up to eight U.S. Air Force KC-135 aerial refueling tankers and their crews, up to 250 U.S. military personnel carrying personal weapons and ammunition, and related airport equipment at Bezmer Air Base from July 24 to October 1, 2026.July 22 – According to the Wall Street Journal, AMD (AMD.O) and Anthropic have signed a multi-billion dollar AI server collaboration agreement. Under the terms of the agreement, Anthropic will procure up to 2 gigawatts of AMDs latest generation Instinct MI450 chips for its data centers starting in the first half of 2027, and will lease some computing power through other large cloud service providers or new cloud vendors. AMD will invest up to $5 billion in Anthropic upon reaching certain deployment milestones, marking its first investment in an AI company. AMDs CEO stated, "We have always been very keen to be a key partner in Anthropics infrastructure, and the engineering teams from both companies have been working together for some time."International oil prices continued to rise as Trump downplayed the possibility of immediate negotiations with Iran. A chart provides a quick overview of the pre-market conversion prices of crude oil between domestic and international markets.

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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