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On June 4th, Investinglive analyst Eamonn Sheridan stated that reports indicate Israel and Lebanon, under US guidance, have reached a framework agreement for a ceasefire, with full-scale talks scheduled to resume the week of June 22nd. However, this is contingent on Hezbollahs complete withdrawal from southern Lebanon. Geopolitical risk premiums in the oil market will likely absorb this headline, largely treating it as already priced in. This Lebanese ceasefire plan, framed by Hezbollahs adherence to the agreement and the establishment of a "pilot zone," is essentially a document aimed at advancing the process, not a final solution. The condition attached to the plan—Hezbollahs complete ceasefire and withdrawal from the Litani River region—is precisely the crux of the failures that led to previous arrangements. The market will note that the next round of substantive negotiations will not take place until the week of June 22nd, three weeks from now. If there is any definite takeaway, it is that this announcement confirms the Lebanese front remains a dynamic and unpredictable factor, rather than a settled situation. At the same time, it does not offer any substantial help in resolving the situation in the Strait of Hormuz, or in alleviating the broader US-Iran conflict that is currently driving up oil prices.U.S. State Department: All parties condemn Irans attacks on countries in the region.On June 4th, US President Trump told reporters at the White House on the 3rd that negotiations between the US and Iran were progressing well and an agreement could be reached by the end of the week. Trump said, "Ive heard the negotiations themselves are going very well, actually quite well… If an agreement is reached, it will likely be announced this weekend." When asked whether the ceasefire agreement between the US and Iran would still be in effect after Irans latest attack on Kuwait, Trump said, "Everything happens for a reason," adding that the US military had launched a fairly heavy attack on Iran two nights ago, "so some things happen for a reason, and those reasons usually make some sense." He also said that Irans actions were "not a big deal," and that "we have the situation under control and have quickly nipped it in the bud."According to The Information, Meta Platforms (META.O) plans to charge up to $200 per month for its planned "Hatch" AI agent.Broadcom CEO: The company plans to deliver 10 gigawatts of computing power in 2027, and expects to achieve even greater computing power growth in 2028.

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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