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Market News: British officials confirmed that US President Trump is expected to announce the outline of the US (trade) agreement with the UK.On May 8, Seema Shah, chief global strategist at Principal Asset Management, said that the Federal Reserve has fallen into an almost desperate situation, and its dual missions - full employment and stable prices - may go in opposite directions. However, the incredibly uncertain US government policies will determine the timing and magnitude of these changes. Trumps tough stance on tariffs has further exacerbated the Feds embarrassing situation. In this case, the Fed can only choose to stand idly by. Rate cuts are necessary, but the Fed seems to increasingly need to wait until the end of the third quarter for the window of opportunity to open.On May 8, Steve Matthews, investment director of Canada Life Asset Management, pointed out that a 50 basis point rate cut will be an important topic at the Bank of Englands upcoming meeting, reflecting the change in the economic background since Marchs standstill. Global trade disruptions and signs of economic slowdown - especially the decline in US quarterly GDP data - have put a larger interest rate cut in the spotlight. Given that UK CPI inflation is now basically up to standard, MPC members Dingla and Mann are expected to support a 50 basis point rate cut, opening the door to a possible unexpected large rate cut. However, Matthews predicted that this camp is expected to be vetoed by the majority vote in the end, thus passing a 25 basis point rate cut resolution, bringing the base rate to 4.25%.Germanys industrial output in March adjusted for working days was -0.2% year-on-year, in line with expectations of -2.7% and previous reading of -4.00%.Ukrainian Air Force: As of 8 a.m. local time on May 8, no Russian missiles or drones were found in Ukrainian airspace.

The USD/JPY exchange rate dipped to 138.50 on Japan's employment data

Alina Haynes

Aug 30, 2022 11:52

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After the release of Japanese labor market data, the USD/JPY has fallen significantly. With today's trading, the asset dropped below the consolidation range it had been making between 138.62 and 138.85. Sharp losses are being seen in the major at 138.27, and if it manages to break through the key support level, we could see even lower prices.

 

The unemployment rate in Japan has been reported by the Japan Statistics Bureau to be 2.6%. Although the revised Jobs-to-Applications ratio of 1.29 is an increase from both earlier estimates and the prior release's 1.27, the difference is not statistically significant. In spite of this, there is no denying that employment data has stayed good, and yen bulls have been successful as a result.

 

US dollar index (DXY) is in a period of adjustment after hitting a 20-year high of 109.40 on Monday. Previous to this, the asset had been held by bulls in response to Federal Reserve (Fed) chief Jerome Powell's hawkish interest rate guidance preference despite a slowdown in US economic activity.

 

Since maintaining price stability is the Fed's primary concern, officials at the Jackson Hole Economic Symposium highlighted that the current interest rate hike cycle will likely continue. Inflation is at 8.5%, which means that households are being hit with the headwind of ever-increasing prices for consistently purchased goods. While a result, American businesses and consumers must remain patient as they await a revival of the economy.

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