Octa's market snapshot: The Fed is stuck between recession and high inflation

On 30 April – 1 May, the Federal Open Market Committee (FOMC) of the U.S. Federal Reserve (Fed) will meet to decide on key interest rates in the U.S. economy. The Fed is expected to leave rates unchanged.
OctaFX | 15 days ago
  • The Fed is expected to leave rates unchanged at their meeting on 30 April – 1 May.
  • The BEA report showed that GDP growth slowed to 1.6% in the first quarter, well below expectations.
  • Fed's preferred inflation rose for the third month in a row. The released GDP and Fed's preferred inflation data sets are hawkish, which means the U.S. dollar will likely continue to strengthen.

On 30 April – 1 May, the Federal Open Market Committee (FOMC) of the U.S. Federal Reserve will meet to decide on key interest rates in the U.S. economy. The Fed is expected to leave rates unchanged.

Since the beginning of this year, the U.S. Federal Reserve has been broadcasting that key interest rates have peaked and are trending downwards. However, the tone of the accompanying rhetoric has changed in favour of tighter monetary policy. The reason for this is inflation, which has no plans to decline. Besides, we also see a slowdown in the U.S. economic growth.

On 25 April, the U.S. Bureau of Economic Analysis (BEA) reported on GDP dynamics (Advance Estimate)—GDP growth slowed to a 1.6% rate in the first quarter, well below expectations. The next day, the BEA released the PCE index—a measure of inflation closely monitored by the Federal Reserve. It showed that the prices rose by 0.3% from February to March, the same as in the previous month. The index rose faster than the Fed's 2% inflation target in the third straight month. Thus, the annualised price growth rate was 2.7% in March compared to 2.5% in February.

'Weak U.S. economic growth and accelerating inflation are pushing back the likelihood of a key rate cut in 2024,' said Kar Yong Ang, Octa Broker financial market analyst. 'In fact, the FOMC does not have any positive factors at the moment', he added.

The released GDP and Fed's preferred inflation data sets a hawkish tone for the upcoming meeting, which means the USD will likely continue strengthening against all major currencies. USDJPY may rise above 160.00 by the end of this week.

 

Regulation: CySEC (Cyprus), FSCA (South Africa)
read more
JPY has sharply strengthened

JPY has sharply strengthened

On Thursday, the yen strengthened against the US dollar in response to improving Federal Reserve interest rate prospects. The USDJPY pair has declined to 153.88.
RoboForex | 20h 32min ago
Soft CPI Hammers Dollar to Monthly Low

Soft CPI Hammers Dollar to Monthly Low

Yesterday’s U.S. inflation gauge, CPI, rattled financial markets as the dollar index (DXY) plunged nearly 1% and equity markets jumped following a reading below market consensus.
PU Prime | 1 day ago
Dollar, Bond Yields Slide on US PPI Revision

Dollar, Bond Yields Slide on US PPI Revision

The benchmark US 10-Year Treasury yield tumbled to 4.44% from 4.50% yesterday following a downward revision in US March Producer Prices. While April’s US PPI rose 0.5%, March’s PPI was revised down to -0.1% from 0.2% previously.
ACY Securities | 2 days ago
Forex Market Report - 15/05/2024

Forex Market Report - 15/05/2024

This Forex Market Report offers an overview of critical economic and financial events that impact the global forex markets. Traders should closely monitor developments to fine-tune their trading strategies accordingly.
DNA Markets | 2 days ago
JPY declines again

JPY declines again

The Japanese yen is experiencing a significant decline against the US dollar, marking the seventh consecutive session of this trend.
RoboForex | 2 days ago
Japan’s Long-term Treasury Yield Surge

Japan’s Long-term Treasury Yield Surge

In the most recent trading session, asset classes remained largely unchanged as markets awaited key U.S. inflation data. The Producer Price Index (PPI) is set for release today, followed by the Consumer Price Index (CPI) tomorrow.
PU Prime | 3 days ago