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Weekly Market Preview
Friday, May 03, 2024
The Federal Reserve, as widely anticipated, opted to maintain interest rates unchanged, and the remarks made by the Fed’s Chairman aligned with expectations, emphasizing the data dependency to guide any potential adjustments in interest rates throughout the year and that the FOMC members will require approximately two months or more worth of data confirming sustained decline in inflation levels before considering any rate cut. The US jobs report for April is seen as one of the initial datasets reflecting this trend, revealing a drop in the YoY average hourly wages to 3.9% from March’s 4.1%, alongside an addition of 175 thousand jobs to the US economy, falling short of the expected 238 thousand jobs. Following the release of this data, risk appetite increased, leading to a decline in the US dollar’s value.
Turning to the economic calendar for the current week, it features fewer data releases but highlights meetings of major central banks. The week starts with the Reserve Bank of Australia’s interest rate decision, expected to maintain the current interest rates at 4.35%, given Australia’s inflation levels at 3.6%, still distant from the 2% target. Consequently, the Australian Central Bank is likely to await the CPI report of the second-quarter due in the third quarter before considering any adjustments to interest rates, making a change before the August meeting unlikely.
Investors are also anticipating the Bank of England’s meeting this week, with expectations of unchanged interest rates at 5.25%. However, attention will be on the voting pattern of the Monetary Policy Committee members, as an increase in votes supporting rate cuts may indicate a potential reduction in the June meeting, potentially impacting the pound sterling’s prices. It’s notable that prevailing market sentiment leans towards interest rate cuts at the August meeting.
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