| Time | Country | Event | Period | Previous value | Forecast | Actual |
|---|
| 01:45 | China | Markit/Caixin Services PMI | April | 52.7 | 52.5 | 52.5 |
During today's Asian trading, the US dollar rose slightly against major currencies, as investors continued to analyze the latest US labor market report and its impact on the Fed's monetary policy outlook.
The US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) rose by 0.12% to 105.15. On Friday, the index fell by 0.22%, as data fueled expectations that the Fed will cut interest rates twice this year. The report showed that employers added 175,000 jobs in April, which was below economists' expectations (+243,000). Wages rose by 3.9% per annum after an increase of 4.1% per annum in March. Consensus estimates suggested a 4% increase. The unemployment rate unexpectedly rose to 3.9% from 3.8%, but remained below 4% again (for the 27th consecutive month). Economists said the Fed would welcome weaker data as a weakening labor market and slowing wage growth would help lower inflation. Markets are now pricing in 45 basis points of cuts this year, with a rate cut in November fully priced in. According to the CME FedWatch Tool, markets see a 8.2% probability of a 25 basis point rate cut at the Fed meeting in June, a 36.6% probability of a rate cut in July, and a 69.6% probability of monetary policy easing in September.
The yen fell 0.5% against the US dollar after last week recording the largest weekly increase (+3.37%) since the beginning of December 2022 amid two alleged interventions by the Japanese government. Japan is closed for a holiday on Monday, likely resulting in lower volumes. But with Japanese authorities choosing last week's quiet periods to intervene in the currency market, traders will be on high alert through the day. Meanwhile, experts warned that while the government clearly has room to intervene more, the broader macroeconomic environment remains very negative for the yen, which is under pressure due to the divergence of monetary policy between the Fed and the Bank of Japan.
The Australian dollar fell 0.2% against the US dollar, while investors are preparing for the RBA meeting, the results of which will be announced tomorrow at 04:30 GMT. Consensus estimates suggest that the Central Bank will leave the interest rate at 4.35%. Consumer price index data for the first quarter of 2024 revealed yearly inflation now sits at 3.6%, which is still well above the RBA's 2%-3% target.