Global Markets Roundup: 26 Apr 2024

Volatility gripped currency markets on Friday following the Bank of Japan's (BOJ) decision to uphold its accommodative monetary policy stance at the conclusion of its two-day policy meeting. While Asian shares saw a broader uptick, the yen stumbled against the dollar. As widely anticipated, the BOJ opted to keep interest rates at near-zero levels on Friday, while notably omitting a reference to the monthly volume of government bonds it typically purchases. Additionally, the central bank provided updated forecasts indicating inflation would hover around its 2% target over the next three years, suggesting a willingness to consider raising borrowing costs later this year.

However, the yen, in a knee-jerk reaction to the BOJ's decision, weakened to around 156 per dollar, marking a decline to multi-decade lows. Christopher Wong, a currency strategist at OCBC, remarked that currency markets had perhaps anticipated clearer guidance on policy adjustments, indicating potential over-optimism among investors. Market attention now shifts to BOJ Governor Kazuo Ueda's forthcoming news conference for further insights into the central bank's policy outlook.

Despite concerns about the yen's depreciation, reflected in recent remarks by Japanese Finance Minister Shunichi Suzuki, attempts to verbally support the currency have had limited impact thus far. Wong noted that the absence of substantive measures could embolden further dollar/yen testing of policymakers' resolve. Benefiting from the yen's weakness, Japan's Nikkei NI225 extended early gains, climbing 0.9% by the latest update. Elsewhere in the region, MSCI's index of Asia-Pacific shares outside Japan rose by 0.8%, with Hong Kong's Hang Seng Index surging by 2% and Chinese blue chips edging up 1%.

In the U.S., stock futures received a boost following upbeat quarterly reports from tech giants Alphabet and Microsoft, with Nasdaq futures advancing by over 1% and S&P 500 futures rising by 0.85%.

Fed Considerations and Market Dynamics

Amid broader market movements, investors grappled with implications from Thursday's data, which revealed the U.S. economy's slowest growth in nearly two years during the first quarter, coupled with accelerated inflation. This reinforced expectations that the Federal Reserve would maintain interest rates until at least September. Rodrigo Catril, senior FX strategist at National Australia Bank, described the U.S. Q1 GDP report as delivering a mix of softer-than-expected growth and higher-than-anticipated inflation.

In response, U.S. Treasury yields surged to five-month highs, with the two-year yield hovering near 5% and the benchmark 10-year yield steadying at 4.6961%. Conversely, the dollar retreated amid concerns over weaker U.S. growth, while sterling dipped slightly after reaching a two-week high on Thursday and the euro eased. Focus now shifts to the release of March's core PCE price index data for further insights into the U.S. rate outlook. James Reilly, a markets economist at Capital Economics, expressed skepticism that inflationary pressures would prompt Fed tightening, suggesting a continuation of the current cautious stance.

In currencies, the USDJPY fell by about 0.2% to 156.10. The yen also traded down to its weakest in 16 years at 167.38 per euro EURJPY and its weakest in a decade on the Australian dollar AUDJPY. The euro EURUSD climbed 0.3% to a two week high of $1.0728. The AUDUSD settled around $0.6522. The GBPUSD rose 0.4% to $1.2503. The NZDUSD was trading at $0.5960.

In commodities, Brent crude edged higher to $89.36 a barrel, while U.S. crude CL1!gained to $83.85 per barrel. Gold also saw modest gains, rising to $2,336.05 an ounce. Spot silver XAGUSD1! was 0.2% higher to $27.49 per ounce, spot platinum PL1! climbed 0.8% to $921.45, and palladium XPDUSD1! was 1.4% higher to $988.22. In agricultural commodities, the wheat on CBOT ZW1! was 0.2% down to $6.19-1/4 a bushel, corn ZC1! rose 0.2% to $4.52-3/4 a bushel and soybeans ZS1! traded unchanged at $11.79-3/4 a bushel. July arabica coffee (KCN24) closed +0.97% higher, and July ICE robusta coffee (RMN24) closed +0.89% higher. July ICE NY cocoa (CCN24) traded -1.93% lower, and May ICE London cocoa #7 (CAK24) traded -1.78% lower.

Looking ahead today, markets anticipate, French Consumer Confidence, US Core PCE Price Index, US Personal Income and US Personal Spending, Russia Unemployment Rate.

You can view all markets data and charts here.

General news - Information source from multiple newswires.

The article and the data is for general information use only, not advice!

The Trade Academy Team

Rating: Mixed Outlook

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