Forex News for 4 April, 2023

  • In March, China’s Caixin manufacturing PMI declined to 50.0 from an eight-month high of 51.6 due to weaker external demand.
  • Following weaker-than-expected factory activity in China, the safe-haven yen gained points, particularly after opening lower.
  • Over the weekend, OPEC and Saudi Arabia made a surprise announcement of oil production cuts, causing a sharp increase in oil prices.
  • Sentiment among Japan’s major manufacturers has fallen to its lowest level since December 2020 due to rising costs and slower overseas growth. However, a steady index for significant service providers reflects hopes of a rebound in tourism and service demand.
  • Traders initially priced in central banks worldwide, requiring further interest rate hikes to counteract the impact of higher oil prices, causing the yen to make new intraday lows. They then realized that the uber dovish Bank of Japan (BOJ) would not be tightening anytime soon.
  • Following the London open, the marginal gains made by EUR/USD have erased the overnight rally by the US dollar. If Euro sentiment continues to improve, the bulls could take control, although the ISM data later may give some impetus to the dollar.
  • As the Fed seeks to curb inflation, policymaker Susan Collins stressed the necessity for higher rates, while Williams predicts inflation to fall to about 3.25% in 2023 before the Fed can achieve its inflation target of 2% in 2024.
  • The likelihood of another 25 basis point rate hike at the May FOMC meeting has risen in Europe and is currently just below 57%.
  • The China-sensitive AUD declined due to China’s disappointing PMI reports before finding support at the halfway mark of AUD/CAD’s full daily ATR.

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