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Currency Market Update - 6th April 2023

Currency Market UpdateUSD has edged higher this morning with risk sentiment amongst traders softening, however the safe-haven currency still remains near 2 month lows as it looks increasingly likely that The Federal Reserve will look to pause it’s rate hike cycle.

Recent economic data out of The US has pointed to a slowdown, especially within the services and manufacturing sectors. U.S job openings also dropped to its lowest in nearly two years in February which did spark fears that a recession in The US is around the corner. Markets are currently pricing in a rate pause at 50% for the May meeting.

Keeping with The US, weekly jobless claims is due out later this afternoon, however more importantly tomorrow brings the ever volatile release of Non-Farm Payroll data which is expected to have shown the economy added 240,000 jobs fewer in March when compared to February. It should be noted, any release above expectations could swing the mood of The Federal Reserve in terms of that decision for next month.

The Euro is still holding its own, however is struggling to break that 1.10 barrier but has seen positive industrial production in Germany with an increase of 2% in February which was a lot more than the initial 0.1% projected. The ECB are still on course to continue hiking their interest rates in May as they are a fair bit behind The Federal Reserve & Bank of England. Overall inflation in the Eurozone has slowed, however inflation pressure from food prices is still considerably high, and according to some ECB members not even at it’s peak. So a rate hike in May and beyond shouldn’t be ruled out.

Next week also brings the release of US Inflation figures, currently lying around the 6% mark but will be another key release for The Federal Reserve when contemplating whether they pause or go again with a small rate hike next month.



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