Sunset Market Commentary

In the statements accompanying the March and May policy decisions, the Bank of England ‘guided’ that ‘If there were to be evidence of more persistent pressures, then further tightening in monetary policy would be required’.

Bitcoin Set for a Deeper Correction

Despite the Bitcoin network’s continued rise in transaction volume, the number of active addresses has fallen to 764K – its lowest since July 2021. Due to the hype around BRC-20 and Ordinals tokens, the average transaction fee on the blockchain rose from $2.5 last year to $16.08 at the peak. The situation is to the benefit of Bitcoin miners, who are getting more commission on transactions than from mining for the fifth time in history (6.25 BTC), Glassnode noted.

Australian Dollar Calm after Wage Growth Accelerates

Australia’s wage price index jumped in the first quarter. Wage growth rose 3.7% y/y, following an upwardly revised 3.4% in Q4 2022 and above the estimate of 3.6%. On a quarterly basis, wages rose 0.8%, unchanged from Q4 and just below the estimate of 0.9%.

Gold Cools Off After the Rally and Chooses a Path Forward

Gold had made impressive moves yesterday before active trading in New York. Still, comments from Fed officials, combined with the release of relatively strong industrial production data, pushed the price back almost $30 to $1990, where it remains at the time of writing.

What about the Dollar? Debt Default Hangs in the Balance as the US Tries to Garner Confidence

The US government is currently actively engaged in attempting to talk its way out of a potential default on its national debt as the ceiling which is imposed by US law is being reached to the extent that if something is not done, the country's government could run out of money in just two weeks' time.

US: Housing Starts Rose and Permits Fell in April

Housing starts rose by 2.2% month-on-month (m/m) in April to 1.40 million (annualized) units, in-line with consensus expectations. Revisions to the three prior months were negative, subtracting roughly 39k units from the previous reported tallies.

Sunset Market Commentary

The current spring lull bridges the period between May policy meetings by ECB/Fed and first relevant datapoints for the June updates. A 25 bps ECB rate hike and a conditional Fed pause are the benchmarks against which they’ll be checked. Next week’s EMU PMI’s are the amuse-bouche ahead of EMU inflation and US payrolls thereafter.

USD/JPY – Japan's GDP Improves But Yen Slips

Japan’s GDP in the first quarter was higher than expected. The economy grew by 1.6% y/y, after a 0.1% decline in Q4 2022 and easily beat the estimate of 0.7%. On a quarterly basis, GDP expanded by 0.4%, up from 0.0% in Q4 and above the estimate of 0.1%.

WTI Futures Stuck in Range after Bounce Off 17-month Low

WTI oil futures (July delivery) had been in recovery mode, but the 200-day simple moving average (SMA) recently rejected their latest advance. Since then, the price plummeted to a fresh 17-month low of 64.20 before recouping some losses.

AUD/USD Under Pressure After Soft Aussie Employment

Australia’s April employment report surprised to the downside today, sending the Australian dollar lower. Net employment fell by 4,300 in April, after a gain of 61,100 in March. The market estimate stood at 25,000. What was more disconcerting was the full-time employment decline of 27,100, after a gain of 72,000 in March. As well, unemployment jumped to 3.7% in April, up from 3.5% a month earlier.