USD/CHF – Swiss Franc Steady, Inflation Lower Than Expected

USD/CHF is unchanged in the European session, trading at 0.9150. The Swissie pushed higher earlier but has given up those gains.

Sunset Market Commentary

At the start of trading this morning, key question was whether the calm that gradually returned to markets last week, would again be overthrown by a new ‘event risk’ as OPEC+ this weekend surprised with an additional 1.1 mln bpd oil production cut.

Decision Time for RBNZ; Potentially the Last Rate Hike?

With the market gradually preparing for a much-needed break due to the Easter festivities, the RBNZ will meet this week. The market is looking for another rate increase, but there is a widespread feeling that we are close to the peak of this hiking cycle. Inflation is still elevated, but the aftermath of Cyclone Gabrielle might have affected the RBNZ’s hawkish appetite. Could the kiwi be assisted by the RBNZ and continue its recovery against the US dollar?

Will Nonfarm Payrolls Make Investors Reconsider Their Fed Pivot Bets?

With the banking crisis reviving fears that the Fed may need to start cutting rates later this year, market participants may look for their next clue on whether this could be true or not in the US employment report for March, scheduled to be released on Friday at 12:30 GMT. Such expectations have weighed on the US dollar recently, but will a positive surprise in the jobs report be enough to bring the currency back to life?

ISM Manufacturing Index Shows Sector Continues to Contract   

The March ISM Manufacturing Index registered 46.3, well short of expectations calling for a 48.0 print. The index fell 1.4 percentage points (pp) from February's reading of 47.7.

China's Rebound and Energy Prices

In March Brent crude oil has once again nosedived below $80, levelling all the systematic price growth from December 2022 to March 2023 in one fell swoop.

Higher Oil Prices – Lower Yields

The announcement from OPEC regarding a production cut sending oil prices higher led to several responses from both Federal Reserve members, US Treasury secretary Yellen and several ECB officials - basically it made the job a bit more difficult for the central banks, but more factors than oil determine the inflation path. Furthermore, Yellen stated that the situation around US banks was stabilizing.

RBA Holds Fire, Attention Shifts to RBNZ

In Australia, the Reserve Bank of Australia (RBA) decided not to hike the interest rates by 25bp at today’s monetary policy meeting. The latest slowdown in inflation and household spending convinced the Australian policymakers that they could take a breather this month.

US Treasuries Rallied With Front End Outperforming

US Treasuries rallied with the front end of the curve outperforming. US yields eventually closed 2 bps (30-yr) to 7.4 bps (5-yr) lower. Filtering out opening gains, shows double digit intraday declines at the front end of the curve.

RBA Board Pauses But Retains Tightening Bias

The RBA Board has softened its clear tightening bias but not enough for Westpac to change its view that we can expect one final rate increase at the May Board meeting.