Focus Turns to Final March Inflation for Euro Area

Today, focus is on the final inflation data for March in the euro area. We particularly look out for inflation components that reflect domestic demand as service inflation remained elevated in March. The final data will also allow us to estimate how much the timing of Easter impacted the March numbers and to what extent we should expect an effect on the April numbers.

Dollar Rally Shifts into a Lower Gear

The dollar rally shifted into a lower gear, but the US currency clearly holds pole position. EUR/USD eased slightly further (close 1.0919). The yen continues outperforming despite multiple verbal warnings from Japanese officials (USD/JPY close 154.72).

USD/JPY Analysis: Prospect of a Breakout of the Level of 155 Yen per Dollar

The USD/JPY rate has consistently reached new highs since 1990, approaching the psychological level of 155 yen per US dollar. The Japanese currency has already fallen about 9% against the dollar this year.

Bitcoin and Ethereum in Eye of Storm?

The crypto market avoided sharp moves on Tuesday, showing low volatility over the 24 hours and remaining near $2.3 trillion. The Crypto Fear and Greed Index added 2 points to 67 (greed) by Wednesday.

GBP/USD Rises as UK Inflation Higher than Expected

The British pound has rebounded after sliding 2.1% over the past week. In the European session, GBP/USD is trading at 1.2461, up 0.28%.

Sunset Market Commentary

Markets Fed Chair Powell yesterday rubberstamped a delay of the inaugural Fed rate cut as inflation doesn’t provide the confidence needed to ease policy anytime soon. Yields yesterday still gained a few bps, but today markets came to a short term evaluation point. US yields change between -5 bps (5 & 10-y) and -3 bps (2-y).

Market Continues to Price in a Plethora of Rate Cuts for 2024

The market is digesting both the latest geopolitical developments and the recent rally in oil prices as the countdown to the May 1 Fed meeting has begun. Compared to the start of 2024, fewer rate cuts are expected by the key central banks with the market also contemplating a non-negligible possibility of the Fed keeping its rates unchanged during 2024.

ASML Miss Hammers Appetite

The big story of yesterday was the disappointing results from the biggest European company, ASML, which sells equipment to chipmakers so that they could build their chips. ASML sales missed estimates and new orders came in way lower than expectations in Q1. They slumped by 60% compared to a quarter earlier.

Sunset Market Commentary

Strike three. Some dismissed the hotter-than-expected inflation prints in January and February as statistical flukes that would soon be reversed. March delivered another nasty upside surprise. Headline CPI rose from 3.2% to 3.5% vs 3.4% expected while the underlying gauge defied hopes for the tiniest of declines by stabilizing at 3.8%. Low base effects have helped but that’s only part of the story.

Bank of Canada Upgrades Outlook for Economy, Remains Silent on Rate Cuts

The BoC remains steadfast in its desire to maintain rates at the current 5% level. It can justify this stance based on its upgrade to economic growth, while still expecting inflation to remain somewhat elevated over the coming months. This economic backdrop (alongside an upgrade to the neutral rate) affords the central bank more time to observe how inflation evolves, allowing it to gain greater confidence that price pressures have been tamed before it decides to cut its policy rate.