Spreadex Market Update
EUR falls sharply as ECB Removes Commitment to Further Tightening
The Euro came under heavy selling pressure yesterday as traders reacted to the latest rate adjustment from the ECB. Despite the central bank hiking rates by a further .25% and Lagarde signalling that the bank had more to do, bulls were seemingly left a little unconvinced as the ECB removed the commitment to further tightening from the language in the meeting statement. EUR longs had been heavily built up into the meeting and, as we saw back in January, with the hike well signalled it was a case of selling the news yesterday for EUR traders.
US Jobs Data in Focus as Rate Cut Expectations Swirl
Following the volatility around the ECB yesterday, attention shifts back to the US today with the latest round of US jobs data due. On the back of the FOMC earlier this week, US rate hike expectations have diminished with traders now looking to gauge when the Fed might begin cutting rates. Despite pushback from Powell, the market is still pricing in a rate cut by September. On the numbers front, the market is looking for headline NFP of 181k down from 236k prior. If today’s jobs data highlights weakness in the labour market, rate cut pricing will likely start to come forward, dragging USD lower near-term while boosting stocks.
Apple shares traded higher yesterday as the company reported better-than-forecast Q1 results. The company posted Q1 EPS of $1.51, vs $1.42 expected on revenues of $94.836 billion vs $192.906 billion expected. Despite beating forecasts, sales were down overall for a second straight quarter. Looking ahead, the group didn’t issue formal guidance but CFO Luca Maestri said that the June quarter was expected to be similar to the March quarter provided macro conditions didn’t change significantly.
US banking fears are back in focus also after regional banking stocks came under heavy selling pressure this week. US regulators stepped in to halt trading in Pac West and Western Alliance as stocks in both banks plummeted. Pac West is reportedly looking at options for a strategic sale to avoid collapse in the latest sign that the crisis is deepening.
In FX, a better tone to risk appetite today is seeing firmer demand for the Aussie. AUD has seen decent gains across the board over the European open on Friday and looks set to gain further should stocks rally on the back of today’s US jobs data.
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