The dollar retained its strong stance during the Asian trading session today, bolstered by a surge fueled by robust manufacturing data and a notable rebound in treasury yields overnight. Investor attention now turns to forthcoming statements from key Federal Reserve officials, including Governor Michelle Bowman and New York Fed President John Williams. These remarks are eagerly anticipated as markets seek insights into the central bank's stance on monetary easing.
The burning question on the minds of investors and analysts alike centers around the Fed's willingness to implement interest rate cuts in June, and whether three cuts will be executed this year. Analysts anticipate that the upcoming comments from Fed officials will shed light on the current balance between hawkish and dovish sentiment within the central bank.
Furthermore, additional guidance is expected to surface from upcoming economic indicators such as the ISM services data and Non-Farm Payroll reports scheduled for later in the week.
Sterling Weakens, Bitcoin Faces Significant Decline
In the broader forex market, Sterling has emerged as the weakest performer this week, closely followed by the Kiwi and Euro. Conversely, the Canadian Dollar and Japanese Yen have demonstrated relative resilience, while the Australian Dollar and Swiss Franc find themselves in a mixed position.
Turning to technical analysis, Bitcoin has undergone a notable decline, suggesting that the recent rebound from 60,769 may have peaked at 71,779. This indicates that the corrective pattern from 73,812 is now entering its third leg, with a deeper downturn expected back to 60,769.
However, significant support is anticipated around the 38.2% retracement level of the move from 38,496 to 73,812, positioned at 60,321, which could potentially signify the completion of the pattern. As a result, a firm breach below the 60k threshold appears improbable at this juncture. Ultimately, a decisive breach of the 60k threshold seems improbable for now.
RBA Minutes: No Rate Hike Discussed
The release of the Reserve Bank of Australia's (RBA) minutes from the March 18-19 meeting unveiled a departure from previous communications, with no explicit discussion on rate hikes. This marks a notable shift in tone, as previous communications had outlined the board's considered options.
During the meeting, the board assessed that more time would be needed to gain "sufficient confidence" in the return of inflation to the target range within a foreseeable timeframe. Emphasizing the priority to "preserve as many of the gains in the labor market as possible," the board described the policy outlook as ambiguous. They found it "difficult to either rule in or out future changes" in the cash rate target.
While inflation remains elevated but gradually declines towards the target, the labour market is nearing conditions synonymous with full employment. In light of these observations, the most appropriate course of action was deemed to be maintaining the cash rate target unchanged.
Furthermore, the board acknowledged that risks had become "little more even," noting that recent data did not indicate the "materialization of upside risks to inflation" and confirmed an expected slowdown in economic output.
Orr Affirms RBNZ's Commitment to Inflation
RBNZ Governor Adrian Orr delivered a resolute message today, emphasizing the committee's unwavering focus on steering inflation back to its target range.
Orr acknowledged the progress made, stating that the RBNZ is "on track" to return inflation to targets. However, he tempered expectations by acknowledging that the journey is far from complete, admitting that they are "not there yet."
A key concern highlighted by Orr revolves around inflation expectations, which he views as a significant challenge in the fight against rising prices. He pointed out the cyclical nature of inflation expectations, explaining that "the more people believe inflation will rise next year, the more likely it is to occur."
Looking ahead to the European session, notable economic releases include Swiss retail sales and PMI manufacturing, Eurozone PMI manufacturing final figures, UK PMI manufacturing final data, and Germany's CPI flash report.