Daily Broad Market Recap – May 2, 2024

The US dollar continued to lose points against its major counterparts, as more traders digested the less-tight-than-expected monetary policy decision by the Federal Reserve.

Other major financial assets and their dollar counterparts were more variable as they reacted to the dollar's trends and individual drivers.

This is what you missed from yesterday's markets!

Titles:

• Inflation in Switzerland It unexpectedly accelerated from 0.0% to 0.3% in April – bringing the annual CPI from 1.2% to 1.4% – due to higher prices for international holidays and air transport.
• Switzerland Manufacturing PMI For April: 41.4 (45.5 expected, 45.2 previous); “The PMI indicated a split in the Swiss economy: strong services, weak manufacturing.”
• HCOB final manufacturing PMI for France The reading for April was revised from 44.9 to 45.3 (no changes expected)
• Germany's final HCOB manufacturing PMI April's reading was revised slightly higher from 42.2 to 42.5 (no changes expected)
• Final Eurozone HCOB Manufacturing PMI The reading for April was revised from 45.6 to 45.7 (no changes expected)
• the American Challenger Report He noted that US employers announced 64,689 job cuts in April, a 28% decline from the March figure. Companies announced job cuts of 4.6% during April last year.
• Weekly initial unemployment claims in the United States Printed another reading of 208K (vs. 212K expected) in the week ending April 27
• Nonfarm primary productivity in the United States In the first quarter: 0.3% QoQ (0.8% expected and 3.5% previous); Initial labor costs per unit In the first quarter: 4.7% QoQ (3.6% expected, 0.4% previous)
• BOC Governor Macklem Canadian interest rates do not need to be the same as U.S. interest rates but “there is a limit to how far apart they can be,” he said, noting that “we are certainly not close to that limit.”
• US factory orders For March: 1.6% m/m as expected (1.2% previously), supported by demand for commercial aircraft and automobiles

Broad market price movement:

Major financial assets continued to respond to Fed Chair Powell's opposition to raising interest rates amid a very high inflation environment.

Spot gold gave up some of its gains after the FOMC meeting and made its way to $2,290 before gaining support during the US session, but Bitcoin (BTC/USD) saw an intraday uptrend after falling sharply early in the day.

The US dollar was oscillating throughout the day until a quarterly report on productivity and unit labor costs pointed to a tight labor market but also raised fears of a slowdown in hiring in the next few months. US dollar and 10-year US bond yields weakened during the US session, while their counterparts such as spot gold, crude oil and US stock indices saw gains.

Forex market behavior: US dollar against major currencies

Overlay of the US dollar against major currencies Chart by TradingView

With the exception of speculation about another intervention in the Japanese currency and the rise against the Swiss franc after the release of the Swiss CPI report, which was stronger than expected, the US dollar was trading in narrow ranges against its counterparts.

The scene intensified during the American session when quarterly reports of non-agricultural productivity and unit labor costs indicated a tight labor market. The dollar found support for a while before traders started to worry about a future slowdown in hiring The US NFP report is released on Friday.

The US dollar lost points across the board and capped the day in the red against its major counterparts.

Potential catalysts coming on the economic calendar:

• Japan and China markets are on bank holiday
• The French government budget is at 6:45 am GMT
• French industrial production at 6:45 am GMT
• Spain's unemployment rate changed at 7:00 AM GMT
• The final UK Services PMI will be announced at 8:30 AM GMT
• Eurozone unemployment rate at 9:00 AM GMT
• The US NFP report will be released at 12:30 PM GMT
• Final PMI for US services at 1:45pm GMT
• US Services Purchasing Managers' Index (ISM) at 2:00 PM GMT

It's NFP Day for US session traders! US labor market numbers will be in the spotlight as traders try to figure out how the reports will impact the Federal Reserve's monetary policy biases.

The final S&P Services Index and US ISM Services PMI due a few minutes after the NFP reading may also attract attention, so make sure you're glued to the tube while the report is released!

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