Most European markets were closed for the holiday, but that did not stop the major currencies from recording big moves during the first-tier issues!
The spotlight was mostly on the Bank of England's monetary policy statement, as the bank decided to keep interest rates at 5.25% as expected but still had some surprises up its sleeve.
Read on to find out what fell (or rose!) in the financial markets.
Titles:
- Average Japanese cash income for March: 0.6% YoY (1.5% expected, 1.6% previous)
- Bank of Japan meeting minutes The bank appeared surprisingly hawkish as it called on members to raise interest rates to contain potential inflation due to a weak yen
- China's trade balance for April: Surplus of $72.4 billion (expected surplus of $81.4 billion, previous surplus of $58.6 billion) as exports return to growth while imports beat expectations
- The Bank of England kept interest rates unchanged at 5.25% As expected by 7-2 vote (expected vote 9-0, previously 8-1)
- In his pressure device, Bank of England Governor Bailey He said that the central bank may lower interest rates and ease monetary policies “perhaps more than is currently priced in market prices.”
- Initial unemployment claims in the United States: 231k (212k expected, 209k previous)
- Bank of Canada Governor Macklem In the Financial Stability Report: High interest rates will continue to restrict household spending
- Pills Member of the Monetary Policy Committee of the Bank of England: Increasing confidence in starting to ease policy but the time to act is not yet ripe, and this depends on the data and the absence of economic turmoil
- European Central Bank official: The future inflation landscape is likely to be shaped by a slowdown in globalization, leading to potentially higher inflation rates than was the case previously.
- Daly, member of the Federal Open Market Committee: The past three months have created a great deal of uncertainty about inflation expectations for the coming months, with a strong labor market coupled with persistently high inflation.
- BusinessNZ Manufacturing Index in New Zealand In April: 48.9 (previously 46.8)
- Japanese household spending in March: -1.2% YoY (-2.3% expected, -0.5% previous)
Broad market price movement:
Dollar index, gold, S&P 500, oil, US 10-year yield, Bitcoin overlay Chart by TradingView
Markets were quiet early in the day, as a market holiday in Europe kept liquidity thin. Asset classes appear to still be reacting to their individual catalysts, with crude oil flipping and turning while the S&P 500, Bitcoin and gold rose as the US session continued.
On the other hand, US bond yields and the dollar took hits after seeing US initial jobless claims data surprisingly weaker than expected. Weekly claimants came in for the first time at 231,000, higher than the expected 212,000 and the previous reading of 209,000.
Forex market behavior: US dollar against major currencies
Overlay of the US dollar against major currencies Chart by TradingView
The US dollar had an overall positive start, rising slowly despite weak liquidity conditions during the European Ascension Day holiday.
A bit of profit-taking in GBP/USD occurred ahead of the Bank of England's decision, MPC minutes and quarterly monetary policy report, before the British currency fell sharply following a more pessimistic-than-expected announcement.
The spotlight quickly turned to the disappointing initial jobless claims numbers in the US, which sent the dollar sharply lower against its rivals. The downward trajectory continued for the rest of the session, with the US currency recording its biggest losses against the Australian and New Zealand dollars.
Potential catalysts coming on the economic calendar:
There are still two top-tier market catalysts on the agenda before the week is out, as Canada will print its April employment report while the US will release the University of Michigan's preliminary consumer confidence index for the same month.
Make sure to stay prepared for potential volatility in the USD and CAD pairs, as well as significant swings in market sentiment!
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