Yesterday was the ultimate game of two halves as macro data came on to play “super sub”, shaking up what had been a listless day of marginal moves.
Markets had still been blowing away the cobwebs collected over the Easter holidays. Volumes were light on Wednesday morning, which helped major currency pairs trade across a pretty tight range for much of the day, despite the usual trickle of data.
That all changed with the release of US services figures yesterday afternoon. US ISM Services PMI fell to 51.4 in March from 52.6 in February, underscoring expectations of a small improvement in the data. New orders fell off significantly and employment contracted, adding up to the study’s worst read for three months.
That caused an instant US dollar selloff. GBP/USD advanced by almost half a cent on the news, while EUR/USD gained a similar amount within an hour of the data hitting screens.
Earlier, eurozone inflation fell to its joint lowest level in almost two and a half years in March’s preliminary report. The 2.4% figure matches the low from last November and marks a reassuring return to deceleration for Europe’s price rises, which had been on the rise heading into 2024.
Unemployment in the eurozone meanwhile came in at 6.5% in February. That was unchanged from January’s figures but slightly above forecasts of 6.4%.
In a speech at Stanford University last night, Federal Reserve chair Jerome Powell said that the central bank will need more time to evaluate the current state of inflation before cutting interest rates.
The Japanese yen continues to languish around its lowest in decades against the US dollar. The yen’s tough times have been caused in large part by the Bank of Japan, which shocked markets by acting incredibly uncertain about future interest rate increases. This is another reminder of just how quickly markets can change. After all, it was just a few short months ago that the yen seemed set for a blockbuster 2024.
The Royal Mail warned it would have to limit second-class post and bulk deliveries in a cost-cutting drive to stay afloat. If you sent any chocolate via post over the past week, you might want to bear this in mind to avoid any confectionary mishaps next year…
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