WEEK AHEAD: APRIL 4

Short Description

FOMC Minutes & RBA

Video Script

Number one:

FOMC minutes. In the light of the first rate hike since 2018 and a dot plot that signalled a rate hike at every meeting this year, markets will be keen to hear more details on The Fed’s thinking from minutes out late on Wednesday. The dollar initially softened after the last FOMC meeting but has been picking up on bets that the Fed will raise rates by 50 basis points at the next meeting.

 

Number two:

The RBA rate decision. The Aussie dollar has been one of the top FX risers over the past month thanks in large part to the huge rally in commodity prices. High inflation in Australia coupled with high demand for the basic resources that Australia exports are bullish for the Aussie. The open question is whether the RBA supports the rally by acknowledging the situation at its meeting on Tuesday.

 

Number three:

March Services PMIs. Economists have been ringing the alarm bells for the economy and the U.S. yield curve inverted, in large part because of fears inflation will slow consumer spending. PMIs for the services sector over March are some of the best forward-looking indicators to judge the health of demand for services.

 

Number four:

Major price levels to watch. USD/JPY cracked 6 year highs at 125 which is now major resistance. The 130 level is still supporting GBP/USD while EUR/USD made it back over 1.11 resistance which is now near term support. Gold needs to break 1900 or 1950 to pick a direction.

 

Number five:

Ukraine peace talks. I didn’t place this at number one this week but an end to the war in Ukraine, if it were to happen, would be critical for risk sentiment. Oil and gold prices are pulling back from multi year highs and equities are bouncing off their lows, on the prospect of the war being over, and we could expect that to continue if/when it happens.