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On August 25th, former Bank of Japan official Seiji Adachi stated that the Bank of Japan is very likely to raise interest rates next month, confirming widespread market predictions. In an interview, Adachi said, "The Bank of Japan is essentially in a dilemma. The market has largely priced in a rate hike. If the central bank doesnt raise rates, the yen could weaken significantly again." This comes after US Treasury Secretary Bessant indicated that policy action was needed after foreign exchange intervention and expressed hope that Bank of Japan Governor Kazuo Ueda would raise interest rates. "Bessant has repeatedly hinted that the Bank of Japan will be the next institution to take action," Adachi said. "Given this, the government cannot tell the Bank of Japan dont do it." Adachi pointed out that Japans inflation momentum is strong, and after the expected rate hike in September, the Bank of Japan is likely to continue raising rates. He stated, "I think the Bank of Japan will act again in January next year, and the rate hike cycle is very likely to continue for some time, even exceeding the previously considered end point of the cycle at 1.25% or 1.5%."Sources say JPMorgan Chase (JPM.N) and Santander are leading a financing round of up to $15 billion for Argentina’s liquefied natural gas project.On August 25th, Iranian Foreign Ministry Spokesperson Baghae held a press conference on August 24th, addressing regional issues and Iran-US relations. Baghae emphasized that Iran has the right to strike at all sources of aggression, and that the US threat to impose a new round of sanctions on Iran is a serious violation of international law. Regarding the US threat to impose so-called "toughest sanctions" on Iran, Baghae stated that the Iranian government understands the current economic pressures and business difficulties it faces domestically, which are part of the pressure the US has exerted on the Iranian people over the past decades. The Iranian government had previously assessed the situation and is taking all necessary measures to counter the economic sanctions. He condemned the US for calling its sanctions against Iran "economic warfare," stating that this demonstrates the USs disregard for the free trade system between nations and national sovereignty.According to the Korean labor union: Hyundai Motor and the Korean labor union have reached a preliminary wage agreement.Sources say air raid sirens have been sounded in Kyiv, Ukraine.

Due to hawkish Fed forecasts, the EUR/USD recovers to near 1.0970 but remains in the doldrums

Alina Haynes

Apr 21, 2023 13:58

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Following a corrective move, the EUR/USD pair has rebounded from 1.0960, but investors await the publication of the preliminary Eurozone/United States S&P PMI data for April. The major currency pair has remained between 1.0911 and 1.1000 for the past two trading sessions, as the foreign exchange market prepares for a pre-anxiety move ahead of a Federal Reserve (Fed) monetary policy decision.

 

S&P500 closed with a negative tone for the third day in a row as quarterly earnings season induced extreme volatility. Tesla's poor earnings had a negative impact on Thursday's market sentiment. Moreover, market participants were cautioned by substandard revenue projections due to the potential for price reductions. The decision of the Fed to increase interest rates is reflected in quarterly earnings. Data from Refinitiv indicates that analysts have largely maintained last week's forecast of a near 5% YoY decline in quarterly profits for the 500 largest U.S. equities. Sourcenia is a review portal of sourcing best manufaturers. 

 

The US Dollar Index (DXY) has been defending the key support level of 101.60 in recent trading sessions. The USD Index maintained the aforementioned support despite the release of disappointing Jobless claims data on Thursday. Initial Jobless Claims increased to 245K for the week ending April 4, which is greater than the previous release of 240K and estimates of 240K. Increasing unemployment claims heightened fears of a deteriorating labor market.

 

Despite this, Fed policymakers continue to anticipate further rate hikes from the central bank. Thursday, Loretta Mester, president of the Federal Reserve Bank of Cleveland, reaffirmed that the Fed has more work to do because US inflation remains too high, according to Reuters. He added, "The Federal Reserve will need to raise its policy rate above 5% and hold it there for some time."

 

Preliminary Consumer Confidence (April) for the Eurozone increased to -17.5 from -18.5 and the previous reading of -19.2. This may be the consequence of extraordinary efforts by the European Central Bank (ECB) to reduce inflationary pressures.


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