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On May 14th, US international trade commodity prices rose sharply in April, with import prices (market expectation +1.0%) rising 1.9% month-over-month and export prices (market expectation +1.1%) surging 3.3%. This much-anticipated increase indicates that the ongoing conflict with Iran continues to exert pressure on input costs, a point already reflected in the Feds Beige Book in early April as a compression of corporate profit margins. Core import prices (excluding fuel) had already begun to rise significantly before the Iran conflict, and this months 0.8% increase was the same as in February, but this may already include the secondary impact of rising energy prices. Food and feed prices were also significantly affected by rising oil prices, rising 1.1% in March and then another 0.9% in April. Industrial supplies and raw materials (excluding fuel) rose 1.6%; fuel prices surged 16.3%. Capital goods prices were also worrying, rising 1.1%. Consumer goods rose 0.4%, a relatively moderate increase, but still high; automobile prices fell slightly by 0.1%.On May 14th, executives from over ten well-known American companies accompanied President Trump on his visit to China, including Apple CEO Tim Cook, Nvidia founder and CEO Jensen Huang, Tesla CEO Elon Musk, and Qualcomm President and CEO Cristiano Amon. In an interview, Amon stated that the Chinese economy is dynamic.The European-Mediterranean Seismological Centre reports a 5.5-magnitude earthquake in the Colombian region.U.S. retail sales growth slowed in April, indicating that high oil prices prompted consumers to cut back on spending in some areas. Data showed that retail sales rose 0.5% last month, after a revised 1.6% increase in March. Excluding gas station sales, April saw a 0.3% increase. Since these figures are not adjusted for inflation, the growth likely reflects rising prices rather than increased sales volume. Nine of the 13 categories saw growth. Sales at sporting goods stores, online retailers, and electronics stores all increased in April. Auto sales declined. Gas station revenue rose 2.8% due to soaring oil prices. Grocery spending also increased significantly, likely reflecting higher food prices that month. Sales in the control group (a metric used by the government to calculate quarterly GDP for goods spending) rose 0.5%. This metric excludes food services, car dealerships, building material stores, and gas stations.May 14th - The number of Americans filing for unemployment benefits rose slightly last week, indicating that the labor market remains stable despite the war in Iran pushing up energy prices and exacerbating inflationary pressures. The U.S. Labor Department said Thursday that initial jobless claims rose by 12,000 to a seasonally adjusted 211,000 in the week ending May 9, compared to expectations of 205,000. The war in Iran has disrupted shipping in the Strait of Hormuz and pushed up prices for fertilizers, petrochemicals, and other commodities such as aluminum. In addition, continuing jobless claims (often used as a proxy for hiring) rose by 24,000 to 1.782 million in the week ending May 2.

Prior to the release of Australian employment data, the AUD/JPY pair attempts to regain 89.00

Alina Haynes

Apr 12, 2023 13:44

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The AUD/JPY pair attempts to reclaim the critical resistance level of 89.00 during the Asian session. Kazuo Ueda, the governor of the Bank of Japan (BoJ), has advocated for an extension of the already decade-long ultra-loose monetary policy in order to consistently achieve an inflation rate above 2%.

 

The decelerating Producer Price Index (PPI) contradicts the optimistic outlook of the Japanese government regarding wage growth. As expected by market participants, the March PPI did not change. The annual PPI came in at 7.2%, which was higher than the consensus estimate of 7.1% but lower than the previous release of 8.1%. The inability of companies to sustain accelerating production rates at factory gates is indicative of weak household demand.

 

Analysts at Commerzbank anticipate that the Japanese Yen will only appreciate over the long term if the current monetary policy is abandoned quickly.

 

Regarding the Bank of Japan's (BoJ) Yield Curve Control (YCC), the IMF has stated that allowing more flexibility in YCC could have repercussions for global markets, but it could also prevent future policy shifts that could result in significant spillovers.

 

Investors are awaiting the March Employment Report for fresh impetus in the Australian Dollar. The market expects the Australian economy to add 20,000 employment, which is less than the previous estimate of 64.6K. While the Unemployment Rate is expected to rise to 3.6% from 3.5% in February, it is anticipated that the Unemployment Rate will increase to 3.6%.

 

Governor Philip Lowe of the Reserve Bank of Australia (RBA) has left the door open for additional rate hikes if Australian inflation persists, so the publication of stronger-than-expected employment gains could reignite fears of additional rate hikes.

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