In today's market insights, we delve into Citibank's oil price predictions, the evolving competition between Huawei and Apple, the Saudi Arabia-Tesla partnership, and the upcoming rate decisions from the world's major central banks.
The Fed interest rate is in focus
ISM Manufacturing PMI in the US
May 1st, 16:00 GMT+2.
The US Manufacturing Purchasing Managers Index keeps falling. The previous fact was 46.3.
The most fragile zones are:
- New orders – decline by 2.7 points.
- Employment – fell by 2.2 points.
- Inventories and Prices – fell by 2.6 and 2.1 points.
The economy is slowing down. By the way, the new orders index is down for seven months.
The economists forecast that the index will slightly rise to 46.6 points in April.
Considering the high interest rate, the fact that it is lower than expected may be perceived by the market as a bullish factor because it will give additional assurance that the Fed will start decreasing the rate soon. EURUSD may rise, then.
Instruments to trade: EURUSD, USDCAD, XAUUSD
Australian key rate decision
May 2nd, 06:30 GMT+2.
The Reserve Bank of Australia (RBA) will decide the key rate.
According to the RBA rate tracker, the probability of the rate change is around 17%. Interestingly, during the two weeks from the 13th to the 24th of April, the probability of a rate hike increased significantly. What happened?
We think that it is connected to the Manufacturing and Non-Manufacturing PMI indices. The preliminary facts of both indices are better than expected. The situation with the Services PMI is quite surprising – the index surpassed 52 points. And it gives room for RBA for a further step toward a rate hike.
The unemployment rate in Australia was published better than expected - +3.5% against 3.6% in the forecast.
Moreover, we have already mentioned that the Australian dollar is constantly decreasing. The weak dollar is not bad for the economy, considering Australia is a net exporter. But on the other hand, imports dropped by 9% in February and demonstrated the minimum since May 2022.
We aren’t sure that RBA is ready to increase the rate, but it may signal to the market that it will do it soon. That’s why the Australian dollar may grow on the news.
Instruments to trade: AUDUSD, AUDCAD, AUDCHF
The Fed’s interest rate decision
May 3rd, 20:00 GMT+2.
The week's most important news is the US Fed interest rate decision.
According to the CME Fed watch tool, the rate hike probability by 25 bp is 86%.
Most of the FOMC members are Hawks.
We have no doubts that the key rate will be higher, so verbal interventions will be in focus.
The Fed’s Loretta Mester said: It is necessary to raise the rate above 5%.
John Williams said: ‘It will take two years to return inflation to the 2% target.’
The probability that EURUSD will fall is high.
Instruments to trade: EURUSD, USDCAD, USDJPY
The US Unemployment rate
May 5th, 14:30 GMT+2.
Economists think that the unemployment rate will be +3.6% vs. the previous fact of 3.5% in March.
That’s reasonable, considering that initial jobless claims constantly increased in April and continuing jobless claims almost exceeded 1.9M.
We want to remind you that activity in the unemployment sector, according to ISM, is falling.
The high unemployment rate may provoke traders to sell the US dollar. But it will happen only if the fact beats the forecast. Otherwise, the rate of +3.6% is already in price.
Instruments to trade: EURUSD, USDJPY, USDCAD
It will be the hottest week of September, with four central banks’ meetings, five PMI releases, and a lot to trade.
Lagarde says difficult times have come, and the ECB raised the rate not to cause a recession but to stabilize prices. Read the report to learn the freshest news of the day!
US stock markets started falling, while the US dollar is rising. What to expect from
Oil prices are rising and Russia banned the export of its petrol. What's happening in the markets?
Today's main event for the markets is the FOMC Interest Rate Decision, where the US regulator is widely expected to keep the interest rate at the same level of 5.5%.