GBP/USD remains on backfoot below 1.2570, UK GDP data looms ========== GBP/USD remains on the defensive around 1.2550 in Friday’s early Asian session. The US Producer Price Index (PPI) increased by 2.1% YoY in March, missing the estimation of 2.2%. BoE’s Greene said the rate cuts in the UK should remain "a way off" amid the persistence of inflation pressure. The GBP/USD pair remains on the backfoot near 1.2550 during the early Asian session on Friday. The market expects that the Bank of England (BoE) will cut its interest rate sooner than the US Federal Reserve (Fed) weighs on the GBP and the major pair. Later on Friday, investors will monitor the UK monthly Gross Domestic Product (GDP) for February and the preliminary US Michigan Consumer Sentiment Index for April. The hotter-than-expected CPI inflation reading this week triggers speculation that the Fed will have to push back the number and timing of interest rate cuts this year. Fed officials believe the US central bank had reached the peak of the current rate-tightening cycle and monetary policy was well positioned to react to the economic outlook, including the possibility of keeping rates higher for longer if inflation declines gradually. The hawkish remarks from the Fed lift the Greenback and drag the GBP/USD pair lower. On Thursday, the US Producer Price Index (PPI) data for March increased by 2.1% YoY, missing the estimation of 2.2%. The core PPI, which excludes volatile food and energy prices, rose by 2.4% YoY, compared to the market consensus of 2.3%. On the other hand, the hawkish comments from policymaker Megan Greene failed to boost the GBP. Greene stated that the interest rate cuts in the UK should remain "a way off" due to the persistence of inflation pressure, which is still more of a threat than in the US. Greene added that markets were wrong to expect that the BoE to cut rates earlier than the Fed this year. The UK GDP numbers for February might offer some hints about the UK economy. If the report shows stronger-than-expected data, this could provide some support to the GBP and cap the downside of the GBP/USD pair. #Gbp/usd #UkGdp #InterestRates #Inflation #BankOfEngland #FederalReserve https://www.fxstreet.com/news/gbp-usd-remains-on-backfoot-below-12570-uk-gdp-data-looms-202404120054

Japan’s Suzuki: Weak Yen has pros and cons ========== Japanese Finance Minister Shunichi Suzuki stated that a weak Japanese Yen (JPY) could push up import prices and have a negative impact on consumers and firms. He emphasized the need to closely watch foreign exchange (FX) moves with a high sense of urgency and to take appropriate steps to minimize the impact of a weak yen on households. Suzuki also mentioned the desirability of stable FX movements reflecting fundamentals and the analysis of the background driving FX moves. He revealed that there is a chance FX will be discussed at the upcoming G20 meeting and that he is in close communication with top currency diplomat Kanda. At the time of writing, USD/JPY is trading 0.02% lower on the day at 153.25. #Japan #Suzuki #WeakYen #ImportPrices #Consumers #Firms #ForeignExchange #Fx #G20Meeting https://www.fxstreet.com/news/japans-suzuki-weak-yen-has-pros-and-cons-202404120011

What’s behind the US economy’s resilience? ========== The US economy has shown extraordinary resilience, outperforming other advanced economies despite high interest rates. Several factors contribute to this strength, including heavy public spending, immigration flows, fixed-rate mortgages, and energy independence. However, the US dollar has not experienced a significant rally due to developments in other financial markets and the collapse in natural gas prices. Looking ahead, the US economy's resilience may lead to persistently high inflationary pressures, potentially delaying rate cuts by the Federal Reserve. A full-blown rally of the US dollar may require a period of risk aversion in the markets and a correction in equity valuations. Foreign central bank rate cuts could also impact the dollar's performance. #UsEconomy #Resilience #PublicSpending #Immigration #Mortgages #EnergyIndependence #UsDollar #FinancialMarkets #Inflation #FederalReserve #RiskAversion #EquityValuations #ForeignCentralBanks https://www.fxstreet.com/analysis/whats-behind-the-us-economys-resilience-202404110901

Markets trim Fed rate cut expectations amid high US CPI ========== Markets have reduced their expectations for a rate cut by the Federal Reserve due to high US CPI. The US March CPI print surprised to the upside with a 0.4% m/m increase in both headline and core inflation. The market reaction was strong, with expectations of rate cuts for the year being scaled back to 2. The 10-year yield gained 18bp and the US dollar gained 1% against most G-10 currencies. Asian equity markets tumbled following the CPI print, with the Nikkei down 0.8% and the MSCI index for Asia-Pacific losing 0.7%. The ECB is expected to confirm its current narrative and deliver a rate cut in June. In Sweden, inflation expectations are expected to be confirmed at around 2.0% on all horizons. The US PPI data and Fedspeak are also awaited. #Fed #RateCut #UsCpi #Ecb #Inflation #MarketReaction #Yield #UsDollar #EquityMarkets #Nikkei #MsciIndex #Sweden #InflationExpectations #Ppi #Fedspeak https://www.fxstreet.com/analysis/markets-trim-fed-rate-cut-expectations-amid-high-us-cpi-202404110605

US inflation report could temper June cut expectations ========== European markets have started the day on a solid footing, with rebounding throughout the region despite potential US-focused ahead of today's inflation data and FOMC minutes. The RBNZ decision to keep rates steady came as no surprise, and their steadfast approach to driving down inflation stands them in stark contrast to those banks signalling potential action in the coming months. US inflation looks to provide a significant hurdle for markets today, with expectations of an uptick in headline CPI signalling the growing likeliness that we will see the Fed push back against expectations of a June rate cut. Between a strong US economy, strong jobs, and elevated inflation rate, there is little surprise that we are seeing markets gradually temper their expectations for a June rate cut from the Fed. #UsInflation #JuneRateCut #EuropeanMarkets #Rbnz #Fomc #Fed https://www.fxstreet.com/analysis/us-inflation-report-could-temper-june-cut-expectations-202404100957

Pound Sterling stays on sidelines ahead of US inflation data ========== The Pound Sterling remains uncertain ahead of the United States Consumer Price Index (CPI) data for March, which will be published at 12:30 GMT. Economists expect US inflation to remain relatively high in March due to increasing gas prices, insurance costs, and rentals. Hot price pressures would shift market expectations of Federal Reserve (Fed) rate cuts to the third quarter of this year. On the domestic front, the Pound Sterling will be guided by the United Kingdom's monthly Gross Domestic Product (GDP) and factory data for February, which will be published on Friday. The rising cost-of-living crisis in the UK supports Bank of England (BoE) rate cut prospects. The Pound Sterling faces resistance near 1.2700 and struggles to extend upside. The US Dollar Index (DXY) rebounds to 104.15 ahead of the US inflation data. The rising burden of higher cost of living on UK households prompts demand for rate cuts by the BoE. Investors expect the BoE to pivot to rate cuts after the June meeting. The Pound Sterling (GBP) is the oldest currency in the world and the official currency of the United Kingdom. The decisions of the Bank of England impact the value of the Pound Sterling, as it adjusts interest rates based on achieving price stability. Economic data releases, such as GDP, Manufacturing and Services PMIs, and employment, can influence the direction of the GBP. The Trade Balance is also a significant data release for the Pound Sterling, as a positive net Trade Balance strengthens the currency. The Pound Sterling trades modestly flat below 1.2700 and awaits the US CPI data. Gold price trades in positive territory around $2,355 as investors await the US CPI data. Ripple (XRP) price tests a crucial support at $0.60. The US Consumer Price Index is set to rise 3.4% YoY in March, following the 3.2% increase in February. Annual core CPI inflation is expected to edge lower to 3.7% YoY in March. #PoundSterling #UsInflationData #BankOfEngland #GrossDomesticProduct #FederalReserve https://www.fxstreet.com/news/pound-sterling-remains-on-tenterhooks-ahead-of-us-inflation-data-202404100755

Dollar retreats on soft US PMIs, bond yields tumble ========== The US ISM Manufacturing PMI in February fell to 47.8, way below estimates of 49.5, and 49.1 previously. US Bond yields tumbled, with the 10-year rate settling at 4.18% (4.25%). The 2-year US treasury rate slumped 11 basis points, finishing at 4.53%. The Dollar Index (USD/DXY), which measures the value of the Greenback against a basket of 6 major currencies, retreated below the 104 level to 103.87 at the New York close. The Australian Dollar (AUD/USD) rebounded against the Greenback, settling at 0.6525 (0.6500). New Zealand’s Kiwi (NZD/USD) rallied 0.3% to 0.6105 from 0.6085 Friday. Sterling (GBP/USD) climbed to 1.2660 (1.2620). The Euro (EUR/USD) edged up 0.25% to 1.0840 (1.0807 Friday). The Japanese Yen weakened past the 150 Dollar mark. The USD/JPY pair finished at 150.12 (149.90 Friday). Wall Street stocks gained. The DOW climbed to 39,050 from 38,880 Friday while the S&P 500 added 0.79% to 5,133 (5,080 Friday). Other economic data released Friday saw the Eurozone January Unemployment Rate dip to 6.4%, against forecasts at 6.5%, unchanged from 6.4% previously. China’s February Caixin Manufacturing PMI climbed to 50.9 from 50.8 previously, beating estimates at 50.6. #Dollar #UsPmis #BondYields https://www.fxstreet.com/analysis/dollar-retreats-on-soft-us-pmis-bond-yields-tumble-202403040330