April 29, 2024

Market run-through

Headlines

US PCE inflation index increases in March giving the FED much to ponder on the timing and extent of rate cuts in 2024.

GBP has quietly strengthened over the past fortnight as tensions in the Middle East start to ease, subduing safe haven flows and underpinning the Pound.  

The Bank of Japan draws a line in the sand, as early morning Yen price action looks suspiciously like intervention from the Central Bank of Japan.

USD

The Personal Consumption Expenditure (PCE) figure is the inflation gauge most closely watched by the Fed. The latest print showed that it increased to 2.7% in March. This is the second consecutive increase in PCE and comes at a time when US CPI figures are also pointing to accelerating price increases. The concern for the FED is that inflation may once again be starting to creep its way back in the US economy reducing the likelihood of seeing the multiple rate cuts the market had previously priced in. This week we have the FOMC meeting, with the overwhelming expectation that they will hold rates steady on May 1st before the Non-Farm payroll is released on Friday.

GBP

The Pound has revived its fortunes over the past two weeks as tensions in the Middle East start to subside. The World held its breath 10 days ago as missiles were exchanged between Israel and Iran.  This was the first direct exchange between the two nations since I was a boy, but thankfully calmer heads seemed to have prevailed, for now. This has allowed the Pound to regain a firmer footing versus the US Dollar, recapturing the majority of losses it suffered during the escalation of tensions which boosted safe-haven flows. In terms of UK data which could make the Pound falter, the calendar has nothing of significance to worry the markets and as such I would expect the recent trend of a firmer Pound to continue this week.

YEN

After falling to a 34-year low against the US Dollar, the Yen seems to have received help from the Central Bank. Although not officially stated by the BOJ, they are front and centre on a shortlist of suspects when it comes to moving USD/YEN so decisively. In fairness, the BOJ did warn the markets that they were watching closely. It would now seem that 160 was the line in the sand. 

Andy Demetriades, FX and Payment Partnership Team Lead

Behind the desk

It’s all about patience in the current scenario. Bitcoin’s price has been fluctuating lately, hovering between $60,000 and $67,000 without any significant breakthrough. Interestingly, there’s been a notable trend of capital outflows from Bitcoin ETFs, including the popular BlackRock’s iShare Bitcoin Trust ETF, which saw a period of no capital inflow. This slowdown in inflows raises questions about investor interest in the crypto asset. Are they losing interest, or is the lack of action simply becoming mundane?

On the trading desk, BTC buy orders persist. Personally, I maintain the belief that any buy order is a wise move, especially with the 100k price point still within reach. The current market appears to be taking a breather after a period of bullish momentum, which is expected. While there may be some fear lingering in the market due to past crypto sell-offs, it’s important not to mistake this moment of calm for a loss of momentum. We’re keeping a keen eye on the market and eagerly await potential volatility in alternative coins as well.

Alex-Desmond Brathwaite, Senior Trader

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