The United States of America

USD is weakening against EUR and GBP but strengthening against JPY.

The dollar is under pressure after Friday’s April labor market statistics, which reflected its cooling. The employment level increased by 175.0K, less than both forecasts of 238.0K and the previous figure of 315.0K, and unemployment – from 3.8% to 3.9%. YoY, average hourly wages slowed from 4.1% to 3.9% instead of the 4.0% expected. These data strengthened investors’ confidence in the beginning of the US Fed’s interest rate reduction this year. Experts believe that it will be double, and its total size will be 50.0 points. Yesterday, a member of the regulator’s board, Michelle Bowman, said that inflation was likely to continue to decline despite maintaining borrowing costs at current levels, confirming her readiness to tighten monetary policy again if consumer prices stabilize above the target of 2.0% or continue to rise significantly.

Eurozone

EUR is strengthening against USD and JPY but weakening against GBP.

In April, the service PMI rose from 51.5 points to 53.3 points, exceeding the expected 52.9 points, and the composite indicator increased from 50.3 points to 51.7 points instead of the predicted 51.4 points. The service PMI in Germany, the key region’s economy, adjusted from 50.1 points to 53.2 points against the estimated 53.3 points, and the composite PMI changed from 47.7 points to 50.6 points, returning to the green zone. In April, its growth was the fastest in almost a year, as expansion in the services sector offset a significant decline in the industry. Today, European Central Bank (ECB) chief economist Philip Lane said the possibility of the regulator’s June interest rate cut was growing as service sector inflation is finally easing.

The United Kingdom

GBP is strengthening against EUR, JPY, and USD.

Today is a public holiday in the UK, so banking institutions are closed and investor activity is reduced. The Bank of England’s monetary policy meeting is due on Thursday. Officials may keep the interest rate at 5.25% but hint at a move to a “dovish” rate in the future. Analysts believe the regulator’s economists will begin reducing the cost of borrowing this year. However, they differ on the timing of its start: the majority expects a change in indicators in June or August and two adjustments by a total of 50.0 percentage points.

Japan

JPY is weakening against EUR, GBP, and USD.

Tomorrow, a summary of the Bank of Japan’s views is due, which may contain hints on the regulator’s further actions in the field of monetary policy: most experts expect the next increase in borrowing costs in the second half of this year depending on a stable movement of inflation towards the target level of 2.0 %. In addition, investors are monitoring the actions of financial authorities, expecting new currency interventions from them against a weakening yen.

Australia

AUD is strengthening against EUR, JPY, and USD but has ambiguous dynamics against GBP.

Due to a lack of significant economic releases, currency movements are due to external factors. Investors are preparing for a Reserve Bank of Australia (RBA) meeting on Tuesday, with the regulator expected to keep interest rates at a 12-year high of 4.35% for most of the year due to elevated inflation pressures underpinned by a strong labor market. Experts suggest that at the subsequent press conference, the head of the department, Michelle Bullock, will take a cautious position, confirming that it is premature to begin adjusting monetary policy, and any change will depend on incoming macroeconomic data.

Oil

Oil prices are making moderate attempts to rise, supported by Saudi Arabia’s increase in the oil cost for most buyers in Asia and Europe in June, as well as signs of a new aggravation of the geopolitical situation in the Middle East.

Yesterday, the Israeli military called on the Palestinian civilian population to leave the city of Rafah, which was a sign of the imminent start of a military operation in this territory. It could lead to the breakdown of peace negotiations between Israel and representatives of the Palestinian Hamas movement taking place in Cairo. On the other hand, poor economic data from China prevents significant growth. The April Caixin service PMI decreased from 52.7 points to 52.5 points, reflecting the risks of a decrease in energy consumption of the world’s leading oil importer.