Fed's Powell: The performance of the US economy has been "quite strong"
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Federal Reserve Chairman Jerome Powell participated in a fireside chat about economic trends in North America at the Wilson Center’s Washington Forum. Powell stated that the performance of the US economy has been "quite strong" and recent data indicates a lack of significant progress on inflation this year. Despite ongoing strength, Powell noted that the labor market is transitioning towards a better equilibrium. He also mentioned that broader wage pressures are moderating gradually and that if higher inflation persists, the Fed can maintain the current rate as long as needed. Powell emphasized that restrictive policy needs further time to work.
#UsEconomy #FederalReserve #JeromePowell #Inflation #LaborMarket #WagePressures #RestrictivePolicy
US outperformance continues
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The economic divergence between the US and the rest of the world has become increasingly pronounced. US inflation pressures remain stickier than in most other parts of the world. US rates have continued to rise, with markets now expecting less than 45bp worth of cuts for 2024. The global manufacturing cycle is softening, but it is seen as a temporary and mostly inventory-driven upturn. Oil prices have risen close to $90 USD/bbl, but further upside is limited. The USD has been the big winner, with EUR/USD breaking below 1.07. The JPY continues to perform poorly. In the near term, lower USD rates are expected, which could provide temporary support to EUR/USD. However, the long-term case is for a lower USD based on stronger US growth dynamics. EUR/NOK is expected to move higher over the year, and SEK is expected to weaken. Risks to the forecasts include a sharp drop in core inflation and a more resilient global economy. A much harder landing would require a sharp easing of global monetary conditions, leading to a weaker USD.
#Us #Economy #Inflation #Usd #Eur/usd #Jpy #Eur/nok #Sek
https://www.fxstreet.com/analysis/us-outperformance-continues-202404161137
Iran’s Foreign Minister: Iran willing to exercise restraint, has no intention of further escalation
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Iran's Foreign Minister, Hossein Amir-Abdollahian, stated that Iran is willing to exercise restraint and has no intention of further escalating the situation. This statement came after a meeting with the Chinese counterpart, where China expressed confidence in Iran's ability to handle the situation while safeguarding its sovereignty and dignity. Despite the thaw in the Israel-Iran conflict, the US Dollar continues to find demand as a safe-haven currency. The article also provides an explanation of the terms 'risk-on' and 'risk-off' in financial markets, as well as the key assets and currencies that are influenced by these sentiments.
The US economic engine is running too hot
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The recent surge in the US economy indicates that the neutral rate may be higher than the current Fed policy suggests, especially after nominal spending significantly surpassed expectations in this week's primary release from the world's largest economy. The headline figure of 0.7% far exceeded the consensus estimate of 0.4%. Moreover, March marked the second consecutive month of MoM gains, with the previous month's increase revised substantially upward to reflect a 0.9% rise. Furthermore, the control group witnessed a remarkable 1.1% increase, nearly quadrupling the expected gain. This robust performance is poised to strengthen Q1 GDP estimates before next week's forthcoming advance read on overall economic growth. Notably, February's control group reading was also revised upward to reflect a 0.3% gain, contrary to the initially reported flat figure. Taken together with the overshoots on both payrolls and CPI for March, this release underscores the resilience of US consumers in the face of higher interest rates. It suggests that the Fed's policy stance may not be as restrictive as previously thought. And strongly hinting that the Federal Reserve will neither be inclined nor warranted to hasten rate cuts. In summary, the US economy is firing on all cylinders. Needless to say, this is not the stuff of rate cuts, and the market reacted accordingly with higher yields and lower stocks.
#UsEconomy #InterestRates #Gdp #FederalReserve
https://www.fxstreet.com/analysis/the-us-economic-engine-is-running-too-hot-202404152244
Forex Today: US Dollar consolidates gains at multi-month highs as focus remains on geopolitics
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The US Dollar (USD) consolidated its gains at multi-month highs around 106.00 after a rally fueled by expectations for a delay in the Federal Reserve's policy pivot and escalating geopolitical tensions. Iran launched an assault with dozens of drones in retaliation to a suspected Israeli attack on Iran's consulate in Damascus. UN Secretary-General Antonio Guterres condemned Iran's drone attacks as a "serious escalation." US index futures traded modestly higher after a sharp decline in Wall Street. The USD was the strongest against the Euro in the last 7 days. Middle East tensions escalated over the weekend after Iran attacked Israel. Ethereum opened higher and advanced above $2,370 before retreating. EUR/USD clings to recovery gains above 1.0650 ahead of US Retail Sales data. USD/JPY closed the previous week higher and continued to push higher, trading at its highest level in over three decades near 154.00. The terms 'risk-on' and 'risk-off' refer to the level of risk that investors are willing to stomach. In a 'risk-on' market, investors are optimistic and more willing to buy risky assets, while in a 'risk-off' market, investors play it safe and buy less risky assets. The Australian Dollar (AUD), Canadian Dollar (CAD), New Zealand Dollar (NZD), Ruble (RUB), and South African Rand (ZAR) tend to rise in 'risk-on' markets. The US Dollar (USD), Japanese Yen (JPY), and Swiss Franc (CHF) tend to rise in 'risk-off' markets. Gold price jumped on a flight to safety after Iran attacked Israel. Ripple price recovered from a weekend low and surged past $0.50. Data from the US, UK, and Canada will be in focus this week.
#UsDollar #Geopolitics #Iran #Israel #Forex
Australian Dollar bounces back from eight-week lows amid a firmer US Dollar
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The Australian Dollar (AUD) rebounds from an eight-week low of 0.6456 reached last Friday. However, the AUD/USD pair faces obstacles as traders seek refuge in the US Dollar (USD) due to heightened tensions in the Middle East. The ASX 200 Index declined, reflecting investor concerns about a possible retaliatory response from Israel to Iran's attack. The US Dollar receives support as traders express concerns about a potential reaction from Israel following Iran's attack. The Australian Dollar may face further challenges as the ASX 200 Index declined, reflecting investor concerns about a possible retaliatory response from Israel to Iran's attack. The US Dollar receives support as traders express concerns about a potential reaction from Israel following Iran's attack. The Australian Dollar (AUD) rebounds on Monday from the eight-week low of 0.6456 reached last Friday. However, the AUD/USD pair encountered obstacles as traders sought refuge in the US Dollar (USD) amidst heightened tensions in the Middle East.
#AustralianDollar #UsDollar #MiddleEastTensions
Weekly column: Mercury in retrograde blaming the trickster for stock market plunge
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The article discusses the recent stock market plunge and attributes it to the effects of Mercury in retrograde, a phenomenon associated with chaos, volatility, and uncertainty in financial markets. The author highlights the significant events that occurred during the week, including a solar eclipse conjunct Chiron in Aries and a Mars/Saturn conjunction. The price of gold and silver experienced significant volatility, with gold reaching an all-time high before dropping, and silver surging to its highest level in years before falling back. The article also mentions the U.S. rushing warships to protect Israel and American forces in response to a potential attack from Iran. The stock market also plummeted, with the DJIA falling to its lowest mark since January 25. The author suggests that the current geocosmic climate and the influence of Mercury retrograde may have contributed to these market movements. The article concludes by discussing the potential impact of upcoming astrological events on monetary policy and the economy.
#StockMarket #MercuryInRetrograde #Volatility #Gold #Silver #Warships #Iran #Djia #Astrology #MonetaryPolicy
The big picture: A tale of three central banks
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Unfavorable trends in US inflation, rising geopolitical tensions, and weak Chinese economic data have pushed equity prices lower and volatility higher. The market is in risk reduction mode and there is a bid in the Dollar. Inflation breakevens are rising and financial conditions are tightening. The US wants to normalize policy but is being held back by a strong economy and short-term inflationary trends. The ECB and the Bank of Canada have dovish rhetoric and want to ease policy. The US, Europe, and Canada have differing narratives among their central banks. The upcoming week is packed with economic data releases. AUD/USD is rising toward 0.6700 as traders look through Middle East escalation. Gold price rebounds above $2,350 on Middle East geopolitical risks. USD/JPY stays defensive below 153.50 amid Iran-Israel conflict. Solana price is nurturing a recovery rally. CPI numbers are due in the UK, Japan, Canada, and New Zealand. GBP/USD outlook is bearish. EUR/USD threatens to fall below parity. A trader hits $6M pay dirt after spending $8K on Ethereum memecoin. Cryptocurrencies look stronger than stocks. Forex seasonality shows best-worst performers in April. Elliott Wave analysis shows Nasdaq and top tech stocks.
#CentralBanks #Inflation #GeopoliticalTensions #EconomicData #RiskReduction #CurrencyExchangeRates
https://www.fxstreet.com/analysis/the-big-picture-a-tale-of-three-central-banks-202404142250
Australian Dollar struggles amid robust US economic data
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The AUD/USD pair remains under pressure, hovering around 0.6528 on Friday. Efforts to stabilize the exchange rate have seen limited success. The stronger-than-expected economic data from the US has dampened hopes for extensive interest rate cuts by the Federal Reserve this year. The capital market currently anticipates only a 40-basis point reduction. The Reserve Bank of Australia (RBA) is considering initiating its monetary easing policies towards the end of 2024. Recent data indicates that the unemployment rate dropped to 3.7% in February, the lowest since September 2023, while inflation remained steady at 3.4% for the third consecutive month. A recent Westpac report highlights the RBA's need for greater confidence in the inflation outlook before seriously contemplating a rate cut. Technical analysis suggests a bearish outlook for the AUD/USD pair, with a potential continuation of the downward wave towards 0.6404. The MACD indicator supports this bearish outlook. The Stochastic oscillator suggests potential short-term corrections within a broader downward trend.
#Aud/usd #ExchangeRate #InterestRateCuts #FederalReserve #MonetaryEasing #UnemploymentRate #Inflation #RateCut #TechnicalAnalysis #BearishOutlook
EUR/USD: New YTD lows for Euro as dust from hot US inflation hasn't settled
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The Euro has reached new year-to-date lows against the US dollar as the dust from the hot US inflation announcement has not settled. The European Central Bank (ECB) meeting did not bring any surprises, with President Christine Lagarde avoiding questions about interest rate cuts. Bets on a possible June rate cut remain high. The US dollar maintains an advantage in relation to key interest rates, which could widen the gap if the ECB reduces rates in June without the Fed doing the same. International stock markets have reacted surprisingly and pared down some recent losses, but concerns about high inflation, high interest rates, and geopolitical issues create a dangerous cocktail for the global economy. The University of Michigan's index of consumer sentiment is the only notable event on today's agenda. The author remains loyal to their view of buying the Euro near 1.06 levels, expecting signs of fatigue in the US dollar's bullish trend and a reactionary behavior from the Euro.
#Eur/usd #Euro #UsDollar #Inflation #EuropeanCentralBank #InterestRates #UsEconomy #InternationalStockMarkets
EUR/USD: New YTD lows for Euro as dust from hot US inflation hasn't settled
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The Euro has reached new year-to-date lows against the US dollar as the dust from the hot US inflation announcement has not settled. The European Central Bank (ECB) meeting did not bring any surprises, with President Christine Lagarde avoiding questions about interest rate cuts. Bets on a possible June rate cut remain high. The US dollar maintains an advantage in relation to key interest rates, which could widen the gap if the ECB reduces rates in June without the Fed doing the same. International stock markets have reacted surprisingly and pared down some recent losses, but concerns about high inflation, high interest rates, and geopolitical issues create a dangerous cocktail for the global economy. The University of Michigan's index of consumer sentiment is the only notable event on today's agenda. The author remains loyal to their view of buying the Euro near 1.06 levels, expecting signs of fatigue in the US dollar's bullish trend and a reactionary behavior from the Euro.
#Eur/usd #Euro #UsDollar #Inflation #EuropeanCentralBank #InterestRates #UsEconomy #InternationalStockMarkets
GBP/USD remains on backfoot below 1.2570, UK GDP data looms
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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
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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?
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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
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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
US inflation report could temper June cut expectations
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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
Pound Sterling stays on sidelines ahead of US inflation data
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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
BRICS is intent on de-dollarization but its chances of success are slim
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BRICS wants to de-dollarize the world economy to curb the US’s power and influence. The chances of it succeeding in replacing the US Dollar are low. The US Dollar would depreciate rapidly should BRICS be successful. One of the main goals of the BRICS nations is to de-dollarize the world economy. BRICS want to topple the US Dollar’s (USD) monopoly on world trade. About 90% of global transactions involve US Dollars and 50% of all global trade is Dollar-denominated. BRICS countries' motives are not purely rooted in anti-American feeling. Reducing reliance on the US Dollar is also a form of “financial” risk management, according to Ray Dalio, CEO of Bridgewater Associates. BRICS nations want to de-dollarize, or reduce exposure to US Dollar debt in the form of US Treasury bonds, to avoid exposure to the risk of US sanctions. The effectiveness of US sanctions is dependent on the widespread use of the US Dollar. BRICS current long-term strategy is to replace the US Dollar with “R5” or the five R’s, which stand for the currencies of the founding BRICS countries – the Real, Ruble, Rupee, Renminbi and Rand. BRICS have already had some success in this endeavor. Whilst a growing amount of international trade amongst BRICS countries is now being conducted in the R5 currencies, the chances of actually replacing the US Dollar are very low, according to experts. The universal appeal and liquidity of the US Dollar is hard to replace and it is these qualities which ensure its continued use as a medium of trade between different countries. One key threat to the dominance of the US Dollar lies in the growth and popularity of the BRICS as a trade association. If the group keeps growing it could eclipse the Dollar through sheer weight of membership. Another threat to the US Dollar comes from an analysis of long-term historical cycles. A study of these cycles leads to the conclusion that the Dollar’s days as the world’s reserve currency are inevitably numbered, according to Ray Dalio. If BRICS were successful in replacing the US Dollar, USD would depreciate substantially according to many currency analysts.
#Brics #Dedollarization #UsDollar #Currency #Trade #Sanctions
BRICS is intent on de-dollarization but its chances of success are slim
==========
BRICS wants to de-dollarize the world economy to curb the US’s power and influence. The chances of it succeeding in replacing the US Dollar are low. The US Dollar would depreciate rapidly should BRICS be successful. One of the main goals of the BRICS nations is to de-dollarize the world economy. BRICS want to topple the US Dollar’s (USD) monopoly on world trade. About 90% of global transactions involve US Dollars and 50% of all global trade is Dollar-denominated. BRICS countries' motives are not purely rooted in anti-American feeling. Reducing reliance on the US Dollar is also a form of “financial” risk management, according to Ray Dalio, CEO of Bridgewater Associates. BRICS nations want to de-dollarize, or reduce exposure to US Dollar debt in the form of US Treasury bonds, to avoid exposure to the risk of US sanctions. The effectiveness of US sanctions is dependent on the widespread use of the US Dollar. BRICS current long-term strategy is to replace the US Dollar with “R5” or the five R’s, which stand for the currencies of the founding BRICS countries – the Real, Ruble, Rupee, Renminbi and Rand. BRICS have already had some success in this endeavor. Whilst a growing amount of international trade amongst BRICS countries is now being conducted in the R5 currencies, the chances of actually replacing the US Dollar are very low, according to experts. The universal appeal and liquidity of the US Dollar is hard to replace and it is these qualities which ensure its continued use as a medium of trade between different countries. One key threat to the dominance of the US Dollar lies in the growth and popularity of the BRICS as a trade association. If the group keeps growing it could eclipse the Dollar through sheer weight of membership. Another threat to the US Dollar comes from an analysis of long-term historical cycles. A study of these cycles leads to the conclusion that the Dollar’s days as the world’s reserve currency are inevitably numbered, according to Ray Dalio. If BRICS were successful in replacing the US Dollar, USD would depreciate substantially according to many currency analysts.
#Brics #Dedollarization #UsDollar #Currency #Trade #Sanctions
Markets looking to US CPI and FOMC Minutes Wed night – RBNZ rate decision tomorrow
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Asian markets were quiet with little movement in FX and bonds. Taiwan Semi's new US subsidies helped Taiwan's Taiex to fresh record highs. Australian monthly consumer confidence extends its slump to 2 years. NZ businesses are more pessimistic about the economy based on their own trading against a range of economic headwinds. South Korea joins the international chip wars with multi-billion dollar incentives to attract chip-makers. US equity futures were up during the Asian session. The RBNZ rate decision is expected tomorrow. Holidays in Asia this week: Indonesia, Malaysia, Philippines, Singapore, India.
#UsCpi #FomcMinutes #RbnzRateDecision #AsianMarkets #TaiwanSemi #Taiex #AustralianConsumerConfidence #NzBusinessConfidence #SouthKoreaChipIncentives #UsEquityFutures #Rbnz