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On Tuesday, the Reserve Bank of Australia (RBA) surprised the market by lowering its interest rate by 25 basis points to as low as 1.75%, showing that the inflationary pressures are lower than expected. Also in the report, the central bank hinted for further rate cut in the future. The Australian dollar dropped significantly against the US dollar to around 75.72 US cents from as high as 77.19 cents at the early session.
According to the US Labor Department report on Friday, the number of created jobs in April was 160,000 as the construction employment hardly rose and the retail sector reduced jobs for the first time since 2014. The data hit the lowest level in seven months, lower than 215,000 expected by economists and below the recent monthly average of 200,000, tempering the expectations for another rate hike this year.
However, Fed President William Dudley said to New York Times on Friday that two rate hikes are still reasonable. Initially, the greenback shed against a basket of currencies on the non-farm report but pared the losses after Dudley’s comments. Stocks on Wall Street got out of the earlier losses to end higher.
The slid of the US dollar made safe-haven assets like gold to go up. Gold closed Friday session at $1287.60 per ounce, heading to the highest level since the beginning of the year.
During the holiday closure, the Yen reached the 18-month high against the American counterpart, hurting the exports section and other shares that benefit from a weaker Yen. The Nikkei shares approached 16,106.72 in the first day of trade after 3-day closure for national holidays. Japan’s benchmark index closed the trading week at 3.4% lower.
In April, the exports of China stayed stabilized due to the decreased currency, while imports extended a streak of declines to 18 months.
Oil prices gained on Friday on the dip of the US dollar and the wildfire that reduces Canadian oil sands production by nearly a half. However, Brent still ended the week with the biggest down in 4 months as investor linked in profit on April’s big rally.
The market is waiting for the US Crude Inventories data to be released on May 11. The change in the number of barrels of crude oil held in inventory by commercial firms during the week to May 5 was 2.8 million.
The Bank of England projection for inflation and economic growth over the next two years will also be reported on the next Thursday. The data is expected to have large effect on the pound amid concerns over Britain’s economy if it votes to leave the European Union.
The Producer Price Index (PPI), measuring the change in the price of finished goods and services sold by producers, is anticipated to be 0.3% after the reading of -0.1% in March. The US retail sales, showing the total value of sales at the retail level, are forecast to decline 0.3%. This is a key indicator of the US consumer spending, which accounts for the majority of overall economic activity.
With the support of weak dollar after the US employment report this week, Japanese Yen as well as precious metals like gold is expected to gain next week as investor seek for safe-haven asset.