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At an important meeting on monetary policy held last week, the Bank of Japan surprised the markets as deciding that there will be no more stimulus for the economy in the near future. This announcement disappointed investors who placed a bet on a continual monetary easing deployed by the central bank. The deposit rate was left unchanged at -0.1% as the first settlement of a negative interest rate in January. After the decision, the safe-haven currency, Japanese yen, witnessed a sharp rally against its peers.
Ending the two-day meeting on April 27, the Federal Reserve Bank stated that the interest rate still stayed unchanged as economists’ forecast. The central bank now is holding a caution on the rate hike path due to weak data from economic growth, reflecting an oncoming slowdown. The dollar index DXY, which measures the greenback against a basket of major currency, edged down for the five consecutive days, closed this week at 93.02, only 40 points higher than the one-year low.
New Zealand’s official cash rate was also kept at 2.25%, the record low as published by the Reserve Bank of New Zealand on Wednesday. However, the Governor Graeme Wheeler commented that to ensure an inflation rate around the 2% target, further policy easing might be carried on. A rate cut in June is expected.
According to data released last Friday, the euro area annual inflation, which was zero in March, was estimated to stand at -0.2% in this month as the shadow of declines in energy market. The seasonally-adjusted unemployment rate in March, reported by Eurostat on April 29, record the lowest level since August 2011 as down to 10.2% from 10.4% in the previous month. The reading indicated a slight recovery of labor market in Eurozone.
At Friday trading session, oil prices hit its record high since the beginning of 2016 thanks to a weakening dollar and the optimistic expectation of a supply-cut. The global benchmark Brent reached its best monthly gain in seven years, finishing April trading at $47.41 per barrel. Gold also surged up during the week ended April 29 with the last settlement of $1292.84/oz, up 4.86% from the open price early this week.
The upcoming week seems quite bustling as PMI readings of China and the UK will be released. China’s economy is expected to improve further, the Caixin manufacturing PMI is anticipated to increase to 49.9 in April, compared with the reading of 49.7 in the month before. Meanwhile, the UK PMI in this sector for April, which is out on Tuesday, is expected to rise to 51.3, 3 points higher the preceding reading.
The US non-farm payrolls report is scheduled to release on May 06 with the expectation of 200k employment change for the April period, in comparison with 215k in March. The unemployment rate is expected to remain unchanged at 5%. The US labor market now is in a stable situation.
Whereas, New Zealand employment change (q/q) for the first quarter in 2016 is expected to stand at 0.6%, compared with the reading of 0.9% in the previous period. Unemployment rate, also on the same basic, is supposed to be higher the last figure of 5.3%, up to 5.5% in the latest quarter.
On Tuesday, the Reserve Bank of Australia will hold a meeting on monetary policy, investors are expecting for an unchanged cash rate at 2%.
Canada’s trade balance will be published on May 04, with $1.2 billion of deficit in February, recovering a little from a shortfall of $1.9 billion in the first month of 2016.