MORNING MARKET REVIEW

EUR/USD

The EUR/USD pair shows ambiguous trading dynamics, holding near 1.0790. Activity on the market remains quite low, and the instrument is still under "bearish" pressure, which at the end of last week led to an update of the local lows of February 20. European trading floors are closed due to the Easter holidays, so investors will focus only on data from the United States. In particular, the publication of March statistics from the Institute of Supply Management (ISM) and S&P on business activity in the manufacturing sector is expected. Forecasts suggest an increase in the ISM PMI from 47.8 points to 48.4 points, and the S&P Global PMI may remain at the same level of 52.5 points. In addition, March inflation statistics in Germany will be presented tomorrow, and on Wednesday the data for the eurozone as a whole will be released. According to forecasts, the monthly rate in Germany will accelerate moderately from 0.4% to 0.6%, and the annual rate will remain at around 2.5%. In turn, inflation in the eurozone may also remain at the same level of 2.6% in annual terms, and the Core Consumer Price Index may slow down slightly from 3.1% to 3.0%. Last Friday, similar statistics were published in France and Italy. Italian data showed growth of 0.1% month-on-month and 1.3% year-on-year, slightly below market expectations of 0.2% and 1.4%, respectively. In France, the rate of slowdown in inflation turned out to be higher: the Core CPI increased by 0.3% on a monthly basis and 2.4% on an annual basis, with forecasts of 0.7% and 2.8%, respectively.

GBP/USD

The GBP/USD pair shows mixed dynamics in the short term, testing 1.2630 for a breakout, while traders await the emergence of new drivers in the market. Trading sites in the eurozone and the UK are closed today due to the Easter holidays, but in the US at 16:00 (GMT 2) statistics on business activity in the manufacturing sector will be published. The Institute for Supply Management (ISM) PMI may rise from 47.8 points to 48.4 points, while the S&P Global PMI may remain unchanged at 52.5 points. In addition, investors will pay attention to data on house price indices from Nationwide in the UK. It is projected that the indicator in March will slow down from 0.7% to 0.3%, while in annual terms the index without seasonal adjustment may increase from 1.2% to 2.4%. Trading participants also analyze statistics on the dynamics of the Personal Consumption Expenditures - Price Index in the United States, which was published on Friday, March 29. The basic indicator decreased from 0.5% to 0.3% on a monthly basis and from 2.9% to 2.8% on an annual basis, which fully coincided with market expectations. At the same time, Personal Income decreased from 1.0% to 0.3%, while Spending, on the contrary, increased from 0.2% to 0.8%, ahead of forecasts of 0.5%.

AUD/USD

The AUD/USD pair is showing faltering gains as it tries to recover from last week's mostly "bearish" trading dynamics, which resulted in a refresh of local lows from March 5. The instrument is testing the level of 0.6520, receiving support from macroeconomic statistics from China. The Caixin Manufacturing PMI in March rose from 50.9 points to 51.1 points, with a forecast of 51.0 points. Last weekend, China also released business activity data from the China Federation of Logistics and Purchasing (CFLP): the Manufacturing PMI rose from 49.1 points to 50.8 points, which was higher than expected at 49.9 points, and the Services PMI - from 51.4 points to 53.0 points. Today, the US will also present statistics on business activity: forecasts suggest that the Manufacturing PMI from the Institute for Supply Management (ISM) will increase from 47.8 points to 48.4 points. Tomorrow, investors will evaluate data from Australia on business activity in the manufacturing sector from S&P, as well as updated inflation data from TD Securities. In addition, the minutes of the Reserve Bank of Australia's March monetary policy meeting will be published throughout the day.

USD/JPY

The USD/JPY pair is showing moderate growth, consolidating near 151.40. The instrument continues to develop flat dynamics in the short term, while trading participants are cautious to open new "bullish" positions. The market is concerned about the possibility of foreign exchange interventions by the Bank of Japan in response to the sharp weakening of the national currency in March. The abandonment of the policy of negative rates still failed to provide any noticeable support to the yen, since the market had factored such a decision into the quotes in advance. Macroeconomic statistics from Japan, published on Friday, March 29, also turned out to be ambiguous. The Consumer Price Index in the Tokyo region adjusted in March from 2.5% to 2.6%, and the CPI excluding Food and Energy went down from 3.1% to 2.9%. At the same time, Retail Sales volumes in February in annual terms accelerated from 2.1% to 4.6%, while analysts expected 3.0%, and in monthly terms the figure added 1.5% after an increase of 0.2% in the previous month. In turn, the Unemployment Rate in February increased from 2.4% to 2.6%, reflecting the tense situation in the labor market. Today in Japan, data on business activity was presented: Tankan Large Manufacturing Index in the first quarter of 2024 decreased from 13.0 points to 11.0 points, while experts expected 10.0 points, and Tankan Large All Industry Capex showed a sharp decline from 13.5% to 4.0%, with expectations at 9.2%.

XAU/USD

The XAU/USD pair shows rapid growth during the Asian session, developing the "bullish" dynamics of last week and updating record highs: the instrument is testing 2260.00 for a breakout, while activity on the market remains subdued. European trading markets are closed today due to the Easter holidays, but investors await the release of March business activity data from S&P and the Institute of Supply Management (ISM) in the US at 16:00 (GMT 2). Forecasts suggest an increase in the ISM Manufacturing PMI index from 47.8 points to 48.4 points, while the indicator from S&P Global is likely to remain unchanged at 52.5 points. At the end of the week, the US will present the March labor market report: it is expected that the Nonfarm Payrolls will decrease from 275.0 thousand to 200.0 thousand, the Average Hourly Earnings will adjust from 0.1% to 0.3% in monthly terms and from 4.3% to 4.1% in annual terms, and the Unemployment Rate will remain at 3.9%. The positive dynamics of the XAU/USD pair quotations is also facilitated by an increase in demand for physical gold from global central banks, which are increasing reserves in anticipation of a change in the rhetoric of the US Federal Reserve and other regulators. Analysts still assume a possible reduction in the interest rate by the American monetary authorities in June, and in total at least three adjustments to the value are expected by the end of 2024. The European Central Bank and Bank of England are likely to move to cut borrowing costs only in August.