United States of America

USD is weakening against EUR and GBP but has ambiguous dynamics against JPY.

Today, preliminary April data on business activity were published: the Manufacturing PMI decreased from 51.9 points to 49.9 points and entered the stagnation zone, the Services PMI declined from 51.7 points to 50.9 points, and the Composite PMI – from 52.1 points to 50.9 points. Thus, business activity is pressured by high interest rates, but is still growing, limiting the ability of the US Federal Reserve to adjust monetary policy. Also today, statistics were published on the number of construction permits issued in March: their volume decreased by 3.7% with a predicted decrease of 4.3% and amounted to 1.467 million. It is also worth noting the results of a survey of leading economists about the further actions of the US regulator, conducted by the Reuters agency: most respondents believe that interest rates will be cut first in September, and then again. However, it is possible that the September reduction in borrowing costs may remain the only one this year.

Eurozone

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

Investors are focused on the publication of preliminary April data on business activity in the EU: the Manufacturing PMI unexpectedly decreased from 46.1 points to 45.6 points with expectations of growth to 46.5 points, the Services PMI increased sharply from 51.5 points to 52.9 points, significantly exceeding the forecast of 51.8 points, and the Composite PMI – from 50.3 points to 51.4 points with preliminary estimates of 50.8 points. Similar results were recorded in the German economy: the Manufacturing PMI increased from 41.9 points to 42.2 points, but did not reach the expected 42.8 points, Services PMI – from 50.1 points sharply to 53.3 points, and the Composite PMI – from 47.7 to 50.5 points. Thus, the ongoing decline in manufacturing is sufficiently offset by growth in the services sector, and overall business activity is accelerating at the fastest pace in the past year, allowing experts to hope for a resumption of growth in the European economy. Also worth noting are comments from European Central Bank (ECB) Vice President Luis de Guindos, who said the regulator is likely to cut interest rates in June but must be cautious about next steps and consider signals coming from the US Federal Reserve.

United Kingdom

GBP is strengthening against its main competitors – EUR, JPY, and USD.

Preliminary April business activity data were published today: the Manufacturing PMI unexpectedly dropped from 50.3 points to 48.7 points and returned to the stagnation zone, but the Services PMI showed significant growth, increasing from 53.1 points to 54.9 points instead of the expected decrease to 53.0 points, the Composite PMI also increased from 52.8 points to 54.0 points. Thus, business activity is growing at the most significant pace in the last 11 months, which, on the one hand, allows us to hope that the economy will emerge from recession, but on the other hand, it makes investors fearful that the Bank of England may delay the start of easing monetary policy. Thus, today the regulator’s chief economist, Huw Pill, said that there is still a long way to go before interest rates are lowered, and emphasized that adjusting borrowing costs too early can cause significantly more harm to the economy than adjusting them too late.

Japan

JPY is weakening against EUR and GBP but has ambiguous dynamics against UD.

Today preliminary April data on business activity were published: the Manufacturing PMI rose from 48.2 points to 49.9 points and was on the verge of the growth zone, the Services PMI – from 54.1 points to 54.6 points, and the Composite PMI – from 51.7 points to 52.6 points. It is also worth noting the comments of leading Japanese politicians. The head of the Bank of Japan, Kazuo Ueda, said today that the regulator will again raise the key rate if inflation steadily accelerates to the target of 2.0%, and Japanese Finance Minister Shunichi Suzuki noted that his last meeting with his American and South Korean colleagues laid the foundation for actions of official Tokyo in the fight against excessive movement of the yen, but the official did not disclose specific measures.

Australia

AUD is weakening against JPY and GBP and has ambiguous dynamics with JPY and USD.

Today preliminary April data on business activity were published: the Manufacturing PMI increased from 47.3 points to 49.9 points and reached the border of the growth zone, the Services PMI decreased from 54.4 points to 54.2 points, but remained in the growth zone, and the Composite PMI increased from 53.3 points to 53.6 points. Thus, business activity is showing strong growth, which contributes to the continued risk of rising inflation, while investors expect the publication of data on it for the first quarter of which on Wednesday: YoY, the consumer price index may decrease from 4.1% to 3.4%, and the truncated indicator – from 4.2% to 3.8%. The implementation of the forecast may create the preconditions for officials at the Reserve Bank of Australia (RBA) to begin lowering interest rates.

Oil

Oil prices today show downward trading dynamics.

Easing tensions in the Middle East reduces the risk of disruptions in the supply of “black gold” from the region, however, the restoration of business activity in the EU may help increase demand for energy. The introduction of additional US sanctions against Iran, which European politicians promised to join, may put pressure on the trade instrument; however, experts note that ahead of the presidential elections, rising fuel prices are undesirable for the current American administration, so the rhetoric about restrictions may not be translated into reality. During the day, investors will monitor the publication of the weekly report on the volume of reserves from the American Petroleum Institute (API): it is expected that they could grow by 1,800 million barrels, putting pressure on the positions of “black gold”.