Morning Report

May 2, 2023

“The AUD is strengthening compared to other currencies due to the Reserve Bank of Australia’s decision to increase its policy rate by 25 basis points to 3.85%, which came as a surprise after it was left unchanged in April. At the same time, the US Dollar is holding steady after making gains yesterday. Market watchers will be paying close attention to the April inflation report from the Eurozone later today, as well as JOLTS Job Openings and Factory Orders data from the US in the American session.”

Sam Cornford, Partner – Head of Trading


Main Headlines

JPMorgan Chase has acquired First Republic Bank as part of an effort to contain the second-largest bank failure in US history. After regulators seized control of the bank, JPMorgan Chase reopened its 84 offices in eight states as branches of its own bank. President Joe Biden praised the sale of the troubled San Francisco-based lender at a White House event on small business, saying it would protect all depositors and avoid a government bailout. The Federal Insurance Deposit Corp also announced plans to overhaul its main insurance fund, including a targeted coverage approach for business accounts. In addition, Axon Enterprise will replace First Republic Bank in the S&P 500.

UK house prices increased by 0.5% in April, according to mortgage lender Nationwide, following seven consecutive months of decline. This suggests that the property market has stabilized after the disruption caused by last year’s “mini-budget.” However, the average house price remained 4% below its peak in August 2021, before the announcement of a plan for big, unfunded tax cuts by former Prime Minister Liz Truss and her finance minister Kwasi Kwarteng, which briefly sent debt markets into a tailspin. Compared to April 2021, the average house price was down by 2.7%.



Sterling is weaker than most major currencies in the early morning trade. Inflation expectations in the UK eased in April, according to Citi Bank, which may provide some relief to the Bank of England. Citi’s monthly survey conducted by market research company YouGov showed that public expectations for inflation in 12 months’ time decreased to 5.2% in April from 5.4% in March. Meanwhile, expectations for inflation five to 10 years ahead fell to 3.6% from 3.7%. Citi economist Benjamin Nabarro stated that Britain’s high inflation problem – the country’s main measure of consumer price growth remains above 10% – is reflected in the findings, which are still well above pre-pandemic levels.



Euro is stronger against sterling and weaker against the dollar this morning. May Day rallies led by unions were held in Paris and other parts of Europe, with some protesters throwing fireworks and causing damage to bus stops. While the majority of the protests in France were peaceful, French Interior Minister Gerald Darmanin reported that the police had to deal with “extremely violent thugs” in Paris, Lyon, and Nantes who were targeting police officers and property. The demonstrations were against the controversial reforms that increased the retirement age from 62 to 64, and trade unions had called for a large turnout to oppose the changes.



The dollar is well bid against most major currencies overnight. The US dollar has surged to an almost two-week high against a basket of currencies, buoyed by the anticipated interest rate hike by the Federal Reserve and positive manufacturing data. The Institute for Supply Management (ISM) reported an increase in its manufacturing PMI to 47.1 last month from 46.3 in March, which was the lowest reading since May 2020. Investors are waiting to see if the Federal Reserve will signal that it expects to pause interest rate increases after May, or if it will keep the possibility of another hike in June or later alive.


European markets opened with mixed results this morning as investors eagerly awaiting the start of the US Federal Reserve’s latest monetary policy meeting. The pan-European Stoxx 600 index initially opened slightly lower before turning marginally positive. However, oil and gas stocks suffered a 1.9% drop due to BP’s first-quarter results, which showed lower profits compared to the exceptional levels of 2022 when fossil fuel prices surged in response to Russia’s full-scale invasion of Ukraine. On the other hand, banking stocks experienced a 0.6% uptick, recovering some of the losses from the previous week. European traders are also eagerly anticipating the release of euro zone inflation data later in the day.


Main Economic Data/Central Banks/Government (All Times CET)

6:30 a.m.: Netherlands April CPI
8:00 a.m.: UK April Nationwide House Prices
8:00 a.m.: Germany March Retail Sales
8:30 a.m.: Sweden April Swedbank/Silf PMI Manufacturing
9:00 a.m.: Czech Republic 1Q GDP
9:15 a.m.: Spain April HCOB Manufacturing PMI
9:45 a.m.: Italy April HCOB Manufactuing PMI
9:50 a.m.: France April HCOB Manufacturing PMI
9:55 a.m.: Germany HCOB Manufacturing PMI
10:00 a.m.: Euro-area April HCOB Manufacturing PMI; March Money Supply
11:00 a.m.: Italy April CPI
11:00 a.m.: Euro-area April CPI
12:00 p.m.: Italy March PPI
3:30 p.m.: Riksbank’s Breman speaks
4:00 p.m.: US March JOLTS Job Openings, Durable Goods


Corporate Events

Earnings include BP, DuPont, Ford, Uber, Marathon Petroleum, Pfizer, AMD, Starbucks


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