Investors and forex traders are focused on positive labor market data: the unemployment rate remained at 4.3%, the number of new nonfarm jobs increased by 115.0 thousand instead of the expected 65.0 thousand, while average hourly earnings rose by 0.2% instead of 0.3%. The employment sector continues to show stability, allowing Federal Reserve officials to focus on fighting inflation, which implies that interest rates may remain at their current level for an extended period. Most leading financial companies expect the regulator to begin adjusting monetary policy no earlier than the end of this year or the beginning of next year. Goldman Sachs analysts revised their forecasts from September and December to December and March. This week, the final change in the regulator’s leadership will take place: the term of current Fed Chair Jerome Powell expires on May 15, after which Kevin Warsh is expected to take over, with the final Senate vote on his nomination scheduled for today. Experts believe that he will try to steer members of the Board toward a more dovish rhetoric. However, given the significant probability of accelerating price growth, he is unlikely to change their position at this stage. Meanwhile, President Donald Trump rejected another set of peace proposals from Iran, triggering only a moderate market reaction, as most investors still hope for a diplomatic resolution of the crisis in the Persian Gulf region.
Eurozone
The euro is strengthening against the yen and the US dollar but weakening against the pound.
Investors are assessing comments from European Central Bank officials. Governing Council member Martin Kocher said the regulator could move toward tighter monetary policy if the inflation outlook does not improve significantly. Although the decision to refrain from adjusting the interest rate in April was justified, a further increase remains possible. According to Kocher, the risk of stagflation in the eurozone cannot be ruled out despite the stability of the labor market, while the duration of the US-Iran conflict will be a decisive factor. ECB Vice President Luis de Guindos urged colleagues to be cautious when changing credit conditions amid the risk of accelerating inflation and slowing economic growth.
United Kingdom
The pound is strengthening against the yen, the US dollar and the euro.
Investors are watching the escalation of a government conflict. Last week, the ruling Labour Party suffered a defeat in local elections, after which more than forty MPs called on Prime Minister Keir Starmer to resign. Starmer refused and promised to confront the challenges facing the country. He named economic growth, national defense, relations with the EU and energy needs as key issues requiring urgent attention, stressing that he was ready to fight for an improvement in the country’s situation. Nevertheless, experts do not rule out the possibility of a party leadership challenge in the near future. Among Starmer’s most serious potential opponents are his former deputy Angela Rayner, Health Secretary Wes Streeting and Manchester Mayor Andy Burnham.
Japan
The yen is weakening against the US dollar, the euro and the pound.
On Tuesday at 01:30 (GMT+2), March household spending data will be published. The indicator is expected to decline from 1.5% to 0.6% month-on-month and improve from –1.8% to –1.4% year-on-year, indicating a slowdown in inflationary pressure and limiting the scope for further monetary tightening by the Bank of Japan. At 01:50 (GMT+2), the market will receive the regulator’s Summary of Opinions, allowing investors to assess policymakers’ sentiment and the possible timing of interest rate changes.
Australia
The Australian dollar is strengthening against the US dollar, the yen and the euro, while showing mixed dynamics against the pound.
Housing market data for March released today matched expert forecasts. The volume of permits issued for the construction of private houses increased by 0.9%, while the total number of permits fell by 10.5%. This confirms growing pressure on the construction sector and reflects the risk of a slowdown in the national economy, increasing uncertainty over the future monetary policy of the Reserve Bank of Australia.
Oil
Oil prices are moderately correcting downward after a morning rise triggered by US President Donald Trump’s rejection of a new Iranian draft peace agreement. This increased concerns about a further escalation of the Middle East conflict and the continued blockade of the Strait of Hormuz. The lack of traffic through the waterway, which previously carried up to 20.0% of global crude oil volumes, is creating a supply shortage and pushing hydrocarbon prices higher. Meanwhile, Saudi Aramco CEO Amin Nasser said that if traffic is not restored, the market will continue to lose around 100.0 million barrels of oil each week.
