April 2024 CCY Wrap

April Summary

Most of the important US data printed on the strong side—US PCE, Employment, CPI, and Retail sales came in above expectations prompting comments from Chair Powell such as “the economy is strong and the FED is in no hurry to cut rates” and “getting inflation down is taking longer than expected.” This has caused the market to pare back rate cut expectations, with most forecasters calling for only one cut now in November.

Middle East tensions have caused volatility across all financial markets. We had the strike on the Iranian embassy in Syria, the Iranian retaliation, and the subsequent Israeli response. The VIX index, which gauges risk appetite, had a range of 13.50 to 21.30—the highest level of the year to date.

Another substantial influence this month has come from the so-called “Magnificent Seven” Big Tech Stocks earning reports. We saw Nvidia lower and Tesla higher, with the Nasdaq overall ending up mid-range on the month.

Finally, the BOJ weighed into the month leaving interest rate policy unchanged at its April meeting, however, Governor Ueada made the comment that the Yen weakness has “no major impact” on inflationary pressures. The market saw this as a green light to take USD/JPY quite quickly from 155.50 to 160.20. During the Tokyo holiday market yesterday, USD/Yen fell from 160.20 to 154.52 in a move attributed (but not confirmed) to official intervention.

Here is the AUD annotated chart of the month:

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