Forex News for 31st March 2023

March 31, 2023
  • Janet Yellen, U.S. Treasury Secretary, has called for stronger regulations of the non-bank or “shadow bank” sector, which includes money market funds, hedge funds, and crypto assets, in her speech to the National Association for Business Economics.
  • In March, Tokyo’s core CPI, a leading indicator of Japan’s inflation, increased by 3.2% y/y, marking the second consecutive month of deceleration after reaching a 40-year high of 4.3% in January.
  • The EU headline inflation figure fell significantly to 6.9% YoY, below the forecast of 7.1%, and a marked decrease from the previous month’s reading of 8.5%. 
  • The monthly CPI figure for March increased by 0.9% from February, supporting the ECB’s stance that interest rates can rise more than expected. The EUR/USD pair has benefited from this divergence in rate expectations.
  • Crude oil has maintained its gains from overnight, with the WTI futures contract rising by over 7% towards the end of the week. 
  • Meanwhile, gold is steady around the USD 1,980 mark, and APAC equities have followed Wall Street’s positive trend.
  • Susan Collins and Neel Kashkari of the Fed have recently expressed their concerns about inflation, potentially pushing the needle towards a 25 basis point rate hike at the January FOMC meeting. 
  • The Nikkei 225 in Japan has been the top performer, rising over 1% at one point. The USD/JPY pair has also benefited from a weaker yen, reaching 133.50 from the low of 129.64 last week.
  • Despite slower global demand and high costs, China’s manufacturing PMI fell from 52.6 to 51.9 in March, but the services PMI increased to a 12-year high of 58.2 due to easier COVID policies.
  • To alleviate the strains on Japan’s financial institutions, the IMF has suggested that the BOJ consider allowing longer-term interest rates to move more flexibly.
Author Amsterdam