In its latest Beige Book business survey The Federal Reserve provided an assuring assessment of the U.S. economy, after Friday’s data showing a sharp slowdown in U.S. jobs creation in March triggered a sell-off in global markets earlier this week. Comments by two top Fed officials suggest the central bank is on hold as it waits to see whether a modest recovery will accelerate despite some stumbles, or whether additional monetary stimulus will be needed. Along with recent data from the United States and China suggesting a slowdown in economic recovery, resurfacing worries about Spain’s fiscal woes as well as Italy persisted despite a better-than-expected sovereign debt auction by Italy.
Federal Reserve Vice Chairman Janet Yellen said “Considerable uncertainty surrounds the outlook, and I remain prepared to adjust my policy views in response to incoming information. Further easing “could be warranted if the recovery proceeds at a slower-than-expected pace, while a significant acceleration in the pace of recovery could call for an earlier beginning to the process of policy firming than the FOMC currently anticipates. Over the next several years, I anticipate that we will fall far short in achieving our maximum employment objective, and I expect inflation to remain at or below the Fed’s 2% target”
Meanwhile, the employment report released today showed Australian payrolls rose more than economists forecast in March. Payrolls rose by 44,000 (vs. 6,500 forecasted). AUD/USD climbed sharply after the news. Some economists think that numbers like today are a bit of a reality check and it does not change the much bigger picture that the labor market is soft. Investors are pricing in an 80% chance the RBA will reduce borrowing costs by 25 basis points to 4% at the next policy meeting,
The Asian stock markets opened slightly higher today. NIKKEI started the day at 9,486.19, previous close was 9,458.74. HANG SENG opened at 20,179.72, previous close was 20,140.67.
EUR/USD is trading at 1.3125 by the time of typing and for today resistances are located at 1.3154 and 1.3244. Support levels are 1.3109 and 1.3063.
GBP/USD is at 1.5920. Resistance levels are located at 1.5943 and 1.5983. Supports are located at 1.5857 and 1.5811.
USD/CHF is trading at 0.9163 by the time of typing and for today resistances are located at 0.9203 and 0.9265. Support levels are 0.9134 and 0.9069.
AUD/USD is trading at 1.0369. Resistances are located at 1.0395 and 1.0451. Support levels are 1.0284 and 1.0238.
The economic calendar is heavy today. UK Trade Balance data will be released at 09:30 GMT. Eurozone Industrial Production figures will be announced at 10:00 GMT. Canada Trade Balance data will be released at 13:30 GMT. US PPI, Trade Balance and Unemployment Claims figures will be released at 13:30 GMT.