The USD is the strongest and the NZD is the weakest as the NA session begins

As the North American session begins, the USD is the strongest and the NZD is the weakest. Central bankers were center stage in expressing views led by Fed Governor Christopher Waller.

Waller – a permanent voting member on the Federal Reserve board, – emphasized a cautious approach to monetary policy, suggesting that the current interest rate may need to be maintained longer than previously anticipated, with no immediate plans to initiate rate cuts. Waller highlighted the necessity of observing further progress towards the 2% inflation target before advocating for a rate reduction, indicating that a few more months of data would be required to ensure inflation is on a downward trajectory. Despite expressing expectations for a rate cut later in the year, recent economic data has presented a mixed picture, with healthy economic growth and easing wage pressures but disappointing inflation progress and ambiguity in job market signals. Waller acknowledged the economy’s robust performance, which supports the Federal Reserve’s cautious stance, and downplayed the likelihood of aggressive rate hikes or significant rate cuts in the near future. He also touched on various factors influencing financial conditions, such as the impact of the stock market on financial conditions indexes and the role of private credit lending in tight credit spreads. Waller concluded that the Fed is responsive to economic data without overreacting, underscoring the importance of not panicking over potential increases in unemployment rates, given the overall aim of achieving a soft landing for the economy.

From the ECB, policymaker Fabio Panetta indicated that the prerequisites for beginning to ease monetary policy are becoming evident. He noted that the currently restrictive monetary policy stance is effectively curbing demand and leading to a swift decline in inflation rates. Furthermore, Panetta highlighted that the risks to price stability have lessened, suggesting a more optimistic outlook for the European Central Bank’s ability to potentially adjust its policy approach in response to improving economic indicators. This perspective suggests a shift towards a less restrictive policy could be on the horizon, reflecting confidence in the progress made towards achieving price stability.

Finally from Jonathan Haskel, a policymaker at the Bank of England, he expressed to the Financial Times that he believes rate cuts are still a significant distance away, indicating a cautious approach towards monetary policy easing. He acknowledged the decline in headline inflation as positive news but emphasized the importance of focusing on the persistence and underlying aspects of inflation, suggesting that headline figures do not fully capture these crucial dimensions. Haskel’s change in vote from advocating for a rate hike in February to maintaining the current rate in March reflects his response to observed improvements in key inflation indicators. Despite this shift, his comments affirm his position as one of the more hawkish members of the committee, underscoring a consistent view that suggests a cautious stance on rate cuts in the near term.

A snapshot of the other markets as the North American session begins currently shows:

• Crude oil is trading up $1.11 or 1.36% at $82.44. At this time yesterday, the price was at $81.27
• Gold is trading up $19.59 or 0.89% at $2214.05. At this time yesterday, the price was at $2189.20
• Silver is trading down -$0.3 or -0.12 at $24.57. At this time yesterday, the price was at $24.54
• Bitcoin currently trades at $70.417. . At this time yesterday, the price was trading at $70,205.

In the premarket, the major indices are trading lower today after all three indices closed at record levels yesterday (again):

• Dow Industrial Average futures are implying a gain of 29.25 points. Yesterday the index rose 477.75 points or 1.22% at 39760.09
• S&P futures are implying a gain of 2.51 points. Yesterday, the index rose 44.91 points or 0.86% at 5248.48
• Nasdaq futures are implying a loss of -6.29 points. Yesterday, the index rose 83.82 points or 0.51% at 16399.52

In the European equity markets, the major indices are trading mixed

• German DAX, 0.05%
• France CAC , + 0.18%
• UK FTSE 100, +0.26%
• Spain’s Ibex, -0.12%
• Italy’s FTSE MIB, unchanged (delayed by 10 minutes).

Shares in the Asian Pacific markets were mostly higher:

• Japan’s Nikkei 225, -1.46%
• China’s Shanghai Composite Index, +0.59%
• Hong Kong’s Hang Seng index, +0.91%
• Australia S&P/ASX index, +0.99%

Looking at the US debt market, yields are lower:

• 2-year yield 4.622%, +4.8 basis points. At this time yesterday, the yield was at 4.586%
• 5-year yield 4.227%, +3.9 basis points. At this time yesterday, the yield was at 4.214%
• 10-year yield 4.218%, +2.6 basis points. At this time yesterday, the yield was at 4.221%.
• 30-year yield 4.365% +1.4 basis points. At this time yesterday, the yield was at 4.387%

Looking at the treasury yield curve spreads:

• The 2-10 year spread is at -40.0 basis points. At this time yesterday, the spread was at -36.7basis points
• The 2-30 year spread is at – 25.6 basis points. At this time yesterday, the spread was at -20.2 basis points

European benchmark 10-year yields are higher:

This article was written by Greg Michalowski at www.forexlive.com.