Key developments that could influence markets on Friday: - Earnings season underway with Citigroup Inc , Wells Fargo and JPMorgan Chase & Co - ECB's Christine Lagarde and Fabio Panetta participate in IMF/World Bank Spring meetings in Washington, along with many other central bankers - Fed Governor Christopher Waller speaks on the economic outlook <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Dollar index - weekly change U.S. inflation ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Wayne Cole; Editing by Christopher Cushing)
A look at the day ahead in European and global markets from
Wayne Cole.
Singapore's central bank sprang the surprise of the Asian
day by halting its tightening cycle when markets had expected a
sixth straight round of restraint.
The Monetary Authority of Singapore (MAS) said there was
enough currency appreciation - controlling the SGD is its
primary policy tool - already in the pipeline to ensure
inflation slowed sharply as the year progressed.
It also sounded more downbeat on the economic outlook as GDP
growth missed forecasts with a rise of just 0.1%.
The MAS is a famously conservative institution so pausing
was a big step, and joins peers in Australia, India, Canada and
South Korea among others.
Markets still imply a two in three chance the Federal
Reserve will hike its rates to a 5.0-5.25% range in May, but see
that as the end of the line for this cycle. Indeed, the
possibility of an easing is envisaged from July and rates at
4.25-4.5% by December.
Supporting the dovish cause was the soft reading on March
U.S. producer prices, and retail sales later today will likely
do the same.
Median forecasts favour a dip of 0.4% but risks seem tilted
to the downside with Goldman Sachs warning of a sharp pullback
in spending following the collapse of SVB.
Analysts at NatWest Markets are tipping a drop of 1.3% for
March, the weakest performance since July 2021.
Market pricing for future Fed cuts stands in stark contrast
to the outlook on the European Central Bank, where another 50
basis points of hikes are in the curve with no easing this year.
This divergence has seen the spread between U.S. 10-year
yields and German bunds shrink to its smallest in
two years near 100 basis points.
A break under 100bp would leave the spread at its narrowest
since early 2014, when the euro was up around $1.3600.
The single currency duly made a one-year high of $1.1075 in
Asian hours and is up across the board in a blow to many travel
plans. It made a five-month top on the yen, a 10-month peak on
the Singapore dollar and a 17-month high on the Australian
dollar.
The U.S. dollar is now on track for its biggest weekly fall
in three months and has weakened five weeks in a row - a run not
recorded since mid-2020.
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