Weekly Market Review - April 29-May 3
The British pound has been the strongest fiat currency this week, gaining 1.97% against the US dollar and 1.44% against euro, as the Bank of England raised growth forecasts while keeping the interest rates unchanged. The US Fed also left the interest rates at the same levels.
In the cryptocurrency market, Bitcoin surged 10% and is currently trading close to $5,800. The rally gives hopes that the crypto space is about to demonstrate another long-term bullish run.
US Unemployment Drops to 50-Year Low
The US nonfarm payrolls surprised the markets with better-than-expected results. Thus, the unemployment rate decline to 3.6% last month, which is the lowest level in 50 years, as the economy added 263 thousand jobs while economists expected 190 thousand. Salary growth kept steady, accelerating by 3.2%, the same rate as in March. The strong progress in the labor market and the US economy in general might increase Donald Trump’s hopes for another election next year.
US And China Might Conclude Trade Talk Next Week
Steven Mnuchin, the US treasury secretary, stated that the recent talks between China and US, which were held in Beijing this week, marked the start of the final round of trade negotiations between the two countries. Next week, China's vice premier, Liu He will go to Washington to participate in another round with the hope that the negotiations will conclude by next Friday. The two largest economies in the world have to discuss how the US will ease current tariffs on Chinese goods and the way the agreement decisions will be enforced in practice.
Fed Keeps Rates Unchanged
The US Fed’s Federal Open Market Committee (FOMC) left the interest rates unchanged on Wednesday, in line with economists’ expectations. However, Fed chairman Jerome Powell came with a hawkish speech, which supported the price of the US dollar. Inflation is still far from the target, but the Fed is encouraged by the good state of the economy, especially the labor market. Powell said that the economy and employment growth was a bit stronger than the Fed expected while inflation was somewhat weaker.
Eurozone’s Economic Growth Accelerates
In the first quarter of this year, the eurozone economy grew at a faster pace than expected. Eurostat said on Tuesday in its preliminary report that GDP growth in the 19 countries sharing the euro was 0.4% compared to the last quarter of 2018, when its growth constituted 0.2%. When compared to the first quarter in 2018, the GDP growth in the first quarter of this year accelerated by 1.2%, the same pace as in the Q4 2018. Also, the unemployment level in the region fell to 7.7%, the lowest level since 2008.
UK May Keep in The EU Customs Union
UK Prime Minister Theresa May is continuing the negotiations with the Labour Party, which is in opposition, in an attempt to reach a consensus on how the Brexit should take place. The PM might be forced to accept to remain in the EU’s customs union to get the Labour’s support. However, this idea has strong resistance from many high-ranking members of May’s Conservative Party, as it wouldn’t permit the UK to shape its own trade pacts with other nations.
German CPI Accelerated in April
The growth of Germany’s consumer price index (CPI) accelerated toward the inflation target imposed by the European Central Bank (ECB), which is just below 2%. A poll carried out prior to the release of the regional data implies that German inflation would increase to 1.7% in April from 1.4% in March. However, the growth might be supported by the one-off price rises related to the Easter holiday, and the prices might get back to normal soon.
Upcoming News to Watch
Next week, the markets will closely monitor the trade talks between the US and China, whose representatives will meet in Washington. A positive outcome might bring relief and mark the restart of the global economic growth acceleration.
Eurozone will come with several macroeconomic indicators on Monday, as it will publish its purchasing managers' indices, retail sales, and investor confidence.
On Friday, the UK will report on its GDP growth and industrial production while the US will release inflation data.
Anatol has been writing for our news site for a year and is the newest member of our team. While he’s new to us, he’s certainly not new to trading with over 10 years’ experience being a professional financial journalist and working in the markets. Learn more.