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CFD Markets News and Forecasts — 05-05-2024
- Gold price trades on a softer note near $2,295 on Monday.
- The Nonfarm Payrolls arrived at 175K in April vs. 315K rise prior, weaker than expected.
- Fed’s Bowman said she remains willing to raise rates further if data shows inflation progress has stalled or reversed.
Gold price (XAU/USD) loses its recovery momentum around $2,295 on Monday during the early Asian session. Investors will keep an eye on Fedspeaks this week, along with the first reading of the US Michigan Consumer Sentiment Index for May on Friday. Meanwhile, the US Dollar Index (DXY), a measure of the value of the USD against a weighted basket of currencies used by US trade partners, edges higher to 105.12, bouncing off nearly one-month lows.
The US Employment data on Friday showed some signs that the US economy is slowing. The Nonfarm Payrolls (NFP) came in at 175K in April from 315K rise (revised from 303K) in March, weaker than 243K expected. This figure registered the smallest gain since October 2023. Additionally, the Unemployment Rate ticked up to 3.9% and Average Hourly Earnings declined by 3.9% YoY in April. Finally, the ISM Services PMI fell into contractionary territory, arriving at 49.4 in April from 51.4 in March, below the market consensus of 52.0.
After the data release, the probability of the Federal Reserve (Fed) rate cut increased, with traders expecting 38 basis points (bps) of rate cuts toward the end of the year. The precious metal climbed to $2,320 due to the downbeat US economic data but erased its earlier gains after the hawkish remarks from the Fed.
Fed Governor Michelle Bowman was hawkish in a recent interview, saying that she’s willing to hike rates if inflation stalls or reverses. Meanwhile, Chicago Fed President Austan Goolsbee stated that the latest US employment report was solid, emphasizing that current monetary policy is restrictive. These comments from Fed officials, along with the risk-on mood, diminish the appeal of non-yielding metals.
- AUD/USD holds positive ground near 0.6610 in Monday’s early Asian session.
- The US Nonfarm Payrolls (NFP) came in weaker than expected in April, along with lower-than-expected wage growth.
- The RBA is expected to hold the cash rate at 4.35% for a fourth straight meeting on Tuesday while reinstating a hawkish bias.
The AUD/USD pair extends its upside around 0.6610 during the early Asian session on Monday. The downbeat US employment data for April has exerted some selling pressure on the US Dollar (USD) across the board. Investors will closely monitor the Reserve Bank of Australia (RBA) interest rate decision on Tuesday.
The employment market in the United States slowed more than expected in April and the annual wages fell below 4.0% for the first time in nearly three years, the US Bureau of Labor Statistics (BLS) reported on Friday. The US Nonfarm Payrolls (NFP) rose 175,000 in April from the 315,000 increase (revised from 303,000) in March, below the market estimation of 243,000. The Unemployment Rate climbed to 3.9% in April from 3.8%, while the Average Hourly Earnings dropped to 3.9% YoY in April from the previous reading of 4.1%.
Investors increased their bets that the Federal Reserve (Fed) will start counting the interest rate in September and expect the Fed to lower its borrowing costs twice this year instead of only once before the data was released. This, in turn, weighs on the Greenback and acts as a tailwind for the AUD/USD pair.
On the Aussie front, the RBA is likely to keep its key interest rate at a 12-year high of 4.35% on Tuesday as inflation in Australia remains stubbornly high. Market players will take more cues from the RBA press conference after the monetary policy meeting. If the RBA’s Governor Michele Bullock delivers a hawkish remark, this might boost the Australian Dollar (AUD) against the USD. Analysts from Commonwealth Bank and Westpac anticipate the interest rate to peak at 4.35% in November 2023, then drop to 3.10% by December 2025.
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