06/12/2024
Written by: Ian Morley
Summary:
Investor sentiment declined yesterday evening, leading to a drop in US equities and a similar decline in Asian markets overnight. The Australian dollar (AUD) has continued to strengthen after Reserve Bank of Australia (RBA) Governor Bullock reinforced earlier hawkish remarks, asserting that the Bank “will not hesitate” to increase rates if necessary. Meanwhile, the British pound (GBP) continues to weaken.
Market Insight:
JP Morgan has increased the likelihood of a US recession this year from 25% to 35%. Today’s focus will be on the weekly Initial Jobless Claims report. A higher-than-expected number could exacerbate fears of rising unemployment and signal potential trouble for the economy. Consequently, markets might anticipate more substantial rate cuts by the Federal Reserve, which would likely be negative for the USD. Conversely, a lower number would boost risk appetite and be positive for the USD, reflecting reduced concerns about the US economy’s outlook.