Market Wrap – CPI Bump

Stocks traded down as sentiment remained soft during the Asian session, however, the US dollar index remained on the backfoot after the release of the FOMC minutes and especially the CPI inflation data.

The fallout from the US banking crisis is likely to tilt the economy into recession later this year, according to Federal Reserve documents released on Wednesday.

The minutes revealed that Federal Reserve staff gave FOMC members a presentation about potential repercussions from the failure of Silicon Valley Bank and other tumult in the financial sector that began in early March.

FOMC officials ultimately voted to increase the benchmark borrowing rate by 0.25 percentage point, the ninth increase over the past year. That brought the fed funds rate to a target range of 4.75%-5%, its highest level since late 2007.

The Australian dollar remained volatile even after the Employment in Australia grew by 53,000 to 13.88 million in March 2023, easily exceeding market forecasts of a 20,000 gain and after a downwardly revised 63,600 gain a month earlier.

The latest reading marked the second straight rise in employment, with full-time employment increasing by 72,200 to 9,748,900 while part-time employment fell by 19,200 to 4,153,900. Over the year to March, employment gained 415,600 or 3.1 percent. 

Australia’s seasonally adjusted unemployment rate stood at 3.5% in March 2023, unchanged from February’s near 50-year low but below market estimates of 3.6%.

The number of unemployed declined by 1,600 to 507,000, as people sought full-time jobs fell by 3,100 to 339.200 while those looking for part-time jobs climbed by 1,400 to 167,800. 

The participation rate was unchanged at 66.7%, above the consensus of 66.6%. The underemployment rate increased to 6.2% from 5.8%. Monthly hours in all jobs dropped by 3 million or 0.2% to 1,914 million.

China export data showed that Exports surged by +14.8% year on year which was much better than the expected -7.1%, and also the previous -6.8%.