Today is May 1st, and many markets in European countries are closed for Labor Day (May Day). However, the London market is open, ensuring some liquidity.
In London, the only significant event is the release of the final UK Manufacturing PMI (Purchasing Managers' Index) for April. As we move into New York trading hours, the Governor of the Bank of Spain, Pablo Hernández de Cos, will give a speech on monetary policy and inflation. The mood seems to be one of anticipation for the upcoming U.S. Federal Open Market Committee (FOMC) meeting.
Yesterday's NY market saw the dollar strengthen as U.S. labor costs for the first quarter exceeded expectations, recalling concerns about rising wage pressures. With the FOMC meeting approaching, expectations for a rate cut starting within the year are fading further.
Today's focus is on the FOMC, but prior to that, a series of U.S. economic indicators will be released, including the MBA Mortgage Applications Index (April 20 - April 26), ADP Employment Report (April), Construction Spending (March), JOLTS Job Openings (March), and the ISM Manufacturing Index (April). Given the high market sensitivity to yesterday's labor cost index, attention should also be paid to today's labor market indicators.
The market consensus for the FOMC is to keep policy rates unchanged. Recent comments by Chairman Jerome Powell align with the market's shift in expectations towards delaying the start of rate cuts this year, and it is anticipated that a hawkish stance will be prominent in today's press conference. This time, there will be no new projections from the members, leaving Powell's press conference as the sole focus. Friday's U.S. employment report will be the next risk event, but today's reaction is expected to closely follow Powell's remarks.
Other events include the release of U.S. weekly crude oil inventories, announcements related to the U.S. quarterly regular auction, and earnings from major U.S. companies such as Pfizer, Kraft Heinz, Qualcomm, eBay, and Estée Lauder.
Today the U.S. dollar is strengthening, and U.S. stocks and cryptocurrencies are experiencing significant declines. Attention is on whether this trend will reverse after the FOMC meeting. Given the high level of anticipation for a strong U.S. dollar, there is a high likelihood of some reversal after the FOMC.
