Daily Digest Market Movers: Australian Dollar appreciates due to positive market sentiment

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  • The Judo Bank Australia Composite Purchasing Managers Index (PMI) declined to 53.0 in April from the previous reading of 53.3. This indicates a slightly slower growth in Australian private sector output. The growth in business activity was mainly confined to the service sector while manufacturing output continued to decrease. Specifically, the Services PMI fell to 53.6 from 54.4 in the previous month.
  • The ASX 200 Index saw gains for the second consecutive session on Friday, propelled by positive movements on Wall Street overnight. These gains were driven by reassurances from the US Federal Reserve, which dismissed concerns about another interest rate hike.
  • US Initial Jobless Claims data reported that the number of individuals claiming unemployment benefits remained unchanged from the previous week at 208K for the week ending April 26. This figure stays at the lowest level in two months and is notably below market expectations of 212K, potentially providing the Federal Reserve with the flexibility to postpone interest rate cuts.
  • US Nonfarm Productivity rose by 0.3% in the first quarter, following an upwardly revised 3.5% increase in the previous quarter and falling short of the expected increase of 0.8%. It was the weakest pace of productivity increase since the January-March quarter in 2023.
  • On Thursday, Australia's Trade Balance (MoM) data posted a surplus, however, it was lower than market expectations for April. Additionally, Building Permits data showed an increase in the number of permits for new construction projects in March, albeit falling short of expectations.
  • Federal Reserve Chairman Jerome Powell highlighted that progress on inflation has recently stalled, suggesting that it would take more time than previously anticipated before the Fed could confidently expect inflation to approach its 2% target. Powell mentioned that if robust hiring persisted and inflation remained stagnant, it would justify delaying rate cuts.
  • According to the CME FedWatch Tool, the probability of the Federal Reserve keeping interest rates within their current range of 5.25%-5.50% during the June meeting has decreased to 85.8%, down from 90.0% a week ago. Conversely, the likelihood of a 25-basis point rate cut has increased to 14.2% from 9.7% compared to a week ago.


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