IFX Market Report: Friday 14th April 2023

Over the past week the dollar has continued to weaken whilst the Euro has seen some strength.

US Jobs growth slowed in March but still came in slightly above expectations. The 236,000 figure was a touch above the 230,000 forecast, but a big drop on the 326,000 in February and record 476,000 in January. The slow down is positive in terms of helping the FED battle inflation but is not enough to necessarily deter a further interest rate hike.

In normal circumstances interest rate hikes are used as a tool to bring down inflation, however if a country is likely to fall into recession then an interest rate hike would be counter productive against growth. Currently the US economy has avoided recession as the jobs market and consumer spending have remained resilient, but the Bank of America believe there are 12 charts that indicate the US is very close to a full blown recession. These charts include Civil service strikes, decline in manufacturing which will in turn lead to earnings decrease and then job losses, oil prices and falling house prices.

The UK has economy has also shown resilience this year however the IMF believe that if high inflation keeps interest rates high then there could be a global recession and that UK GDP will suffer around a 0.3% decline.

The latest GDP reading for February showed a flat 0% stagnated figure, compared to 0.1% estimated. Despite this Januarys figure was revised up to 0.4% meaning that the UK will unlikely enter recession in Q1 this year.

The Euros strength this week was down to a 6 month high industrial output figure, which showed a rise of 1.5% compared to the 1% expected.

GBPEUR was down after the data and currently resides at 1.1320.

GBPUSD currently resides at 1.2510, whist EURUSD has climbed to 1.1050

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