There weren’t many dark clouds in the nonfarm payrolls numbers in March, but the market is increasingly expecting strong economic data, as the Fed says, rather than something that would result in reductions. The market has decided that it can tolerate fed funds at 5.25-5.50% and as long as rates don’t rise, delaying rate cuts is not a problem. And no Fed official is talking about further hikes.
Yesterday’s rout was largely triggered by fears of an escalation of the war between Iran and Israel, but the market is seriously considering this. But even with a 30 point drop today, there is still a long way to go to erase yesterday’s declines.
This article was written by Adam Button at www.forexlive.com.
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