US indices saw subdued performance last week. On the one hand, they're being buoyed by the corporate earnings season. On the other hand, uncertainty in the Middle East is a major factor restraining growth. The US Federal Reserve's monetary policy decision had no significant impact on indices.
On the foreign exchange market, the dollar also showed a mixed trend. However, the Fed's decision not to raise rates amid rising inflation was a disappointment for the US currency. The dollar is losing ground against the yen and gold but remains stable against the pound and the euro. Brent crude prices continued to rise, with the blockade of the Strait of Hormuz and ongoing geopolitical uncertainty in the Middle East supporting prices. The UAE's announcement that it won't significantly increase production despite its withdrawal from OPEC and OPEC+ also kept prices up.
RBA rates decision
The global economy is in a difficult place right now. Energy prices are stubbornly rising. This is having an impact on inflation. According to the latest data, inflation in Australia reached a 30-month high as it rose to 4.6%. In this context, global analysts' expectations that the Reserve Bank of Australia will raise its key interest rate seem justified. A move to tighten its monetary policy is good news for the national currency. In this context, AUD/USD could rise to 0.7220.
The US. Services PMI (ISM)
The US services sector remains fairly resilient, with the Purchasing Managers' Index remaining in the growth zone. This is a positive sign since the sector accounts for approximately 75% of the country's GDP. Analysts nevertheless expect the index to stay above 50 (the growth zone) but decline versus the previous period. With inflation rising, it won't prompt the Fed to cut its key interest rates. However, a decline in this key indicator is negative for the dollar in the short term. In this scenario, USD/JPY could decline towards 158.40.
The US. Non-farm payrolls
The US labour market is showing mixed movement. After falling sharply in February, it saw an increase in March. Meanwhile, the unemployment rate remains at 4.3%. Global analysts expect the US economy to create fewer jobs in the reporting period than in the previous month, which signals that the sector is cooling. The labour market's health continues to be a key factor for the Federal Reserve's monetary policy decisions. However, with inflation moving higher due to rising energy prices, the regulator won't cut its key interest rate. Lower macroeconomic indicators are bad news for the dollar. At the same time, the US dollar's weakening is supporting assets denominated in it, particularly gold. In this context, XAU/USD could return to around 4,690.00.