Market Newsletter on 03.04.2023

FORECAST FOR THE DAY
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Market sentiment:

Domestic: S&P Global's Vietnam Manufacturing Purchasing Managers' Index (PMI) reached 47.7 points in March, down from 51.2 in February and below the 50-point benchmark for the fourth time. in the past five months. After showing signs of recovery last month, Vietnam's manufacturing sector weakened again in March. Output, new orders and industry employment all fell as the report noted demand. decline from customers.

The USD/VND exchange rate increased slightly by about 20 dong this morning following the rise of the greenback in the world market and information about some sources of buying USD for payment from domestic enterprises. On the free market, the exchange rate is trading at 23,430 - 23,480.

World: The dollar rallied nearly 0.6 percent against the euro at the weekend but still posted a fifth straight weekly decline against the common currency after US consumer spending growth slowed boosted expectations that the US Federal Reserve would soon pivot to halt the process of raising interest rates. US consumer spending rose moderately in February after a strong increase in the previous month while inflation showed signs of cooling down, although still at a high level. The core US personal consumption expenditures (PCE) price index rose 4.6% in February year-on-year, compared with 4.7% the previous month.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, have unexpectedly announced further production cuts since May. The move sent world crude oil prices instantly rising more than 6% when markets reopened this morning while also raising expectations for global inflation. Financial markets are currently assessing a 61% chance that the Fed will raise interest rates by 0.25% in May, from 48% last Friday. Data on the jobs market and the services PMI will be the highlight of the US market this week alongside the April policy meeting of the Australian Central Bank.

TRENDING CURRENCY pairs
AUD/USD:

AUD/USD continues to fall around -0.2% this morning after falling more than -0.4% last week. Data showed China's manufacturing activity expanded at a slower pace in March, stoking fears of a rebound in factory activity from the coronavirus pandemic, with global demand stagnating. demand and the real estate market weaken.

The Reserve Bank of Australia will meet this Tuesday with the possibility that the base rate may increase by 0.25% but does not rule out the possibility that the tightening cycle may be halted. The market is expecting an 85% chance that the RBA will maintain interest rates at the current 3.6%, so if the Central Bank of Australia surprises with its decision to raise interest rates, it will support AUD appreciation. Based on the minutes of the meeting last March, a pause seems very likely. The RBA has noted that there is little room for a rate hike and that "members have agreed to reconsider the possibility of a pause at a later meeting". It's worth noting that last month's RBA meeting took place before the banking crisis and January CPI data was lower than Australia's forecast.

The scenario of an unexpected rate hike by the RBA will likely lead to AUD/USD testing back to the 200-day moving average at 0.6750. On the contrary, if it receives a message to suspend interest rate hikes from the RBA, the pair can return to the March 10 low of 0.6564.