The Swiss National Bank unexpectedly cut the interest rate. Oil declines amid attempts to de-escalate the conflict in the Middle East

US weekly jobless claims unexpectedly fell from 2,000 to 210,000, indicating a strengthening labor market compared to expectations of a rise to 213,000. S&P Manufacturing PMI for March rose by 0.3 to a 2-year high of 52.5, stronger than expectations for a decline to 51.8. US home sales for February unexpectedly rose 9.5% to 4.38 million, stronger than expected for a decrease to 3.95 million.

The Bank of England (BOE) voted 8:1 to keep the official bank rate at 5.25%, with BOE Governor Bailey stating that the bank “has not yet reached the point where we can cut interest rates.” GfK’s UK consumer confidence indicator unexpectedly came in at 21 in March 2024, unchanged from February and missing market expectations for a slight improvement to 19 as the cost of living crisis and broader economic uncertainty continue to dampen sentiment.

The Swiss franc fell sharply against the dollar and other currencies following the Swiss National Bank’s (SNB) decision to cut interest rates by 25 basis points (bps) to 1.50% at its March meeting on Thursday. The SNB decided to cut interest rates in response to a significant decline in inflation and growth over the past year. The SNB expects inflation to average 1.9% in 2024. Inflation is currently well below this forecast at 1.2%.

WTI crude futures fell to around $80.5 a barrel on Friday, declining for the third consecutive session, as the possibility of a ceasefire in Gaza that could ease supply concerns weighed on oil prices. The US is ready to bring a draft UN resolution calling for an immediate and sustained ceasefire in Gaza to a Security Council vote on Friday. The US Secretary of State Anthony Blinken also said Thursday that he believes peace talks in Qatar can succeed.

Asian markets were predominantly rising yesterday. Japan’s Nikkei 225 (JP225) rose by 2.03%, China’s FTSE China A50 (CHA50) gained 0.51% on Thursday, Hong Kong’s Hang Seng (HK50) added 1.93% on the day, and Australia’s ASX 200 (AU200) was positive 1.12%.

The offshore yuan weakened to 7.25 per dollar, falling to its lowest level in four months on bets that China will further ease policy to support the economy. A senior central bank official recently said the People’s Bank of China (PBoC) has room to further reduce banks’ reserve requirement ratios and other policy tools. Investors await data on manufacturing and services activity in China in the coming weeks to gauge the health of the world’s second-largest economy.

The New Zealand dollar slid to US $0.60, falling to its lowest level in four months, as the US dollar rebounded amid growing expectations that US interest rates could remain elevated for longer even as they begin to fall in other major economies. There were also hopes that the RBNZ may cut the official money rate sooner than forecast as the economy is in a technical recession following an unexpected contraction in Q4 GDP.