Tag: AUD

  • Dollar Drops on CPI Miss; Trade Optimism Offers Limited Support

    Dollar Drops on CPI Miss; Trade Optimism Offers Limited Support


    Dollar fell broadly following weaker-than-expected US inflation report for May, reinforcing the narrative that consumer prices have not yet felt the full brunt of tariff pressures. The data offered some relief that the feared pass-through from tariffs to end consumers hasn’t materialized, at least not yet.

    However, it wasn’t enough to shift expectations for the June and July Fed meetings, where markets still overwhelmingly anticipate the central bank to hold steady. What did shift slightly was the probability of a September rate cut. According to fed funds futures, the odds of a cut in Q3 have now climbed above 55%. Nonetheless, the Fed is unlikely to act preemptively without more confirmation.

    On trade, President Trump declared this week’s talks with China a success, albeit with no rollback of existing tariffs. While the 55% tariff rate remains in place, Trump noted that China has committed to supplying key items such as magnets and rare earths “up front,” with the US reciprocating on non-economic terms like student access.

    In the broader FX market, Dollar is now the weakest performer for the week, followed by Sterling and Yen. The Pound remains weighed down by soft UK labor market data. On the other hand, Euro is gaining the upper hand, while commodity Aussie and Kiwi are benefiting from improved risk sentiment. Swiss Franc and Loonie sit in the middle.

    In Europe, at the time of writing, FTSE is up 0.22%. DAX is up 0.41%. CAC is up 0.10%. UK 10-year yield is up 0.008 at 4.552. Germany 10-year yield is down -0.006 at 2.521. Earlier in Asia, Nikkei rose 0.55%. Hong Kong HSI rose 0.84%. China Shanghai SSE rose 0.52%. Singapore Strait Times fell -0.37%. Japan 10-year JGB yield fell -0.019 to 1.461.

    US CPI ticks up to 2.4%, core unchanged at 2.8%, undershoot expectations

    US consumer inflation data for May came in softer than expected, offering some relief to markets concerned about price pressures from tariffs and broader cost pass-throughs.

    Headline CPI rose just 0.1% mom, below consensus of 0.2% mom. Core CPI, which excludes food and energy, also surprised to the downside with a 0.1% mom rise against an expected 0.3% mom. The gains in overall prices were primarily driven by shelter (0.3% mom) and food (0.3% mom), while energy posted a -1.0% monthly drop.

    On an annual basis, headline CPI rose slightly from 2.3% yoy to 2.4% yoy, still undershooting the forecasted 2.5% yoy. Core CPI held steady at 2.8% yoy, also missing expectations of 2.9% yoy.

    ECB’s Lane: Last week’s rate cut aimed at anchoring expectations, avoiding prolonged undershoot

    ECB Chief Economist Philip Lane emphasized that last week’s rate cut was a strategic step to ensure inflation remains on track toward the 2% target over the medium term. He argued that, without this move, the “projected negative inflation deviation” over the next 18 months could have risked becoming entrenched.

    In a speech today, Lane also stressed the importance of clarity in ECB’s reaction function. By cutting the deposit facility rate to 2.00%, the central bank signaled that “we are determined to make sure that inflation returns to target in the medium term”. This helps “underpin inflation expectations and avoid an unwarranted tightening in financial conditions.”

    On the other hand, holding the rate at 2.25% could have sent the wrong signal, Lane warned, potentially triggering a market repricing that would reinforce a “more pronounced and longer-lasting undershoot of the inflation target.”

    ECB’s Kazaks: Further fine-tuning cuts likely

    Latvian ECB Governing Council member Martins Kazaks signaled openness to further interest rate cuts, suggesting that while ECB has already delivered significant easing, “fine-tuning” adjustments could be needed depending on how the economy evolves.

    He noted that current market pricing for one more cut is “not out of the realm of the baseline,” but stressed that any additional moves must be carefully calibrated to keep inflation anchored near the 2% target.

    Kazaks warned against complacency, highlighting risks of a persistent inflation undershoot. While not yet leaning toward accommodative territory, he emphasized the importance of vigilance, particularly amid the uncertain impact of global trade tensions. So far, deflationary effects seem to dominate, but the final outcome remains highly uncertain and must be watched closely.

    Japan’s CGPI cools to 3.2% in May, but food inflation continue to rise

    Japan’s corporate goods price index slowed more than expected in May, easing from 4.1% to 3.2% yoy, versus the anticipated 3.5% yoy. The decline reflects the broader disinflationary trend in upstream prices, aided by the recent rebound in Yen. Yen-based import price index plunged -10.3% yoy, a sharper drop than April’s -7.3% yoy.

    Falling raw material costs were evident across sectors, with steel prices down -4.8% yoy, chemicals -3.1% yoy, and non-ferrous metals -2.1% yoy

    However, consumer-related categories showed more persistence in inflation. Prices of food and beverages accelerated to 4.2% yoy from April’s 4.0% yoy, suggesting that inflationary stickiness in essential goods remains a challenge despite broader producer-side cooling.

    AUD/USD Mid-Day Report

    Daily Pivots: (S1) 0.6497; (P) 0.6515; (R1) 0.6540; More…

    Intraday bias in AUD/USD is mildly on the upside with breach of 0.6536 resistance. Rise from 0.5913 could be resuming for 61.8% retracement of 0.6941 to 0.5913 at 0.6548. However, considering bearish divergence condition in 4H MACD, break of 0.6478 support will turn bias back to the downside for 55 D EMA (now at 0.6410) and possibly below.

    In the bigger picture, AUD/USD is still struggling to sustain above 55 W EMA (now at 0.6443) cleanly, and outlook is mixed. Sustained trading above 55 W EMA will indicate that rise from 0.5913 is at least correcting the down trend from 0.8006 (2021 high), with risk of trend reversal. Further rise should be seen to 38.2% retracement of 0.8006 to 0.5913 at 0.6713. However, rejection by 55 W EMA will revive medium term bearishness for another fall through 0.5913 at a later stage.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    23:50 JPY PPI Y/Y May 3.20% 3.50% 4.00% 4.10%
    12:30 CAD Building Permits M/M Apr -6.60% 0.30% -4.10% -5.30%
    12:30 USD CPI M/M May 0.10% 0.20% 0.20%
    12:30 USD CPI Y/Y May 2.40% 2.50% 2.30%
    12:30 USD CPI Core M/M May 0.10% 0.30% 0.20%
    12:30 USD CPI Core Y/Y May 2.80% 2.90% 2.80%
    14:30 USD Crude Oil Inventories -2.4M -4.3M

     



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  • Aussie Firmer in Quiet Markets as US-China Trade Talks Continue

    Aussie Firmer in Quiet Markets as US-China Trade Talks Continue


    Global markets remain in a state of cautious anticipation as high-level trade negotiations between the US and China continue for a second day in London. While there’s no definitive outcome yet, mild optimism lingers. Asian equities reflected that mood, with Japan’s Nikkei and Hong Kong’s Hang Seng Index both trading slightly higher. Yet the prevailing sense is one of hesitation, with limited conviction behind the moves. Investors are still waiting for substantive developments before making bolder positioning decisions.

    In the currency markets, Kiwi and Aussie continue to outperform for the week so far, buoyed by broad risk resilience and perhaps early hopes that renewed dialogue could reduce global trade frictions. However, upside momentum in both currencies has been sluggish. At the other end, Loonie is trading as the weakest, followed by Swiss Franc and Japanese Yen. Dollar, Euro, and British Pound are largely directionless, trading in the middle of the weekly performance board.

    The London meetings between US and Chinese officials mark the second day of high-stakes negotiations aimed at resolving the fallout from earlier tariff escalations. While Monday’s talks yielded no breakthrough, the inclusion of Commerce Secretary Howard Lutnick in this round is notable. His agency oversees export controls, signaling the centrality of rare earths in the ongoing discussions. These magnets, vital to EV production and defense equipment, have become a leverage point for Beijing as it holds a near-monopoly over global supply.

    Markets are not pricing in a full resolution just yet. Most expectations center around a tentative agreement on technical issues or interim concessions, such as expanded export licenses. However, structural divisions persist, particularly over technology and national security. Without more substantive signs of compromise, the fragile sentiment boost from the talks could quickly fade, especially if either side issues a combative post-meeting statement.

    Technically, EUR/AUD is now pressing 1.7460 support as the decline from 1.7705 extends. Firm break there will argue that choppy recovery from 1.7245 has completed as a correction, ahead of 38.2% retracement of 1.8554 to 1.7245. That would also suggest that fall from 1.8854 is ready to resume through 1.7245 low.

    In Asia, at the time of writing, Nikkei is up 0.89%. Hong Kong HSI is up 0.15%. China Shanghai SSE is down -0.13%. Singapore Strait Times is down -0.13%. Japan 10-year JGB yield is down -0.002 at 1.476. Overnight, DOW closed down -0.00%. S&P 500 rose 0.09%. NASDAQ rose 0.31%. 10-year yield fell -0.028 to 4.482.

    BoJ’s Ueda reaffirms gradual tightening path, cites limited room for rate cuts

    BoJ Governor Kazuo Ueda reiterated to parliament today that interest rate hikes will continue, though cautiously, once the central bank gains “more conviction that underlying inflation will approach 2% or hover around that level”.

    Ueda explained that BoJ still maintains negative real interest rates to support inflation momentum and ensure price growth remains both stable and sustained.

    However, Ueda also flagged a significant limitation in policy space should economic conditions deteriorate. With the short-term policy rate still only at 0.5%, the BoJ has “limited room” to cut rates in response to any sharp downturn in growth.

    Australia’s Westpac consumer sentiment edges higher as rate cuts clash with growth worries

    Australia’s Westpac Consumer Sentiment index rose a modest 0.5% mom in June to 92.6, reflecting a population still mired in what Westpac called a “holding pattern of cautious pessimism.”

    The data reveal “two clear opposing forces” shaping household attitudes: easing inflation and RBA’s May rate cut have improved perceptions around major purchases. On the other hand, sluggish domestic growth and global trade uncertainties continue to weigh heavily on expectations.

    Looking ahead, attention turns to the RBA’s next meeting on July 7–8. With economic data remaining mixed and labor market tightness still evident, Westpac expects the central bank to proceed with caution and keep the cash rate on hold. Nonetheless, a fresh round of economic projections in August could pave the way for another 25 basis point cut, as RBA recalibrates its stance amid still-sluggish growth.

    Australia’s NAB business confidence lifts to 2, but employment conditions erode

    Australia’s NAB Business Confidence index turned positive in May, rising from -1 to 2. However, the improvement in confidence was not matched by underlying business conditions, which weakened further. Business Conditions index slipped from 2 to 0, with trading conditions dipping slightly from 6 to 5, profitability remaining in the red at -4, and employment conditions dropping from 4 to 0 — all pointing to a stagnating environment.

    On the inflation front, cost indicators presented a mixed picture. Labor cost growth remained firm at a quarterly equivalent pace of 1.7%. Purchase cost and final product price growth eased to 1.1% and 0.5%, respectively. Retail price growth held steady at 1.2%, suggesting persistent margin pressures.

    NAB Chief Economist Sally Auld emphasized that business conditions are still weak and warned that continued softness could cap any recovery in confidence. She also flagged the labor market as a key area to monitor, with the employment index now below average.

    AUD/USD Daily Report

    Daily Pivots: (S1) 0.6496; (P) 0.6515; (R1) 0.6536; More…

    Intraday bias in AUD/USD remains neutral as it’s still staying below 0.6536 resistance. More consolidations could be seen, but even in case of another dip, further rise is in favor favor as long as 0.6406 support holds. On the upside, decisive break of 0.6536 will resume the rally from 0.5913 to 61.8% retracement of 0.6941 to 0.5913 at 0.6548. However, firm break of 0.6406 will turn bias to the downside for 38.2% retracement of 0.5913 to 0.6536 at 0.6298.

    In the bigger picture, AUD/USD is still struggling to sustain above 55 W EMA (now at 0.6443) cleanly, and outlook is mixed. Sustained trading above 55 W EMA will indicate that rise from 0.5913 is at least correcting the down trend from 0.8006 (2021 high), with risk of trend reversal. Further rise should be seen to 38.2% retracement of 0.8006 to 0.5913 at 0.6713. However, rejection by 55 W EMA will revive medium term bearishness for another fall through 0.5913 at a later stage.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    23:01 GBP BRC Retail Sales Monitor Y/Y May 0.60% 2.70% 6.80%
    23:50 JPY Money Supply M2+CD Y/Y May 0.60% 0.50%
    00:30 AUD Westpac Consumer Confidence Jun 0.50% 2.20%
    01:30 AUD NAB Business Confidence May 2 -1
    01:30 AUD NAB Business Conditions May 0 2
    06:00 JPY Machine Tool Orders Y/Y May 7.70%
    06:00 GBP Claimant Count Change May 4.5K 5.2K
    06:00 GBP Average Earnings Excluding Bonus 3M/Y Apr 5.50% 5.60%
    06:00 GBP Average Earnings Including Bonus 3M/Y Apr 5.50% 5.50%
    06:00 GBP ILO Unemployment Rate (3M) Apr 4.60% 4.50%
    08:30 EUR Eurozone Sentix Investor Confidence Jun -6 -8.1
    10:00 USD NFIB Business Optimism Index May 95.9 95.8

     



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  • Markets Eye US-China Trade Talks for Fresh Catalyst

    Markets Eye US-China Trade Talks for Fresh Catalyst


    Asian equity markets opened the week on a positive note, supported by cautious optimism surrounding the high-stakes US-China trade negotiations in London. US Treasury Secretary Scott Bessent, along with Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer, are meeting Chinese counterparts as efforts to revive dialogue intensify. The outcome of these talks could set the tone for broader risk sentiment in the coming sessions.

    Despite the upbeat market tone, traders appear restrained in their positioning. While recent developments — such as China’s approval of rare earth export licenses — hint at a willingness to de-escalate, there’s little in the way of concrete breakthrough yet. White House economic adviser Kevin Hassett tempered enthusiasm by pointing out that China’s release of critical minerals remains below what the US believes was agreed to previously in Geneva. As such, expectations for a definitive deal remain muted, limiting any aggressive risk-on trades for now.

    Currency markets reflect this tempered tone. Aussie and Kiwi are modestly firmer, benefiting from the underlying improvement in sentiment, Dollar and Loonie are trading on the softer side. European majors and Yen are relatively steady in the middle. With most major pairs holding inside Friday’s ranges, the currency space is clearly in wait-and-see mode.

    Beyond trade, inflation will be the other key macro theme this week. The US will release its May CPI and PPI data, alongside the University of Michigan’s consumer sentiment and inflation expectations. Markets are keen to assess whether signs of tariff-driven are beginning to firm. A surprise to the upside could challenge the current market view that the Fed’s next move will be no earlier than Q4, particularly if inflation expectations also pick up.

    Technically, Gold’s extended decline argues that rebound from 3120.34 might have completed at 3403.39 already, with break of near term channel support and bearish divergence condition in 4H MACD. Further fall is now in favor to 3245.23 support first. Firm break there will the solidify the case that corrective pattern from 3499.79 is already in its third leg, and target 3120.34 support and possibly below.

    In Asia, at the time of writing, Nikkei is up 0.89%. Hong Kong HSI is up 0.88%. China Shanghai SSE is up 0.26%. Singapore Strait Times is up 0.15%. Japan 10-year JGB yield is up 0.011 at 1.470.

    China’s CPI falls -0.1% yoy in May, negative for fourth month

    China’s headline CPI stayed in negative territory for the fourth consecutive month in May, coming in at -0.1% yoy, slightly better than the expected -0.2% yoy.

    The persistent softness in overall inflation was largely driven by a sharp -6.1% yoy decline in energy prices, which alone shaved off nearly half a percentage point from the annual CPI reading.

    On a monthly basis, CPI fell -0.2% mom, with energy again dragging down the figure through a -1.7% mom decline.

    In contrast, core inflation, which strips out food and energy prices, rose to 0.6% yoy, the highest level since January.

    Producer price pressures continue to weaken further, with PPI dropping to -3.3% yoy from -2.7% yoy previously, marking the deepest contraction in nearly two years. Wholesale prices have now been stuck in deflation since October 2022.

    China’s trade surplus widens to USD 103.2B in May, US exports slump -34.5% yoy

    China’s trade surplus widened to USD 103.2B in May, exceeding expectations of USD 101.3, even as headline export and import figures undershot forecasts. Exports rose 4.8% yoy, just shy of the 5.0% yoy consensus. Imports fell -3.4% yoy, a sharper drop than the anticipated -0.9% yoy.

    Exports to the US plunged -34.5% yoy, highlighting the entrenched trade tensions despite Washington’s partial tariff rollback in April. However, the impact was cushioned by robust growth in exports to ASEAN (15% yoy), the European Union (12% yoy), and Africa (33% yoy).

    ECB’s Nagel signals Pause, cites maximum flexibility at current rates

    German ECB Governing Council member Joachim Nagel indicated over the weekend that the central bank is likely entering a pause phase after last week’s eighth rate cut in the current easing cycle, which brought the deposit rate to 2.00%.

    Speaking on Deutschlandfunk radio, Nagel also noted that the current level of interest rates offers “maximum flexibility.” And, “We can now take the time to look at the situation first.”

    BoE’s Greene warns on inflation sensitivity, risk of wage-price spiral

    BoE Monetary Policy Committee member Megan Greene acknowledged at a Saturday conference that while UK inflation is moving “in the right direction,” the pace of decline is slower than she would prefer.

    Speaking candidly about April’s upside inflation surprise, Greene stated that while the MPC believes it can “look through” the jump, there remains a “pretty big risk” that price pressures could become more entrenched, especially if second-round effects materialize.

    Greene also highlighted the behavioral shift triggered by the recent cost-of-living crisis, warning that past inflation shocks may have left households and businesses more reactive to even small price increases. That, in turn, could “feed through the wage-price behavior.” S

    He noted that private-sector wage growth remains “way above” the level consistent with the BoE’s 2% inflation target.

    Tariff effects under scrutiny as US CPI, PPI and inflation expectations take center stage

    A relatively quiet week for global economic releases will nevertheless carry key signals for monetary policy in both the US and UK.

    US May CPI report will be front and center, offering insight into whether there is an emerging inflation pickup from tariffs. Headline CPI is expected to accelerate from 2.3% yoy to 2.5% yoy. Core CPI is seen rising to 2.9% after troughing at 2.8% for two months. A rise in both measures would raise concerns that 2025’s slow disinflation trend is reversing just as tariffs begin to seep into consumer prices.

    Additional confirmation may come from upstream price pressures in PPI data, alongside consumer inflation expectations in the University of Michigan’s sentiment survey. If all three elements—CPI, PPI, and expectations—firm, the Fed’s cautious stance would harden further. While markets currently lean toward a September cut, such an inflation environment could shift expectations toward Q4.

    In the UK, attention will turn to April GDP and labor market data. GDP is expected to show a mild contraction of -0.1% mom. But that may be less concerning given signs that post-trade deal clarity with the US could support stronger growth later in Q2. The more pivotal element will be wage growth, which has remained stubbornly high and continues to feed into sticky services inflation—a key concern for BoE.

    Diverging views within the Monetary Policy Committee remain apparent. While some members are inclined to ease, Chief Economist Huw Pill has warned last month that the UK’s weak productivity growth and embedded wage pressures could mirror past inflationary episodes. His remarks highlight that underlying structural risks—especially in the labor market—may prevent BoE from loosening policy too quickly, even if growth remains uneven.

    Here are some highlights of the week:

    • Monday: New Zealand manufacturing sales; Japan GDP final; China CPI, PPI, trade balance.
    • Tuesday: Australia Westpac consumer sentiment, NAB business confidence; UK employment; Swiss SECO consumer climate; Eurozone Sentix investor confidence.
    • Wednesday: Japan PPI; Canada building permit; US CPI.
    • Thursday: Japan BSI manufacturing; UK GDP, industrial and manufacturing production, goods trade balance; US PPI, jobless claims.
    • Friday: New Zealand BNZ manufacturing; Japan tertiary industry index; Germany CPI final; Eurozone industrial production, trade balance; Canada wholesale sales, manufacturing sales; US U of Michigan consumer sentiment.

    AUD/USD Daily Report

    Daily Pivots: (S1) 0.6476; (P) 0.6497; (R1) 0.6513; More…

    AUD/USD recovers mildly today but stays below 0.6536 resistance. Intraday bias remains neutral for the moment. Further rise is in favor as long as 0.6406 support holds. On the upside, decisive break of 0.6536 will resume the rally from 0.5913 to 61.8% retracement of 0.6941 to 0.5913 at 0.6548. However, firm break of 0.6406 will turn bias to the downside for 38.2% retracement of 0.5913 to 0.6536 at 0.6298.

    In the bigger picture, AUD/USD is still struggling to sustain above 55 W EMA (now at 0.6443) cleanly, and outlook is mixed. Sustained trading above 55 W EMA will indicate that rise from 0.5913 is at least correcting the down trend from 0.8006 (2021 high), with risk of trend reversal. Further rise should be seen to 38.2% retracement of 0.8006 to 0.5913 at 0.6713. However, rejection by 55 W EMA will revive medium term bearishness for another fall through 0.5913 at a later stage.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    22:45 NZD Manufacturing Sales Q1 5.10% 1.10% 3.00%
    23:50 JPY Bank Lending Y/Y May 2.40% 2.40% 2.40% 2.30%
    23:50 JPY Current Account (JPY) Apr 2.31T 2.59T 2.72T
    23:50 JPY GDP Q/Q Q1 F 0.00% -0.20% -0.20%
    23:50 JPY GDP Deflator Y/Y Q1 F 3.30% 3.30% 3.30%
    01:30 CNY CPI Y/Y May -0.10% -0.20% -0.10%
    01:30 CNY PPI Y/Y May -3.30% -3.00% -2.70%
    03:00 CNY Trade Balance (USD) May 103.2B 101.1B 96.2B
    05:00 JPY Eco Watchers Survey: Current May 44.4 43.9 42.6
    14:00 USD Wholesale Inventories M/M Apr F 0% 0%

     



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  • Subdued Markets Drift as Tariff Tensions Resurface and BoC Decision Looms

    Subdued Markets Drift as Tariff Tensions Resurface and BoC Decision Looms


    Global markets remain subdued as investors struggle to find a firm direction. US stocks closed higher overnight, with NASDAQ extending to fresh multi-week highs, suggesting some resilience in tech-led risk appetite. Asian equities followed suit to some extent, but the overall momentum has been tepid.

    In the currency markets, Dollar is attempting to recover from recent losses, though the rebound so far lacks strong conviction. Loonie and Kiwi are mildly firmer. However, Aussie and Yen are both underperforming, sitting at the bottom of the performance table and highlighting the absence of a coherent risk-on or risk-off narrative. European majors are positioned in the middle of the pack, with Swiss Franc slightly outperforming.

    The trade backdrop remains tense. US President Donald Trump’s decision to double tariffs on most imported steel and aluminum to 50% took effect on today, marking a new escalation in the global trade conflict. According to economic adviser Kevin Hassett, the initial 25% steel tariffs delivered partial support, but “more help is needed,” hence the decision to double the rates. The move came just as the White House also demanded “best offers” from trade partners ahead of a self-imposed early July deadline. Attention now turns to the European Union, with markets awaiting any formal response or retaliatory measures.

    Technically, EUR/GBP’s recovery has stalled ahead of 0.8458 resistance and retreated notably. Focus is back on 0.8401 support. Firm break there will argue that fall from 0.8737 might be ready to resume through 0.8354. That, if happens, might be accompanied by extended pullback in EUR/USD or upside break out in GBP/USD, or both.

    In Asia, at the time of writing, Nikkei is up 0.92%. Hong Kong HSI is up 0.47%. China Shanghai SSE is up 0.36%. Singapore Strait Times is down -0.07%. Japan 10-year JGB yield is up 0.014 at 1.495. Overnight, DOW rose 0.51%. S&P 500 rose 0.58%. NASDAQ rose 0.81%. 10-year yield fell -0.002 to 4.460.

    Looking ahead, final PMI Services data from both the Eurozone and the UK will be released in European session. In the US, markets will closely watch the ADP employment report and ISM services index for clues on labor market momentum and service sector resilience. Still, the day’s main event is BoC policy decision, where the central bank is widely expected to hold, but guidance could lean dovish as trade risks intensify.

    BoC to hold rates at 2.75%, maintain dovish bias

    BoC is widely expected to leave interest rate unchanged at 2.75% for the second consecutive meeting today.

    While Q1 GDP surprised to the upside at 2.2% annualized, the growth was heavily front-loaded by export activity as US buyers rushed to stockpile Canadian goods ahead of impending tariffs. That one-off boost is unlikely to alter the central bank’s cautious stance in light of growing global and domestic uncertainties. Meanwhile, core inflation rose back to near the top of BoC’s 1-3% target range, offering a reasonable basis for a continued pause.

    Overall, expectations are firmly anchored toward further easing later this year. A Reuters poll found that 75% (17 of 23) of economists anticipate at least two more cuts in 2025, with two of them forecasting as many as four.

    Given the high degree of trade uncertainty, particularly around tariffs, BoC is likely to keep a flexible tone in its communication. While the rate is on hold today, policymakers are expected to leave the door open for adjustments ahead, depending on how the trade situation evolves.

    In the currently markets, today’s BoC decision may not be the key driver for USD/CAD. Instead, market direction is still largely dictated by sentiment around US trade policy.

    Technically, further decline is expected as long as 1.3860 resistance holds, to 61.8% projection of 1.4414 to 1.3749 from 1.4014 at 1.3603. There might be some support from 1.3603 to contain downside and bring a rebound, as a correction to the five wave decline from 1.4791 high. However, decisive break there could prompt downside acceleration to 100% projection at 1.3349 rather quickly.

    Australia’s GDP grows only 0.2% qoq in Q1, as weather and public investment drag

    Australia’s GDP expanded just 0.2% qoq in Q1, falling short of expectations for 0.4% qoq growth. On an annual basis, GDP rose 1.3% yoy. However, GDP per capita declined by -0.2% qoq, marking a renewed contraction in individual economic output.

    The ABS noted that severe weather disrupted key sectors including mining, tourism, and shipping, while also impacting domestic demand and exports.

    The most notable drag came from public investment, which fell -2.0%, contributing to the largest negative impact from public spending since Q3 2017. Net exports also weighed slightly, subtracting -0.1 percentage points from quarterly growth.

    Japan’s PMI composite finalized at 50.2, growth momentum falters

    Japan’s private sector lost steam in May as final PMI Services reading slipped to 51.0 from April’s 52.4, while Composite PMI declined to 50.2 from 51.2. The data point to only marginal growth in overall activity, with a slowdown in services combining with a mild deterioration in manufacturing output.

    S&P Global’s Annabel Fiddes noted that the rise in total new orders “moved closer to stagnation, as service sector sales grew at their slowest pace in six months and factory demand continued to decline. This moderation suggests that Japan’s private sector “may struggle to bounce back in the near-term”.

    Underlying concerns were linked to external and structural factors, including an uncertain global demand outlook, persistent labor shortages, and mounting cost pressures.

    AUD/USD Daily Report

    Daily Pivots: (S1) 0.6439; (P) 0.6470; (R1) 0.6492; More…

    Intraday bias sin AUD/USD remains neutral for the moment. With 0.6406 support intact, further rally is expected. ON the upside, firm break of 0.6536 will resume the rally from 0.5913 to 61.8% retracement of 0.6941 to 0.5913 at 0.6548. However, decisive break of 0.6406 will confirm short term topping, and turn bias back to the downside for 38.2% retracement of 0.5913 to 0.6536 at 0.6298.

    In the bigger picture, AUD/USD is still struggling to sustain above 55 W EMA (now at 0.6441) cleanly, and outlook is mixed. Sustained trading above 55 W EMA will indicate that rise from 0.5913 is at least correcting the down trend from 0.8006 (2021 high), with risk of trend reversal. Further rise should be seen to 38.2% retracement of 0.8006 to 0.5913 at 0.6713. However, rejection by 55 W EMA will revive medium term bearishness for another fail through 0.5913 at a later stage.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    01:30 AUD GDP Q/Q Q1 0.20% 0.40% 0.60%
    07:50 EUR France Services PMI May F 47.4 47.4
    07:55 EUR Germany Services PMI May F 47.2 47.2
    08:00 EUR Eurozone Services PMI May F 48.9 48.9
    08:30 GBP Services PMI May F 50.2 50.2
    12:15 USD ADP Employment Change May 120K 62K
    12:30 CAD Labor Productivity Q/Q Q1 0.40% 0.60%
    13:45 CAD BoC Interest Rate Decision 2.75% 2.75%
    13:45 USD Services PMI May F 52.3 52.3
    14:00 USD ISM Services PMI May 52 51.6
    14:30 CAD BoC Press Conference
    14:30 USD Crude Oil Inventories -2.9M -2.8M
    18:00 USD Fed’s Beige Book

     



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  • Euro Slips on Softer CPI, But Trading Largely Listless

    Euro Slips on Softer CPI, But Trading Largely Listless


    The currency markets remain largely listless today, with all major pairs and crosses still trapped within last week’s ranges. Euro edged slightly lower following the release of Eurozone CPI data, which showed inflation falling below the ECB’s 2% target for the first time since September last year. The core measure also softened notably, reinforcing the view that disinflationary pressures—particularly within services—are well entrenched. With inflation now comfortably back within target, markets have little doubt that ECB will proceed with a 25bps rate cut this Thursday.

    Uncertainty over tariffs continues to hover as a key wildcard. With little clarity on whether the US will escalate its trade actions further, markets are reluctant to commit. A July pause from ECB remains the base case, but further action could hinge on whether tariffs ultimately push inflation up through cost channels—or suppress demand and contribute to disinflation. This dilemma is front and center as policymakers navigate crosscurrents in growth and prices.

    Adding to the cautious mood, the OECD revised its global growth forecasts downward. It now sees world GDP expanding just 2.9% in both 2025 and 2026, citing increased trade barriers and lingering policy uncertainty as key drags. OECD Secretary General Mathias Cormann warned that a further 10 percentage point hike in US bilateral tariffs could shave 0.3% off global output over two years, while likely adding to inflation in affected countries.

    Technically, AUD/JPY continues to press 38.2% retracement of 86.03 to 95.63 at 91.96. Firm break of this fibonacci level will extend the correction from 95.63 to 100% projection of 95.63 to 91.64 from 93.85 at 89.86. Nevertheless, strong bounce from current level, followed by break of 93.85 resistance, will argue that rise from 86.03 is ready to resume through 95.63.

    In Europe, at the time of writing, FTSE is up 0.17%. DAX is up 0.16%. CAC is down -0.15%. UK 10-year yield is down -0.038 at 4.632. Germany 10-year yield is down -0.019 at 2.51. Earlier in Asia, Nikkei fell -0.06%. Hong Kong HSI rose 1.53%. China Shanghai SSE rose 0.43%. Singapore Strait times rose 0.10%. Japan 10-year JGB yield fell -0.27 to 1.482.

    BoE’s Bailey: Rate path still downward, but clouded by unpredictability

    BoE Governor Andrew Bailey told the Treasury Committee today that while the direction for interest rates remains downward, the outlook has become increasingly uncertain.

    Declining to pre-commit to a vote at the upcoming June meeting, Bailey said, “the path remains downwards, but how far and how quickly is now shrouded in a lot more uncertainty.”

    He emphasized the role of external forces, noting that the Bank has revised its language to reflect the “unpredictable” nature of the current global environment.

    His comments were echoed by fellow policymakers Catherine Mann and Sarah Breeden, who both acknowledged that rates are likely headed lower but stressed the difficulty in forecasting the exact pace or scale of future cuts.

    Mann warned against assuming a fixed glide path, while Breeden said “there is uncertainty about how far, how fast.”

    Eurozone CPI falls to 1.9%, below ECB target for first time since Sep 2024

    Eurozone inflation dipped back below the ECB’s 2% target for the first time since September 2024. Headline CPI fell from 2.2% yoy to 1.9% yoy in May, undershooting expectations of 2.0%. Core CPI (ex-energy, food, alcohol & tobacco) also eased more than forecast to 2.3% from 2.7%.

    The disinflation was led by a sharp slowdown in services inflation, which dropped from 4.0% yoy to 3.2% yoy. Non-energy industrial goods remained unchanged at 0.6% yoy. Energy prices continued to contract at -3.6% yoy, reinforcing the broader downward pressure. Despite a slight uptick in food and alcohol inflation to 3.3% yoy, the overall picture confirms easing price momentum across key sectors.

    Swiss CPI falls to -0.1% yoy, first negative since 2021

    Swiss consumer inflation turned negative in May for the first time since March 2021, with headline CPI falling -0.1% yoy, down from 0.0% in April yoy. Core inflation, which strips out volatile components such as fresh food and energy, slipped to 0.5% yoy from 0.6% yoy previously.

    On a monthly basis, both headline and core CPI rose 0.1%, in line with expectations.

    The breakdown reveals that domestic product prices grew just 0.2% mom and decelerated to from 0.8% yoy to 0.6% yoy. Imported goods prices were flat on the month and fell -2.4% yoy, ticked up from -2.5% yoy.

    BoJ’s Ueda: Ready to hike if wage growth recovers from tariff drag

    BoJ Governor Kazuo Ueda told parliament today that recently imposed U.S. tariffs could weigh on Japanese corporate sentiment, potentially impacting winter bonus payments and next year’s wage negotiations.

    He acknowledged that wage growth may “slow somewhat” in the near term due to these external pressures. However, Ueda expressed confidence that wage momentum would eventually “re-accelerate”, helping to sustain a moderate growth in household consumption.

    Looking ahead, Ueda reiterated the BoJ’s readiness to adjust its ultra-loose policy if the economy evolves in line with its projections. “If we’re convinced our forecast will materialize, we will adjust the degree of monetary support by raising interest rates,” he said.

    However, he cautioned that uncertainty surrounding the economic outlook remains “extremely high.”

    RBA’s Hunter: AUD’s recent resilience linked to global shift away from USD exposure

    RBA Chief Economist Sarah Hunter addressed the unusual behavior of the Australian Dollar in recent months in a speech today. She highlighted that while initial moves were consistent with past risk-off episodes, the currency’s subsequent rebound against the US Dollar stood out as “more unusual”.

    On a “trade-weighted” basis, AUD has remained broadly stable, even though it has appreciated against the greenback and the Chinese renminbi, while weakening against most other major currencies.

    This divergence, Hunter explained, stems from “offsetting factors”. Global growth concerns have pressured the AUD against safe-haven and cyclical peers, while simultaneous outflows from US assets have weakened the US Dollar.

    Hunter cautioned that it’s too soon to tell whether this trend will persist, but acknowledged that recent market behavior reflects shifting investor sentiment, particularly toward capital reallocation away from US assets. As a result, Australian Dollar’s relative resilience against USD may be underpinned by portfolio rebalancing and perceived relative economic stability.

    Hunter noted that the trade-weighted index has reverted to “pre-shock values”, suggesting minimal net change in the foreign-currency value of Australian exports. However, the “relative move of capital” into Australia, at a time when the US is facing policy and tariff-related volatility, could offer some support to “domestic investment activity”, providing a cushion to the broader economy amid global uncertainties.

    RBA Minutes: 25bps cut chosen for caution and predictability after debating hold and 50bps options

    RBA’s May 20 meeting minutes revealed that policymakers weighed three policy options—holding rates, a 25bps cut, or a larger 50bps reduction—before ultimately opting for a modest 25bps cut to 3.85%.

    The case for easing hinged on three key factors: sustained progress in bringing inflation back toward target without upside surprises, weakening global conditions and household consumption, and the view that a cut would be the “path of least regret” given the risk distribution.

    While members discussed a 50bps reduction after deciding to ease, they found the case for a larger move unconvincing. Australian data at the time showed little evidence that trade-related global uncertainty was materially harming domestic activity. Furthermore, some scenarios might even result in upward pressure on inflation, prompting caution. The Board also assessed that it was “not yet time to move monetary policy to an expansionary stance”.

    Ultimately, the Board judged that to move “cautiously and predictably” was more appropriate.

    Caixin PMI manufacturing drops to 48.3, as China faces marked weakening at start of Q2

    China’s manufacturing sector unexpectedly shrank in May, with Caixin PMI falling to 48.3 from 50.4, well below market expectations of 50.6. This marked the first contraction in eight months and the lowest reading since September 2022.

    According to Caixin Insight’s Wang Zhe, both supply and demand weakened, with a particularly notable drag from overseas demand. Employment continued to contract, pricing pressures remained subdued, and logistics saw moderate delays. Although business optimism saw a marginal recovery, the broader picture points to intensifying headwinds.

    The report highlights the fragile start to Q2, with Wang pointing to a “marked weakening” in key economic indicators and a “significantly intensified” level of downward pressure.

    EUR/USD Mid-Day Outlook

    Daily Pivots: (S1) 1.1377; (P) 1.1413; (R1) 1.1480; More…

    Intraday bias in EUR/USD is turned neutral with current retreat. Rebound from 1.1064 could extend higher, but strong resistance should be seen from 1.1572 to limit upside, at least on first attempt. On the downside, break of 1.1209 support will indicate that the corrective pattern from 1.1572 has started the third leg, and target 1.1064 support.

    In the bigger picture, rise from 0.9534 long term bottom could be correcting the multi-decade downtrend or the start of a long term up trend. In either case, further rise should be seen to 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916. This will now remain the favored case as long as 55 W EMA (now at 1.0856) holds.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    22:45 NZD Terms of Trade Index Q1 1.90% 3.60% 3.10% 3.20%
    23:50 JPY Monetary Base Y/Y May -3.40% -4.20% -4.80%
    01:30 AUD RBA Meeting Minutes
    01:30 AUD Current Account (AUD) Q1 -14.7B -12.0B -12.5B -16.3B
    01:45 CNY Caixin Manufacturing PMI May 48.3 50.6 50.4
    06:30 CHF CPI M/M May 0.10% 0.10% 0.00%
    06:30 CHF CPI Y/Y May -0.10% -0.10% 0%
    09:00 EUR Eurozone Unemployment Rate Apr 6.20% 6.20% 6.20% 6.30%
    09:00 EUR Eurozone CPI Y/Y May P 1.90% 2.00% 2.20%
    09:00 EUR Eurozone CPI Core Y/Y May P 2.30% 2.40% 2.70%
    14:00 USD Factory Orders M/M Apr -3.10% 3.40%

     



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  • Markets Turn Cautious Again on Trade Stalemates; Euro Picking Up Momentum in Some Crosses

    Markets Turn Cautious Again on Trade Stalemates; Euro Picking Up Momentum in Some Crosses


    Asian markets returned to a risk-off tone today, with investor sentiment once again weighed down by the lack of clarity on the US tariff front and the apparent stalling of key trade negotiations. The week’s earlier relief rally following the U.S. court ruling against President Trump’s sweeping reciprocal tariffs has faded, as the legal battle drags on and policy direction remains uncertain. The result is renewed market hesitancy, with equities pulling back and safe-haven flows nudging Yen higher.

    In currency markets, the tone is cautious and directionless, with almost all major pairs and crosses confined to last week’s ranges. After a volatile stretch, there’s little momentum to drive breakouts. For the day, Yen is the strongest performer, supported by risk aversion, followed by the Dollar and Kiwi. On the weaker side, the Euro is underperforming, trailed by the Aussie and Sterling. Swiss Franc and Loonie are trading near the middle of the pack.

    Thursday’s session in the US captured this shifting mood well as stocks closed well off their intraday highs. That optimism was first driven by the US Court of International Trade’s ruling that struck down most of Trump’s global tariff orders. However, the relief was short-lived. The US Court of Appeals paused that ruling to consider the administration’s appeal, setting a new timeline for responses from both plaintiffs and the government in early June. The pause has restored uncertainty to a situation markets briefly hoped was resolved.

    Further dampening sentiment were remarks from US Treasury Secretary Scott Bessent, who confirmed that US-China trade talks are “a bit stalled.” He did, however, hold out the possibility of further engagement in the coming weeks, including a potential leader-level call. Still, Bessent acknowledged that the magnitude and complexity of the negotiations likely require direct involvement from both presidents, a signal that near-term breakthroughs remain unlikely.

    Technically, however, EUR/GBP’s break of 0.8400 minor resistance suggests short term bottoming at 0.8354, on bullish convergence condition in 4H MACD. While the rebound might still be a corrective move, further rise is now in favor through 0.8458 resistance to 38.2% retracement of 0.8737 to 0.8354 at 0.8500.

    In Asia, at the time of writing, Nikkei is down -1.08%. Hong Kong HSI is down -1.54%. China Shanghai SSE is down -0.30%. Singapore Strait Times is down -0.24%. Japan 10-year JGB yield is down -0.015 at 1.506. Overnight, DOW rose 0.28%. S&P 500 rose 0.40%. NASDAQ rose 0.39%. 10year yield fell -0.053 to 4.424.

    Looking ahead, Germany CPI flash is the main focus in European sess. Switzerland will publish KOF economic barometer. Eurozone will release M3 money supply. Later in the day, attention will be on Canada GDP, and US PCE inflation.

    Japan’s industrial production falls -0.9% mom in April, but May rebound expected

    Japan’s industrial production fell by -0.9% mom in April, a milder decline than the expected -1.4%. The Ministry of Economy, Trade and Industry maintained its view that production “fluctuates indecisively,” reflecting ongoing uncertainty, particularly around global trade developments.

    While the ministry said the impact of US tariffs was limited in April, some firms have voiced concern about the manufacturing outlook as policy risks persist.

    The breakdown of the data shows a mixed picture: six of 15 industrial sectors saw declines, including production machinery, fabricated metals, and transport equipment excluding motor vehicles. However, eight sectors recorded gains, with electronic parts and business-oriented machinery showing notable strength.

    Manufacturers surveyed expect a sharp 9.0% rebound in May, followed by a -3.4% dip in June.

    Also released, Japan’s retail sales grew by a stronger-than-expected 3.3% yoy in April, outpacing the consensus of 2.9% yoy. Meanwhile, the unemployment rate remained steady at 2.5%.

    Tokyo core inflation accelerates to 3.6%, driven by food and services costs

    Tokyo’s core CPI (excluding fresh food) accelerated to 3.6% yoy in May, up from 3.4% yoy and above market expectations of 3.5% yoy, marking the fastest pace since January 2023. This marks the third consecutive year that core inflation has exceeded the Bank of Japan’s 2% target.

    While headline CPI ticked down slightly from 3.5% yoy to 3.4% yoy, the underlying core-core measure (excluding food and energy) also edged up fro 2.0% yoy to 2.1% yoy, suggesting broad-based inflation persistence.

    The surge in non-fresh food prices, up 6.9% yoy, remains a dominant driver—highlighted by a staggering 93.2% yoy jump in rice prices.

    Another notable development is the uptick in services inflation, which climbed to 2.2% yoy from 2.0% yoy , indicating that businesses are beginning to pass on higher labor costs.

    Australia retail sales down -0.1% mom in April, weighed by weak clothing demand

    Australia’s retail sales turnover unexpectedly declined by -0.1% mom in April, missing expectations for a 0.3% mom rise. On an annual basis, sales were up 3.8% compared to April 2024/

    The Australian Bureau of Statistics noted that the decline was driven primarily by reduced spending on clothing. The weakness was partly offset by a rebound in Queensland, where businesses recovered from disruptions caused by ex-Tropical Cyclone Alfred in March.

    RBNZ’s Silk: Data to guide timing and need for further cuts

    RBNZ Assistant Governor Karen Silk said that interest rates are currently within the estimated neutral band of 2.5% to 3.5%.

    She noted that the full impact of previous easing has yet to filter through the economy, making any future adjustments highly dependent on incoming data.

    The OCR track indicates “whatever we do is going to be data-dependent, and then we will be looking to the data to help us to decide when or if we cut further from here,” she added.

    Fed’s Logan: Policy well positioned, ready to respond to shifting risks

    Dallas Fed President Lorie Logan said overnight that with inflation “trending gradually back to target”, the labor market “holding strong”, and risks to Fed’s dual mandate are “roughly balanced.

    Speaking at an event, Logan emphasized that “monetary policy is in a good place”, and there is no immediate need for a policy shift.

    Logan also highlighted the potential impact of fiscal policy and regulatory changes, noting they could stimulate investment and consumer demand, while elevated economic uncertainty or financial volatility might dampen activity.

    Fed’s Daly: Modestly or moderately restrictive policy still needed

    San Francisco Fed President Mary Daly, in a Reuters interview, emphasized that above-target inflation remains her “focus” while the labor market is in “solid shape”.

    With inflation still running above the Fed’s 2% target and uncertainty around the pace of its decline, Daly said it’s appropriate for monetary policy to remain in a “modestly or moderately restrictive” stance to guide inflation back to target.

    Daly added that she’s closely watching for any signs of labor market weakening but hasn’t observed such signals yet. At the same time, she remains attentive to whether inflation continues to gradually ease or risks becoming sticky or re-accelerating.

    BoE’s Bailey stresses caution on rate cuts amid inflation surprises and trade uncertainty

    BoE Governor Andrew Bailey emphasized the need for a “gradual and careful” approach to future interest rate cuts in light of lingering global trade uncertainty and its impact on domestic inflation.

    His comments follow last week’s stronger-than-expected inflation data, which showed UK CPI jumping to 3.5% in April from 2.6%. Bailey noted it remains unclear how much of the increase is due to seasonal factors, and said the BoE will closely examine the next set of inflation data ahead of its June policy decision.

    Bailey acknowledged that while core inflation is “gradually grinding down”, the pace of improvement remains sluggish. He also highlighted a renewed rise in food price inflation, which—although not unique to the UK—has a significant influence on public inflation perceptions.

    EUR/AUD Daily Outlook

    Daily Pivots: (S1) 1.7527; (P) 1.7591; (R1) 1.7709; More…

    EUR/AUD’s break of 1.7628 resistance argues that fall from 1.8554 might have completed as a correction at 1.7245. Intraday bias is back on the upside for 38.2% retracement of 1.8554 to 1.7245 at 1.7745. Firm break there will solidify this bullish case and target 61.8% retracement at 1.8054. On the downside, however, break of 1.7460 support will bring retest of 1.7245 instead.

    In the bigger picture, as long as 1.7062 resistance turned support (2023 high) holds, up trend from 1.4281 (2022 low) should still be in progress. Break of 1.8554 will target 100% projection of 1.4281 to 1.7062 from 1.5963 at 1.8744. However, sustained break of 1.7062 will confirm medium term topping and bring deeper fall back to 1.5963 support.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    22:45 NZD Building Permits M/M Apr -15.60% 9.60% 10.70%
    23:30 JPY Tokyo CPI Y/Y May 3.40% 3.50%
    23:30 JPY Tokyo CPI Core Y/Y May 3.60% 3.50% 3.40%
    23:30 JPY Tokyo CPI Core-Core Y/Y May 2.10% 2%
    23:30 JPY Unemployment Rate Apr 2.50% 2.50% 2.50%
    23:50 JPY Industrial Production M/M Apr P -0.90% -1.40% 0.20%
    23:50 JPY Retail Trade Y/Y Apr 3.30% 2.90% 3.10%
    01:30 AUD Retail Sales M/M Apr -0.10% 0.30% 0.30%
    01:30 AUD Private Sector Credit M/M Apr 0.70% 0.50% 0.50%
    01:30 AUD Building Permits M/M Apr -5.70% 3.10% -8.80% -7.10%
    05:00 JPY Housing Starts Y/Y Apr -26.60% -18.30% 39.10%
    06:00 EUR Germany Retail Sales M/M Apr 0.30% -0.20%
    07:00 CHF KOF Economic Barometer May 98.3 97.1
    08:00 EUR Eurozone M3 Money Supply Y/Y Apr 3.70% 3.60%
    12:00 EUR Germany CPI M/M May P 0.10% 0.40%
    12:00 EUR Germany CPI Y/Y May P 2.10% 2.10%
    12:30 CAD GDP M/M Mar 0.20% -0.20%
    12:30 USD Personal Income M/M Apr 0.30% 0.50%
    12:30 USD Personal Spending M/M Apr 0.20% 0.70%
    12:30 USD PCE Price Index M/M Apr 0.10% 0%
    12:30 USD PCE Price Index Y/Y Apr 2.20% 2.30%
    12:30 USD Core PCE Price Index M/M Apr 0.10% 0%
    12:30 USD Core PCE Price Index Y/Y Apr 2.50% 2.60%
    12:30 USD Goods Trade Balance (USD) Apr P -141.8B -162.0B
    12:30 USD Wholesale Inventories Apr P 0.40% 0.50%
    13:45 USD Chicago PMI May 45.1 44.6
    14:00 USD UoM Consumer Sentiment May F 50.8 50.8
    14:00 USD UoM 1-year Inflation Expectations May F 7.30% 7.30%

     



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  • Dollar Rides Optimism Wave; RBNZ Lifts Kiwi, Aussie Ignores CPI Surprise

    Dollar Rides Optimism Wave; RBNZ Lifts Kiwi, Aussie Ignores CPI Surprise


    Dollar’s broad-based rebound gained further momentum in Asian session today. The turnaround in risk appetite has been key in lifting the greenback, which had come under pressure amid recent tariff tensions and soft economic signals. The rebound is also visible across asset classes, US equities have reversed losses tied to US-EU trade fears, and the 10-year yield has returned to levels seen before last week’s Treasury selloff.

    This shift in tone followed US President Donald Trump’s decision to postpone the implementation of a 50% tariff on EU goods until July 9. Trump further noted overnight that the EU had reached out to set up meeting dates, describing the latest developments as “positive.”

    Elsewhere, Kiwi saw a jump following RBNZ’s 25bps rate cut to 3.25%. What surprised markets was the internal division within the committee, as one member dissented and preferred no change. The minutes revealed a genuine debate on the merits of holding rates steady to better assess trade-related uncertainties and their inflationary implications. The signal was clear: while more easing is possible, the path ahead will not be automatic.

    Aussie, by contrast, showed a muted response to stronger-than-expected monthly CPI data. Although core inflation edged higher, it remains comfortably within the RBA’s 2–3% target band. As such, the print is unlikely to alter RBA’s policy course. With quarterly inflation data due on July 30, the central bank is expected to wait until its August meeting to make a more informed decision on the next move, likely another 25bps cut.

    In terms of performance, Dollar is currently leading for the week, followed by Sterling and then Euro. Yen is the weakest major, pressured by falling long dated Japanese government bond yields. Aussie and Swiss Franc are also lagging. Kiwi and Loonie sit in the middle of the pack.

    Technically, AUD/NZD is extending the near term fall from 1.0920 today. For now, without clear downside momentum, this decline is still seen as a corrective move. Break of 1.0848 resistance will argue that rebound from 1.0649 is ready to resume through 1.0920 resistance. However, clear break of the lower channel support will argue that the cross is accelerating downward. That would raise the chance that it’s actually resume the larger down trend through 1.0649 low.

    In Asia, at the time of writing, Nikkei is up 0.52%. Hong Kong HSI is down -0.43%. China Shanghai SSE is up 0.03%. Singapore Strait Times is up 0.44%. Japan 10-year JGB yield is up 0.033 at 1.499. Overnight, DOW rose 1.78%. S&P 500 rose 2.05%. NASDAQ rose 2.47%. 10-year yield fell -0.75 to 4.434.

    RBNZ cuts OCR to 3.25%, one member favors holding steady

    RBNZ lowered the Official Cash Rate by 25 basis points to 3.25%, in line with market expectations. The decision was not unanimous, passed by a 5-1 vote.

    The central bank emphasized that inflation is now within the target band and is “well placed” to respond to both domestic and international developments.

    Meeting minutes revealed that some committee members favored holding the rate steady at 3.50%, citing a desire to monitor elevated global uncertainty and potential inflation risks stemming from recent tariff increases.

    Maintaining the OCR, they argued, could have helped anchor inflation expectations more firmly around the 2% midpoint.

    In its accompanying Monetary Policy Statement, RBNZ revised down its rate path projections slightly. The OCR is now expected to fall to 3.12% by September 2025 (previously 3.23%), and to 2.87% by June 2026 (previously 3.10%).

    Australia’s monthly CPI unchanged 2.4%, core inflation edges higher

    Australia’s monthly CPI held steady at 2.4% yoy in April, slightly above expectations of 2.3% yoy, marking the third consecutive month of unchanged headline inflation.

    However, underlying inflation measures moved higher, with CPI excluding volatile items and holiday travel rising to 2.8% yoy from 2.6% yoy. Trimmed mean CPI also tickd up from 2.7% yoy to 2.8% yoy.

    These developments suggest that while headline inflation appears stable, price pressures beneath the surface remain persistent.

    Key contributors to the annual inflation rate included food and non-alcoholic beverages (+3.1%), recreation and culture (+3.6%), and housing (+2.2%).

    BoJ’s Ueda highlights focus on short- and medium-term rates

    BoJ Governor Kazuo Ueda told parliament today that shifts in short- and medium-term interest rates have a more pronounced impact on economic activity than movements in super-long yields.

    He explained that corporate and household debt is more concentrated in those shorter maturities, making the economy more sensitive to changes in that segment of the yield curve.

    However, Ueda also acknowledged the spillover effects of volatility in super-long bond yields, noting that sharp moves in that part of the curve can ripple through to shorter maturities and influence overall financial conditions.

    “We’ll carefully watch market developments and their impact on the economy, he emphasized.

    Fed’s Williams stresses need for vigilance on inflation expectations

    New York Fed President John Williams emphasized the importance of acting decisively to prevent inflation from becoming entrenched, warning that delayed responses risk making price pressures permanent.

    Speaking at a conference in Tokyo, Williams noted, “you want to avoid inflation becoming highly persistent because that could become permanent”.

    “And the way to do that is to respond relatively strongly” when inflation begins to deviate from target.

    He also highlighted the sensitivity of inflation expectations, cautioning that any significant shift could be “detrimental” to economic stability.

    USD/JPY Daily Outlook

    Daily Pivots: (S1) 142.83; (P) 143.64; (R1) 145.17; More…

    USD/JPY’s break of 144.31 resistance suggests that fall from 148.64 might have completed as a correction at 142.10. Intraday bias is back on the upside for 55 D EMA (now at 145.83). Sustained break there will affirm this case and target 148.64 resistance and above. Nevertheless, break of 142.10 will turn bias back to the downside for 139.87 low instead.

    In the bigger picture, price actions from 161.94 are seen as a corrective pattern to rise from 102.58 (2021 low), with fall from 158.86 as the third leg. Strong support should be seen from 38.2% retracement of 102.58 to 161.94 at 139.26 to bring rebound. However, sustained break of 139.26 would open up deeper medium term decline to 61.8% retracement at 125.25.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    01:30 AUD Monthly CPI Y/Y Apr 2.40% 2.30% 2.40%
    02:00 NZD RBNZ Interest Rate Decision 3.25% 3.25% 3.50%
    03:00 NZD RBNZ Press Conference
    06:45 EUR France Consumer Spending M/M Apr 0.80% -1%
    06:45 EUR France GDP Q/Q Q1 F 0.10% 0.10%
    07:55 EUR Germany Unemployment Change Apr 10K 4K
    07:55 EUR Germany Unemployment Rate Apr 6.30% 6.30%
    08:00 CHF UBS Economic Expectations May -51.6
    18:00 USD FOMC Minutes

     



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  • Markets Stay Guarded Despite China Profit Gains

    Markets Stay Guarded Despite China Profit Gains


    Markets were subdued in the Asian session today, showing little enthusiasm in response to China’s better-than-expected industrial profit figures. Profits rose 3.0% yoy in April, following a 2.6% gain in March, pushing year-to-date growth to 1.4%. The data was notably resilient given ongoing trade tensions. Still, the NBS struck a cautious tone, warning of persistent headwinds such as weak domestic demand, price pressures, and heightened global uncertainty stemming from ongoing trade war.

    Risk sentiment remains fragile despite US President Trump’s decision to postpone the threatened 50% tariff on EU goods until July 9. This move offers a temporary reprieve, but the lack of a clear path to resolution continues to weigh on investor confidence. US futures are holding up for now, but the news should have already been priced in. The broader concern is that even with paused escalations, the threat of further trade disruptions remain a structural drag on growth and trade.

    This cautious backdrop is reflected in persistent Dollar weakness and the steady resilience in Gold. As for today so far, commodity currencies are under mild pressure along with the greenback. Yen and Swiss Franc are the strongest performers, followed by Euro, while Sterling trades mixed.

    AUD/CAD is a pair to monitor this week, with Australian monthly CPI due Wednesday and Canadian GDP on Friday. Technically, rebound from 0.8440 stalled after hitting 0.9041. Price actions from there is currently seen as a corrective pattern only. Downside should be contained by 0.8799 support (38.2% retracement of 0.8440 to 0.9041 at 0.8811). Break of 0.9041 will resume the rally through 0.9132 resistance.

    In Asia, at the time of writing, Nikkei is down -0.23%. Hong Kong HSI is down -0.21%. China Shanghai SSE is down -0.33%. Singapore Strait Times is up 0.13%. Japan 10-year JGB yield is down -0.019 at 1.478.

    Looking ahead, Swiss trade balance and German Gfk consumer sentiment will be released in European session. Later in the day, US will publish durable goods orders, house price index and consumer confidence.

    BoJ’s Ueda highlights persistent food inflation and trade uncertainty

    In his remarks at the BoJ-IMES Conference, BoJ Governor Kazuo Ueda highlighted a fresh wave of price pressures, particularly from food, has emerged in Japan recently. Rice prices nearly doubling year-on-year and broader non-fresh food categories climbing 7%.

    While BoJ expects the latest food-driven inflation spike to be transitory, Ueda acknowledged that underlying inflation now hovers closer to the 2% mark than in previous years, warranting heightened vigilance.

    BoJ retains its baseline scenario that underlying inflation will gradually return to the 2% target over time. However, given the evolving backdrop of supply-driven shocks and heightened global uncertainty, Ueda reiterated that any adjustment in the degree of monetary easing will hinge on incoming data.

    “Considering the extremely high uncertainties, it is important for us to judge whether the outlook will be realized, without any preconceptions,” Ueda emphasized.

    Japan’s external assets hit record, but top creditor status lost to Germany

    Japan’s gross external assets soared to a record JPY 533.05T in 2024, marking a 12.9% increase from the previous year. This seventh consecutive annual rise was driven by a combination of Yen depreciation and continued outbound investment activity, especially in mergers and acquisitions.

    The Japanese government, businesses, and individuals collectively benefited from currency effects, as Dollar and Euro appreciated by 11.7% and 5% respectively against Yen, inflating the yen-denominated value of overseas holdings.

    Nevertheless, for the first time in 34 years, Germany overtook Japan with external assets totaling JPY 569.65T. China followed closely behind Japan with JPY 516.28T.

    While Yen’s depreciation offered valuation support, Japan’s position was undercut by Germany’s structurally stronger current account surplus.

    EUR/USD Daily Outlook

    Daily Pivots: (S1) 1.1360; (P) 1.1389; (R1) 1.1417; More…

    For now, further rise is expected in EUR/USD with 1.1255 support intact. Correction from 1.1572 should have completed at 1.1064. Rebound from there should target 1.1572 first. Decisive break there will resume larger up trend to 61.8% projection of 1.0176 to 1.1572 from 1.1064 at 1.1927. On the downside, however, break of 1.1255 will turn bias back to the downside to extend the corrective pattern with another falling leg.

    In the bigger picture, rise from 0.9534 long term bottom could be correcting the multi-decade downtrend or the start of a long term up trend. In either case, further rise should be seen to 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916. This will now remain the favored case as long as 55 W EMA (now at 1.0858) holds.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    23:01 GBP BRC Shop Price Index Y/Y May -0.10% 0.00% -0.10%
    23:50 JPY Corporate Service Price Index Y/Y Apr 3.10% 3.00% 3.10% 3.30%
    06:00 CHF Trade Balance (CHF) Apr 5.55B 6.35B
    06:00 EUR Germany GfK Consumer Sentiment Jun -19.7 -20.6
    09:00 EUR Eurozone Economic Sentiment May 94 93.6
    09:00 EUR Eurozone Industrial Confidence May -11 -11.2
    09:00 EUR Eurozone Services Sentiment May 1.4
    09:00 EUR Eurozone Consumer Confidence May F -15.2 -15.2
    12:30 USD Durable Goods Orders Apr -8.00% 7.50%
    12:30 USD Durable Goods Orders ex Transport Apr 0.00% -0.40%
    13:00 USD S&P/CS Composite-20 HPI Y/Y Mar 4.50% 4.50%
    13:00 USD Housing Price Index M/M Mar 0.20% 0.10%
    14:00 USD Consumer Confidence May 87.1 86

     



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  • Tariff Truce Wobbles at Halfway Mark; Risk Sentiment Falters on Renewed Threats

    Tariff Truce Wobbles at Halfway Mark; Risk Sentiment Falters on Renewed Threats


    Trade war roared back into focus late last week, derailing fragile market sentiment already strained by concerns over the ballooning US deficit. The catalyst came in the form of a sharp threat from US President Donald Trump on European Union imports. This abrupt escalation shattered hopes that the 90-day truce period would lead to calmer trade diplomacy, and instead reignited fears of a broader trade war just as markets were struggling to absorb fiscal uncertainty.

    US equities tumbled in response, with heavy losses across major indices, while European bourses weren’t spared either. Risk aversion swept through global markets, pushing investors toward traditional safe-haven assets.

    Dollar, which had already been under pressure from Moody’s downgrade and debt sustainability concerns, took another hit and ended the week as the worst-performing major currency. Confidence in US assets appears increasingly fragile as both fiscal and trade risks deepen.

    Aussie followed as the second weakest, burdened not just by global risk aversion but also by the dovish tone from RBA earlier in the week, while Loonie also suffered at the bottom.

    In contrast, the Japanese Yen and Swiss Franc surged to the top of the FX leaderboard, clearly benefiting from haven demand. Gold also staged a powerful rally, with its bullish momentum signaling deep market unease.

    Euro and Sterling settled in the middle of the pack. While the Euro showed some vulnerability to Trump’s tariff threat, it remained relatively supported. Sterling, meanwhile, was underpinned by a series of stronger-than-expected economic data, including upside surprises in inflation and retail sales.

    Trade War Returns to Spotlight as Trump’s Tariff Threat on EU Hammers Markets, Dollar Slides

    The global financial markets, which had been preoccupied with US sovereign debt concerns and the impact of a Moody’s downgrade earlier in the week, saw sentiment quickly shift as trade war tensions re-emerged. The trigger came late Friday, when US President Donald Trump declared he is “recommending a straight 50% Tariff on the European Union,” citing frustration with stalled negotiations. The announcement stunned investors and reignited fears of a wider spiral, sending US stocks and Dollar sharply lower into the weekly close.

    Equity markets, which had enjoyed a strong six-week rally driven by optimism from the 90-day tariff truce with major trading partners, were caught off guard. As little tangible progress was made halfway through the truce period, Trump’s shift back to hardline tactics was interpreted as a sign that the administration may be preparing to walk away from negotiation tables. The renewed threat has not only clouded the outlook for trade but also raised concerns over the policy direction in Washington.

    Speaking at a White House event, Trump made clear his stance: “I’m not looking for a deal. I mean, we’ve set the deal. It’s at 50%.” Treasury Secretary Scott Bessent echoed the sentiment, suggesting the tariff threat was intended to “light a fire under the EU.” These remarks hinted at a deliberate strategy to escalate pressure on Brussels ahead of the June 1 deadline.

    In response, European Commission Vice President Maros Sefcovic stated the EU remains “fully engaged” and committed to securing a mutually beneficial deal. He emphasized that negotiations must be “guided by mutual respect, not threats,” and warned the EU stands ready to defend its interests. Despite diplomatic overtures, the tone on both sides suggests little ground has been gained, making further market volatility likely as the deadline nears.

    In summary, the re-ignition of trade tensions with the EU has thrown markets back into uncertainty. With US fiscal policy already under scrutiny and tariff escalation threatening global growth, investors may remain on the defensive until clearer direction emerges, either through a breakthrough in negotiations or a change in Washington’s rhetoric. Until then, volatility and risk aversion are likely to dominate.

    Technically, DOW’s extended decline last week indicates that a short term top was already formed at 42842.04. More consolidations would be seen with risk of deeper decline. But overall near term outlook will stay bullish as long as 38.2% retracement of 36611.78 to 42842.04 at 40462.08 holds.

    However, rise from 36611.78 is seen as the second leg of the medium term corrective pattern from 45073.63 high. So, even in case of another rise, DOW should start to lose momentum again as it approaches 45073.63.

    Dollar Index’s late break of 99.17 support argues that corrective rebound from 97.92 might have completed at 101.97 already. Further decline is now in favor in the near term to retest 97.92 low first. Firm break there will resume the larger down trend to 61.8% projection of 100.17 to 97.92 from 101.97 at 94.40.

    European Stocks Also Hit by Tariff Shock; DAX and CAC Signal Near-Term Tops

    European equities also slumped in tandem with the US on Friday on Trump’s tariff threat. The announcement dealt a direct blow to investor sentiment across the region, with Germany’s DAX and France’s CAC 40 each falling around -1.6% on the day.

    However, Germany’s equity outlook, and to a lesser extent the region’s, should remain underpinned by fiscal expansion at both national and EU levels, which could cushion downside risks and support a medium-term bullish outlook.

    Technically, the late selloff in DAX indicates that 24154.24 record high should already be a short term top. Near term risk is mildly on the downside for pull back to 55 D EMA (now at 22610.12). Nevertheless, strong support should emerge from 38.2% retracement of 18489.91 to 24154.24 at 21989.23 to contain downside to bring rebound.

    CAC should have formed a short term top at 7955.53, and turned into consolidations. Given CAC’s underperformance comparing to DAX, there is risk of dipping through 38.2% retracement of 6763.76 to 7955.53 at 7500.27. But strong support should be seen above 61.8% retracement at 7219.02 to contain downside.

    Aussie Under Fire as RBA’s Dovish Cut Fuels July Easing Bets

    Aussie ended last week as one of the weakest performers among major currencies, additionally weighed down by the dovish 25bps rate cut from RBA. While the move was widely expected, RBA Governor Michele Bullock revealed that the board had actively considered a larger 50bps reduction before settling on the more measured step.

    Bullock also deliberately leave the door open for fasting easing, as she indicated that “if we need to move quickly, we can. We have got space.”

    Alongside the cut, RBA downgraded its 2025 GDP growth forecast from 2.1% to 1.9% and revised year-end CPI projections sharply lower, from 3.7% to 3.0%.

    These adjustments cemented the market’s view that the easing cycle has room to run, with rate futures now assigning more than 50% probability to another cut as early as July and fully pricing in a second 25bps cut by August.

    Technically, AUD/JPY failed to sustain above 38.2% retracement of 109.36 to 86.03 at 94.94, and retreated from there. Focus is now on 92.10 cluster support (38.2% retracement of 86.03 to 95.63 at 91.96).

    Strong rebound from 91.96/92.10 will retain near term bullishness. Further break of 95.63 will solidify the bullish case that whole fall form 109.36 has completed as a three-wave correction to 86.03.

    However, firm break of 91.96/92.10 will argue that the rebound has completed. More importantly, the down trend from 109.36 is likely still in progress for another low below 86.03.

    Gold Eyes Fresh Record High as Safe Haven Flows Persist

    Gold rallied strongly last week, supported by a confluence of factors including persistent concerns over the US fiscal outlook and escalating global trade tensions.

    With global equities showing signs of strain and long-dated US Treasury yields on the rise, capital has flowed steadily into Gold. The precious metal’s resilience suggests it may be gearing up to break above the record high of 3500, especially if risk aversion intensifies in the days ahead.

    Technically, corrective decline form 3499.79 should have completed with three waves down to 3120.34. That came after strong support from 55 D EMA (now at 3177.32) and 38.2% retracement of 2584.24 to 3499.79 at 3150.04.

    Further rise is expected as long as 3279.22 support holds, to retest 3499.79 high first. Decisive break there will resume larger up trend to 61.8% projection of 2584.24 to 3499.79 from 3120.34 at 3686.14 next.

    GBP/USD Weekly Outlook

    GBP/USD’s up trend resumed by breaking through 1.3442 resistance last week. Initial bias remains on the upside this week for 61.8% projection of 1.2706 to 1.3442 from 1.3138 at 1.3593, and then 100% projection at 1.3874. On the downside, below 1.3389 minor support will turn intraday bias neutral again first.

    In the bigger picture, up trend from 1.3051 (2022 low) is in progress. Next medium term target is 61.8% projection of 1.0351 to 1.3433 from 1.2099 at 1.4004. Outlook will now stay bullish as long as 55 W EMA (now at 1.2843) holds, even in case of deep pullback.

    In the long term picture, for now, price actions from 1.0351 (2022 low) are still seen as a corrective pattern to the long term down trend from 2.1161 (2007 high) only. However, firm break of 1.4248 resistance (38.2% retracement of 2.1161 to 1.0351 at 1.4480) will be a strong sign of long term bullish reversal.



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  • Aussie Dips on RBA’s Dovish Tilt, But Risk Sentiment Provides Cushion

    Aussie Dips on RBA’s Dovish Tilt, But Risk Sentiment Provides Cushion


    Aussie softened modestly following the RBA’s widely expected 25bps rate cut to 3.85%. But selling was contained as broader market sentiment remained supportive.

    While the move itself was no surprise, the updated economic forecasts leaned dovish, notably with headline CPI now seen at just 3.0% by year-end, down from the previous 3.7% projection. This downward revision in inflation opens the door for RBA to maintain a steady path of policy easing.

    More importantly, should global trade tensions re-escalate or downside risks materialize, especially from US tariff policy uncertainty, there is ample room for the central bank to accelerate its rate cuts.

    Despite the RBA’s dovish bias, Aussie found some footing amid steady risk sentiment. US equities shrugged off the initial shock from Moody’s credit rating downgrade, with major indexes finishing higher. Meanwhile, US 10-year yields also retreated from their earlier spike, indicating that investor appetite for Treasuries remains intact for now. Across Asia, sentiment was further bolstered by China’s latest easing move, with the PBoC cutting its key LPRs for the first time in seven months.

    Meanwhile, on the trade front, Japan is maintaining a firm stance in negotiations with the US. Top trade official Ryosei Akazawa reaffirmed that Tokyo would not rush into a deal at the expense of national interests. Japan continues to push for full tariff elimination, including automobiles, car parts, and metals. Talks with the US are ongoing at the working level, but no date has been set for a third ministerial meeting.

    Technically, AUD/NZD’s dip and break of 55 4H EMA today suggests that a short term top was formed at 1.0920, on bearish divergence condition in 4H MACD. Deeper retreat is now in favor to 38.2% retracement of 1.0649 to 1.0920 at 1.0816 to contain downside, at least on first attempt. However, firm break of 1.0816 will suggest near term reversal, and bring deeper fall to 61.8% retracement at 1.0753 instead.

    In Asia, at the time of writing, Nikkei is up 0.25%. Hong Kong HSI is up 1.29%. China Shanghai SSE is up 0.38%. Singapore Strait Times is up 0.19%. Japan 10-year JGB yield is up 0.039 at 1.527. Overnight, DOW rose 0.32%. S&P 500 rose 0.09%. NASDAQ rose 0.02%. 10-year yield rose 0.034 to 4.475.

    Looking ahead, Germany PPI is a focus in European session. Later in the day, attention will be on Canada CPI.

    RBA cuts rates to 3.85%, lowers 2025 growth and inflation forecasts

    RBA delivered a widely expected 25 bps rate cut, lowering the cash rate to 3.85%. In its statement, RBA said the risks to inflation had become “more balanced,” with headline inflation now within the target range and upside pressures “appear to have diminished” amid deteriorating global economic conditions.

    Still, the central bank remains cautious, citing significant uncertainty around both demand and supply dynamics, as well as the evolving impact of global trade tensions and geopolitical developments.

    The Board acknowledged a “severe downside scenario” and emphasized that monetary policy is “well placed” to respond decisively if global shocks materially affect Australia’s outlook. RBA flagged the unpredictability of global tariff policies and noted that households and businesses may hold back on spending amid heightened uncertainty. These concerns have contributed to a weaker outlook across growth, employment, and inflation.

    In its revised forecasts, RBA downgraded GDP growth for 2025 to 1.9% (from 2.1%) and for 2026 to 2.2% (from 2.3%). End-2025 headline CPI was revised down to 3.0% from 3.7%, with end-2026 projection lifted from 2.8% to 2.9%. Trimmed mean forecasts for the end-2025 and end 2026 were both cut slightly from 2.7% to 2.6%.

    China cuts loan prime rates for first time in seven months

    China’s central bank lowered its key lending benchmarks for the first time since October, delivering a long-anticipated move to support the economy.

    PBoC lowered the one-year loan prime rate by 10 bps to 3.0%. The five-year LPR, a key reference for mortgages, was also trimmed by 10 bps to 3.5%.

    The October 2025 easing was more aggressive at 25 basis points, but today’s cuts still mark a meaningful step in the ongoing monetary support cycle.

    The move comes as part of a broader policy package unveiled by PBOC Governor Pan Gongsheng and top financial regulators ahead of high-level trade talks in Geneva that have since led to a temporary truce between China and the US on tariffs.

    SNB’s Schlegel: Inflation outlook unclear, negative rates remain on the table

    SNB Chair Martin Schlegel warned that the outlook for Swiss inflation remains highly uncertain and reiterated that the central bank could not rule out a return to negative interest rates.

    Speaking at an event overnight, Schlegel said while such rates were an extraordinary measure, they had previously achieved their intended effect when used between 2014 and 2022.

    “The uncertainty is currently enormous,” Schlegel said, citing volatility in both USD/CHF and EUR/CHF, adding that “investors are seeking a safe haven in stormy times,” which has put upward pressure on the Swiss franc.

    Separately, Schlegel addressed concerns about global asset shifts, emphasizing that US treasuries remain foundational to global markets despite rising uncertainty. “There’s no current or foreseeable alternative to U.S. treasuries,” he said, citing their liquidity and dominance.

    BoE’s Dhingra: Vote for bigger rate cut a signal of economic direction

    BoE MPC member Swati Dhingra explained her decision to vote for a larger 50bps rate cut at the May 8 meeting as a deliberate signal about the UK’s economic outlook.

    Speaking in an FT interview, Dhingra said she wanted to send a “more categorical statement about where I think the economy is headed,” noting that using such a larger move sparingly increases its impact on market expectations.

    Her vote, along with Alan Taylor’s, diverged from the majority who supported a more measured 25bps cut.

    AUD/USD Daily Report

    Daily Pivots: (S1) 0.6415; (P) 0.6440; (R1) 0.6482; More…

    AUD/USD dips mildly today but stays in range of 0.6356/6511. Intraday bias remains neutral and further rise is in favor. One the upside, break of 0.6511 will resume the rise from 0.5913 and target 61.8% retracement of 0.6941 to 0.5913 at 0.6548. However, firm break of 0.6356 will bring deeper pullback to 38.2% retracement of 0.5913 to 0.6511 at 0.6283 first.

    In the bigger picture, as long as 55 W EMA (now at 0.6438) holds, down trend from 0.8006 (2021 high) should resume later to 61.8% projection of 0.8006 to 0.6169 from 0.6941 at 0.5806. However, sustained trading above 55 W EMA will argue that a medium term bottom was already formed, and set up further rebound to 0.6941 resistance instead.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    01:15 CNY 1-Y Loan Prime Rate 3.00% 3.00% 3.10%
    04:30 CNY 5-Y Loan Prime Rate 3.50% 3.50% 3.60%
    04:30 AUD RBA Interest Rate Decision 3.85% 3.85% 4.10%
    06:00 EUR Germany PPI M/M Apr -0.30% -0.70%
    06:00 EUR Germany PPI Y/Y Apr -0.60% -0.20%
    08:00 EUR Eurozone Current Account (EUR) Mar 35.9B 34.3B
    12:30 CAD CPI M/M Apr -0.10% 0.30%
    12:30 CAD CPI Y/Y Apr 1.60% 2.30%
    12:30 CAD CPI Median Y/Y Apr 2.90% 2.90%
    12:30 CAD CPI Trimmed Y/Y Apr 2.80% 2.80%
    12:30 CAD CPI Common Y/Y Apr 2.30% 2.30%

     



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  • Risk Mood Softens as Moody’s US Downgrade and Mixed China Data Dent Confidence

    Risk Mood Softens as Moody’s US Downgrade and Mixed China Data Dent Confidence


    Global markets kicked off the week with a mild risk-off tone, driven by renewed concerns over US creditworthiness and mixed economic data out of China. Moody’s downgrade of the U.S. sovereign rating from Aaa to Aa1 late last Friday has cast a shadow over investor sentiment. Meanwhile, China’s latest data highlighted a fragile recovery with industrial output holding up but retail sales and investment disappointing. Still, losses in Asian equities have been relatively contained so far, suggesting caution more than panic.

    The more notable market movement is in US futures, where the DOW is down over 200 points in early trade. However, since US cash markets are yet to reopen, the true extent of investor reaction remains to be seen. Currency markets are relatively quiet, with Dollar trading on the soft side, but there’s no sign of a broad-based selloff. Nearly all major currency pairs and crosses are hovering within Friday’s ranges.

    Trade policy developments will continue dominate this week’s narrative. In a Sunday interview, US Treasury Secretary Scott Bessent reiterated the administration’s readiness to reinstate reciprocal tariffs at the April 2 rate on countries that fail to negotiate “in good faith.” However, he offered little clarity on what qualifies as “good faith” or when decisions might be announced.

    Bessent noted that the US is currently focused on its 18 most important trading relationships, and letters will be sent out to those nations deemed to be stalling or resisting negotiations. The threat of reactivating the more extreme tariff brackets imposed in April looms large and could provoke renewed volatility.

    On the economic calendar, RBA’s expected rate cut will headline central bank action. Meanwhile, inflation data from Canada, the UK, and Japan will offer fresh insight into price dynamics amid global tariff pressures. Retail sales from the UK, Canada, and New Zealand will help gauge consumer resilience. ECB’s meeting accounts may shed light on the internal debate ahead of its anticipated June rate cut.

    Technically, Bitcoin reversed quickly after initial surge earlier today. Upside momentum is also unconvincing as seen in D MACD. Break of 100692 support should confirm rejection by 109571 higher. Deeper pullback should at least be seen to 55 D EMA (now at 94361), with risk of near term bearish reversal.

    In Asia, Nikkei fell -0.73%. Hong Kong HSI is down -0.02%. China Shanghai SSE is up 0.02%. Singapore Strait Times is down -0.25%. Japan 10-year JGB yield is up 0.03 at 1.485.

    BoJ’s Uchida notes strain on consumers as food and import costs climb

    BoJ Deputy Governor Shinichi Uchida noted in parliamentary remarks that recent inflation has been driven primarily by higher import and food costs, particularly staples like rice.

    He acknowledged the burden on households, saying the price increases are “having a negative impact on people’s livelihood and consumption”. The bank remains prepared to continue raising rates if its current forecast holds.

    However, Uchida stressed the “extremely high uncertainty” around global trade policies and their economic consequences. Given these risks, he emphasized that the BoJ would assess whether the economy and inflation align with projections before taking further steps.

    China’s retail sales growth slows to 5.1% in April, misses expectations

    China’s economic data for April revealed a patchy recovery, with retail sales rising by 5.1% yoy, falling short of the 6.0% yoy forecast and slowing from March’s 5.9% yoy. Stripping out automobiles, consumer goods sales rose 5.6% yoy.

    National Bureau of Statistics spokesperson Fu Linghui remained upbeat, saying that consumption momentum continues to build and will remain a key driver of economic growth.

    On the production side, industrial output grew by 6.1% yoy, exceeding expectations of 5.7% yoy but decelerating from March’s robust 7.7% expansion. Meanwhile, fixed asset investment came in at 4.0% year-to-date, below the expected 4.4%.

    NZ BNZ services slips to 48.5, sector remains under pressure

    New Zealand’s services sector showed further signs of strain in April, with the BusinessNZ Performance of Services Index dipping from 48.9 to 48.5, well below the long-term average of 53.0.

    Key components of the survey highlighted persistent weakness: activity/sales was stagnant at 47.3. Employment slipped back into contraction territory at 48.2. New orders showed only marginal improvement, rising from 50.8 to 50.9.

    BNZ Senior Economist Doug Steel noted the PSI paints a more sobering picture than broader recovery narratives might suggest, highlighting that New Zealand’s services sector is underperforming relative to key global peers.

    ECB’s Lagarde attributes Euro strength to waning confidence in US policy amid uncertainty

    ECB President Christine Lagarde has described the Euro’s recent appreciation against Dollar as “counter-intuitive,” but ultimately a reflection of growing global unease over US political and economic direction.

    In an interview with La Tribune Dimanche, Lagarde said that parts of the financial markets appear to be “losing confidence” in the US, due to economic and financial chaos during the first 100 days of President Donald Trump’s term.

    By contrast, Lagarde highlighted Europe’s comparative stability, both economic and institutional, as a key driver behind the Euro’s unexpected strength.

    “Uncertainty is a constant [in the US],” she noted, while Europe is being recognized as “a stable economic and political region with a solid currency and an independent central bank.”

    That divergence in perceived reliability, she argues, has led markets to favor the Euro even in a climate where risk aversion would normally boost Dollar.

    RBA rate cut, inflation data from Canada, UK and Japan to highlight the week

    RBA is widely expected to deliver a 25 bps rate cut, bringing the cash rate down to 3.85%. While all of Australia’s big four banks agree on the need for further easing, there’s some divergence on the pace. NAB stands out with a bolder forecast, projecting a larger 50bps reduction.

    Looking ahead, ANZ anticipates two more cuts in July and August to bring the cash rate to 3.35% by then. Commonwealth Bank shares a similar view but sees the final cut coming in November. NAB expects a more dovish sequence, projecting three further cuts by year-end, followed by one more in early 2026. Westpac also forecasts two cuts in H2 2025.

    Yet, with global tariff negotiations still unresolved, particularly regarding China, Australia’s economic outlook remains highly fluid, leaving room for policy recalibration in the months ahead.

    On the data front, inflation will dominate. Canada, the UK, and Japan are all set to release April CPI figures.

    In Canada, headline inflation could be significantly distorted by the recent removal of the consumer carbon tax on energy products. As a result, attention will shift to the ex-energy components, which could offer clearer guidance for the BoC. Economists generally expect another rate cut in June, provided the CPI report shows subdued underlying pressures, especially as tariff effects begin to bite.

    In the UK, inflation is projected to rebound above 3%, largely due to previously flagged increases in energy prices and regulated items like water bills. BoE has already accounted for this temporary surge, so a surprise in either direction is unlikely to alter its current pace of easing, generally one 25bps cut per quarter.

    Japan’s CPI will also attract attention after Q1 GDP revealed a deeper-than-expected contraction, causing markets to dial back BoJ rate hike bets. Even if core inflation picks up again in April, BoJ is likely to remain on hold for now, especially given the dual headwinds of weak growth and global trade uncertainty. However, an upside surprise could test BoJ’s tolerance.

    Beyond inflation, retail sales from the UK, Canada, and New Zealand will provide insight into consumer resilience in face of tariff threats. Germany’s Ifo Business Climate and a batch of Chinese data, including retail sales, industrial production, and fixed asset investment, will also be in focus. Additionally, ECB will publish the minutes of its latest policy meeting, offering more clues on the anticipated June rate cut.

    Here are some highlights for the week:

    • Monday: New Zealand BNZ services, PPI; China industrial production, retail sales, fixed asset investment; Japan tertiary industry index; Eurozone CPI final.
    • Tuesday: China rate decision; RBA rate decision; Germany PPI; Eurozone current account; Canada CPI.
    • Wednesday: New Zealand trade balance; Japan trade balance; UK CPI; Canada new housing price index.
    • Thursday: Australia PMIs; Japan PMIs, machine orders; Eurozone PMIs, ECB accounts; Germany Ifo business climate; UK PMIs; Canada IPPI and RMPI; US jobless claims, PMIs, existing home sales.
    • Friday: New Zealand retail sales; Japan CPI; UK retail sales; Germany GDP final; Canada retail sales; US new home sales.

    AUD/USD Daily Report

    Daily Pivots: (S1) 0.6382; (P) 0.6409; (R1) 0.6430; More…

    Intraday bias in AUD/USD remains neutral as range trading continues. Further rise is in favor as long as 0.6356 support holds. One the upside, break of 0.6511 will resume the rise from 0.5913 and target 61.8% retracement of 0.6941 to 0.5913 at 0.6548. However, firm break of 0.6356 will bring deeper pullback to 38.2% retracement of 0.5913 to 0.6511 at 0.6283 first.

    In the bigger picture, as long as 55 W EMA (now at 0.6438) holds, down trend from 0.8006 (2021 high) should resume later to 61.8% projection of 0.8006 to 0.6169 from 0.6941 at 0.5806. However, sustained trading above 55 W EMA will argue that a medium term bottom was already formed, and set up further rebound to 0.6941 resistance instead.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    22:30 NZD Business NZ PSI Apr 48.5 49.1 48.9
    22:45 NZD PPI Input Q/Q Q1 2.90% 0.20% -0.90%
    22:45 NZD PPI Output Q/Q Q1 2.10% 0.10% -0.10%
    23:01 GBP Rightmove House Price Index M/M May 0.60% 1.40%
    02:00 CNY Industrial Production Y/Y Apr 6.10% 5.70% 7.70%
    02:00 CNY Retail Sales Y/Y Apr 5.10% 6.00% 5.90%
    02:00 CNY Fixed Asset Investment YTD Y/Y Apr 4.00% 4.40% 4.20%
    04:30 JPY Tertiary Industry Index M/M Mar -0.30% -0.20% 0.00% 0.50%
    09:00 EUR Eurozone CPI Y/Y Apr F 2.20% 2.20%
    09:00 EUR Eurozone CPI Core Y/Y Apr F 2.70% 2.70%

     



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  • Dollar Steadies After Early Weakness, Focus Turns to Australia Jobs Data

    Dollar Steadies After Early Weakness, Focus Turns to Australia Jobs Data


    Dollar faced broad selling pressure throughout the Asian and European sessions but has since found some footing as markets transition into the US trading day. However, direction remains murky, with traders appearing undecided on whether to push the greenback higher or extend the recent pullback. A similar tone of uncertainty is mirrored in equities, as European indexes drift sideways and US futures show little conviction. With no major catalysts in the immediate pipeline, both FX and equity markets are likely to stay range-bound until fresh data offers clearer cues.

    Attention now turns to Thursday’s key releases, including Australia’s April employment report and the UK’s GDP figures. While Australia’s stronger-than-expected Q1 wage price index suggested some resilience in pay growth, the detail showed continued moderation in the private sector. This is unlikely to derail RBA’s expected rate cut next week, as the central bank remains focused on cushioning the economy from tariff-related risks. The upcoming April employment data will be more telling—especially if it deviates significantly from the expected 20.9k job growth and 4.1% unemployment rate. A downside surprise could fuel speculation of faster easing later this year.

    Technically, AUD/USD has struggled to establish momentum, despite a supportive risk-on backdrop. Even if a short-term rally resumes, 61.8% retracement of 0.6941 to 0.5913 at 0.6548 is likely to provide strong resistance to bring at least a near term pullback.

    In Europe, at the time of writing, FTSE is up 0.09%. DAX is down -0.18%. CAC is down -0.29%. UK 10-year yield is up 0.039 at 4.715. Germany 10-year yield is up 0.005 at 2.686. Earlier in Asia, Nikkei fell -0.14%. Hong Kong HSI rose 2.30%. China Shanghai SSE rose 0.86%. Singapore Strait Times fell -0.26%. Japan 10-year JGB yield rose 0.008 to 1.457.

    Fed’s Goolsbee urges patience amid ‘dusty’ data and tariff uncertainty

    Chicago Fed President Austan Goolsbee cautioned against overinterpreting April’s softer inflation data, noting on NPR that it’s still too early to gauge the true impact of rising US import tariffs.

    While recent consumer price figures suggest inflation may be easing, Goolsbee stressed that Fed needs more clarity before making firm policy judgments, describing the current environment as one filled with “a lot of dust in the air.”

    He acknowledged that the data so far “suggest that it’s going okay,” but emphasized the difficulty of drawing long-term conclusions amid ongoing short-term volatility.

    “It’s just not realistic,” he said, “to expect businesses or central banks to be jumping to conclusions” in such an uncertain setting.

    ECB’s Nagel stresses Dollar’s global role, cautious on tariff impact ahead of June decision

    German ECB Governing Council member Joachim Nagel emphasized the continued importance of the Dollar as a global reserve currency during remarks today. At the same time, he expected that Euro would gradually play a stronger role in the international financial system over the coming years.

    Looking ahead to ECB’s June policy meeting, Nagel reiterated that the interest rate decision will be guided by incoming data. He acknowledged the uncertainty surrounding the impact of US tariffs on inflation and growth within the Eurozone.

    The updated ECB staff projections, due next month, would be essential in shaping the decision. Nagel also stressed that central banks must increasingly adapt to operating in an environment characterized by persistent geopolitical and policy-driven uncertainty.

    BoE hawk Mann: Labor market resilient, and firms yet to lose pricing power

    BoE MPC member Catherine Mann explained her notable policy shift during an interview with CNBC, revealing why she moved from backing a 50bps rate cut in February to voting for a hold at last week’s meeting.

    Mann cited the UK labor market’s resilience as a key factor in her reassessment. While recent data suggest some moderation “a slowing labor market”, she argued that “it is not a non-linear adjustment.”

    Mann also flagged a new risk emerging from tariffs. She warned that rising US tariffs on countries like China could lead to an influx of diverted exports into markets such as the UK. While this could temporarily ease goods prices at the border, she cautioned that domestic retailers may use the opportunity to rebuild profit margins, keeping upward pressure on consumer price inflation rather than alleviating it.

    Crucially, Mann emphasized the need to see a broad-based “loss of pricing power” in firms. “I need to see that firms are starting to be much more moderate in setting their prices across a broad range of products,” she added. “Goods price inflation is actually going up, not down.”

    Japan’s PPI rises 4% yoy in April, record high for 8th straight month

    Japan’s PPI rose 4.0% year-on-year in April, easing slightly from 4.3% yoy in March and matching market expectations. Despite the modest slowdown, the index climbed to a fresh record high of 126.3, marking the eighth consecutive month of new highs, highlighting persistent cost pressures at the wholesale level.

    However, the data also showed little immediate impact from the sweeping US tariffs announced in early April, thanks in part to the 90-day suspension.

    Japan’s Yen-based import price index fell sharply by -7.2% yoy in April, following a -2.4% yoy decline in March. The drop suggests that Yen’s appreciation during the market turmoil have helped shield Japanese importers from some of the price shocks, at least for now.

    Australian wage growth accelerates to 3.4% yoy in Q1, led by public sector

    Australia’s Wage Price Index rose by 0.9% qoq in Q1, slightly above market expectations of 0.8% qoq. Public sector saw a stronger 1.0% qoq gain, outpacing the 0.9% qoq rise in private sector.

    On an annual basis, wages grew by 3.4%, up from 3.2% in the previous quarter, marking the first uptick in annual wage growth since mid-2024.

    The uptick in annual wage growth was driven primarily by the public sector, which saw a notable increase to 3.6% yoy from 2.9% yoy in Q4. Private sector wage growth was steady at 3.3% yoy.

    USD/CHF Mid-Day Outlook

    Daily Pivots: (S1) 0.8367; (P) 0.8415; (R1) 0.8442; More….

    Intraday bias in USD/CHF remains neutral for the moment. On the downside, firm break of 0.8333 resistance turned support will argue that corrective rebound from 0.8038 has completed at 0.8475, after rejection by 38.2% retracement of 0.9200 to 0.8038 at 0.8482. Intraday bias will be back on the downside for 0.8184, and then retest of 0.8038 low. However, sustained trading above 0.8482 will dampen this bearish view and target 61.8% retracement at 0.8756 next.

    In the bigger picture, long term down trend from 1.0342 (2017 high) is still in progress and met 61.8% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.8079 already. In any case, outlook will stay bearish as long as 55 W EMA (now at 0.8750) holds. Sustained break of 0.8079 will target 100% projection at 0.7382.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    23:50 JPY PPI Y/Y Apr 4.00% 4.00% 4.20% 4.30%
    01:30 AUD Wage Price Index Q/Q Q1 0.90% 0.80% 0.70%
    06:00 EUR Germany CPI M/M Apr F 0.40% 0.40% 0.40%
    06:00 EUR Germany CPI Y/Y Apr F 2.10% 2.10% 2.10%
    12:30 CAD Building Permits M/M Mar -4.10% 1.00% 2.90% 4.90%
    14:30 USD Crude Oil Inventories -2.0M -2.0M

     



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  • Dollar Rally Stalls, Market Cools, Trade Optimism Tempered by Reality

    Dollar Rally Stalls, Market Cools, Trade Optimism Tempered by Reality


    Global markets showed signs of fatigue overnight as trade optimism gave way to a more cautious tone. In the US, the S&P 500 eked out another gain, turning positive for the year, while DOW lagged and closed modestly lower. The divergence reflects a market still digesting the implications of recent trade developments. In Asia, stock markets also lacked direction, with investors reluctant to chase risk without clearer signs of progress on the trade front.

    Despite the positive headlines, investors are coming to terms with the reality that any new trade deal with China is unlikely to resemble a full rollback to pre-conflict conditions. Even if an agreement is reached, it will likely involve layered provisions and protracted enforcement timelines, making the short-term benefits less impactful. Meanwhile, trade discussions with the EU remain stalled, and Brussels is preparing countermeasures should negotiations not advance in the near future. The fragmented state of trade diplomacy is leaving markets in a holding pattern, particularly as geopolitical and political uncertainties remain elevated.

    That said, there is cautious hope that more preliminary deals could emerge soon. Market chatter suggests Switzerland, India, and Japan might be next in line for early-stage agreements. Though, like the recent UK deal, these are likely to be agreements in principle rather than fully ratified pacts, requiring extended negotiations before they take effect.

    Adding to the anticipation, US National Economic Council Director Kevin Hassett said President Donald Trump is expected to announce a new trade deal upon returning from his Middle East trip. According to Hassett, around 25 negotiations are currently underway, with at least one nearing final confirmation.

    Dollar’s rally also lost much momentum, despite extended rise in 10-year yield. Technically, Dollar’s bounce earlier in the week look more like part of a corrective rise, then a genuine bullish reversal. As for 10-year yield, rise from 3.886 might be ready to resume with corrective pullback from 4.592 completed at 4.124. Further rally is now in favor to retest 4.592 first. Firm break there will confirm this bullish case and target 100% projection of 3.86 to 4.592 from 4.124 at 4.830.

    As for currency performance this week, Aussie is now leading the pack, followed by Kiwi, and then Loonie. Yen remains the weakest, trailed by Swiss Franc and Euro. Dollar and British Pound are trading in the middle of the pack.

    In Asia, at the time of writing, Nikkei is down -0.33%. Hong Kong HSI is up 1.42%. China Shanghai SSE is up 0.35%. Singapore Strait Times is down -0.22%. Japan 10-year JGB yield is up 0.008 at 1.457.

    Overnight, DOW fell -0.64%. S&P 500 rose 0.72%. NASDAQ rose 1.61%. 10-year yield jumped 0.042 to 4.499.

    Japan’s PPI rises 4% yoy in April, record high for 8th straight month

    Japan’s PPI rose 4.0% year-on-year in April, easing slightly from 4.3% yoy in March and matching market expectations. Despite the modest slowdown, the index climbed to a fresh record high of 126.3, marking the eighth consecutive month of new highs, highlighting persistent cost pressures at the wholesale level.

    However, the data also showed little immediate impact from the sweeping US tariffs announced in early April, thanks in part to the 90-day suspension.

    Japan’s Yen-based import price index fell sharply by -7.2% yoy in April, following a -2.4% yoy decline in March. The drop suggests that Yen’s appreciation during the market turmoil have helped shield Japanese importers from some of the price shocks, at least for now.

    Australian wage growth accelerates to 3.4% yoy in Q1, led by public sector

    Australia’s Wage Price Index rose by 0.9% qoq in Q1, slightly above market expectations of 0.8% qoq. Public sector saw a stronger 1.0% qoq gain, outpacing the 0.9% qoq rise in private sector.

    On an annual basis, wages grew by 3.4%, up from 3.2% in the previous quarter, marking the first uptick in annual wage growth since mid-2024.

    The uptick in annual wage growth was driven primarily by the public sector, which saw a notable increase to 3.6% yoy from 2.9% yoy in Q4. Private sector wage growth was steady at 3.3% yoy.

    AUD/USD Daily Report

    Daily Pivots: (S1) 0.6395; (P) 0.6437; (R1) 0.6513; More…

    AUD/USD is staying in range below 0.6511 and intraday bias remains neutral. On the upside, firm break of 0.6511 will resume the rally from 0.5913 to 61.8% retracement of 0.6941 to 0.5913 at 0.6548. However, break of 0.6356 support should confirm short term topping. Intraday bias will be turned back to the downside for 38.2% retracement of 0.5913 to 0.6511 at 0.6283.

    In the bigger picture, as long as 55 W EMA (now at 0.6441) holds, down trend from 0.8006 (2021 high) should resume later to 61.8% projection of 0.8006 to 0.6169 from 0.6941 at 0.5806. However, sustained trading above 55 W EMA will argue that a medium term bottom was already formed, and set up further rebound to 0.6941 resistance instead.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    23:50 JPY PPI Y/Y Apr 4.00% 4.00% 4.20% 4.30%
    01:30 AUD Wage Price Index Q/Q Q1 0.90% 0.80% 0.70%
    06:00 EUR Germany CPI M/M Apr F 0.40% 0.40%
    06:00 EUR Germany CPI Y/Y Apr F 2.10% 2.10%
    12:30 CAD Building Permits M/M Mar 1.00% 2.90%
    14:30 USD Crude Oil Inventories -2.0M -2.0M

     



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  • Risk Assets Soar as US-China Tariff Rollback Surpasses Expectations

    Risk Assets Soar as US-China Tariff Rollback Surpasses Expectations


    Global risk markets surged after the surprising breakthrough in US-China trade negotiations delivered results far beyond market expectations. Just days ago, hopes were low, with even the mere continuation of talks seen as a positive development. Investors had braced for a possible breakdown or at best, a symbolic gesture of engagement. Instead, both countries announced a major easing of tariffs, offering a rare dose of optimism to fragile global sentiment.

    The agreement will see tariffs lowered on both sides for a 90-day period. Specifically, the US will cut its tariffs on Chinese goods from 125% to 30%, while China will reduce its duties on US goods from 125% to just 10%. The gap reflects the US’s decision to maintain a 20% base tariff linked to concerns about fentanyl imports. Still, the rollback represents a major de-escalation.

    In a joint statement, both governments emphasized the intention to continue discussions in a “spirit of mutual openness” and “cooperation,” with follow-up meetings already being planned. US Treasury Secretary Scott Bessent confirmed he expects to meet Chinese officials again in the coming weeks to build on the momentum.

    In the currency markets, Dollar is the strongest performer of the day. Commodity-linked currencies including the Aussie, Kiwi and Loonie are also advancing. In contrast, Yen is under significant pressure while. European majors are also lagging.

    AUD/USD would now provide an important gauge to Dollar’s underlying strength in this risk-on sentiment. Technically, break of 0.6364 support will confirm short term topping at 0.6511. Deeper decline would then be seen to 38.2% retracement of 0.5913 to 0.6511 at 0.6283. Firm break there will argue that whole rise from 0.5913 has already completed.

    In Europe, at the time of writing, FTSE is up 0.64%. DAX is up 0.67%. CAC is up 1.46%. UK 10-year yield is up 0.089%. Germany 10-year yield is up 0.085 at 2.646. Earlier in Asia, Nikkei rose 0.38%. Hong Kong HSI rose 2.98% China Shanghai SSE rose 0.82%. Singapore was on holiday. Japan 10-year JGB yield rose 0.035 to 1.389.

    BoE’s Lombardelli: Gradual cuts warranted as wage and services inflation stay high

    BoE Deputy Governor Clare Lombardelli reinforced the case for a “gradual and careful” approach to policy easing in a speech today. She noted underlying inflation “have continued to fall” despite noises. Monetary policy is still restrictive and will continue to balance the need to lower inflation with the risk of undermining already soft demand.

    Lombardelli highlighted wage growth as a central focus in the disinflation process, particularly given its outsized influence on domestic services pricing. She noted that private sector regular average weekly earnings rose 5.9% in February, still well above levels consistent with BoE’s inflation target. Services inflation, a key proxy for persistent price pressure, remains elevated at 4.7% as of March. Both indicators suggest that while progress has been made, inflationary momentum in wage-sensitive sectors continues to pose a challenge.

    She also addressed the global backdrop, warning that higher US tariffs and increasingly uncertain American trade policy could lower growth and inflation in the short term by dampening global demand and trade volumes. However, over the longer term, if trade fragmentation continues, it could “reduce output and productivity and would raise inflationary pressures.”

    BoE’s Greene says trade risks justify rate cut

    BoE MPC member Megan Greene said during a panel discussion today that while wages and inflation are moving in the right direction, they remain uncomfortably high. And more concerningly, “medium-term inflation expectations have also started picking up.”

    Greene, who voted with the majority last week in favor of a 25bps rate cut, the fourth since last August, revealed that she was initially undecided going into the meeting.

    She noted being “torn” between holding rates steady and cutting, but ultimately decided to support easing. A key factor in her decision was the rise in global trade tensions, driven by US President Donald Trump’s sharp tariff hikes.

    Despite the subsequent temporary trade truce between the US and China announced today, Greene said it would not have changed her vote.

    She also flagged continued uncertainty over US-EU trade relations as a key downside risk for the UK economy, noting that any escalation could further dampen external demand.

    USD/JPY Mid-Day Outlook

    Daily Pivots: (S1) 144.74; (P) 145.46; (R1) 146.11; More…

    USD/JPY’s rise from 139.87 accelerates higher today Break of 38.2% retracement of 158.86 to 139.87 at 147.12 suggests that whole fall from 158.86 has completed at 139.87, after defending 139.57 support and 139.26 fibonacci level. Intraday bias stays on the upside for 61.8% retracement at 151.60 next. On the downside, below 145.70 minor support will turn intraday bias neutral again first.

    In the bigger picture, price actions from 161.94 are seen as a corrective pattern to rise from 102.58 (2021 low), with fall from 158.86 as the third leg. Strong support should be seen from 38.2% retracement of 102.58 to 161.94 at 139.26 to bring rebound. However, sustained break of 139.26 would open up deeper medium term decline to 61.8% retracement at 125.25.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    23:50 JPY Bank Lending Y/Y Apr 2.40% 2.80% 2.80%
    23:50 JPY Current Account (JPY) Mar 2.72T 2.42T 2.32T 2.91T
    05:00 JPY Eco Watchers Survey: Current Apr 42.6 44.5 45.1

     



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  • Markets Cautious Despite US-China Trade Progress, US Inflation and Consumer Data In Focus This Week

    Markets Cautious Despite US-China Trade Progress, US Inflation and Consumer Data In Focus This Week


    Markets opened the week on a subdued note despite the White House’s announcement that a trade agreement had been reached with China following negotiations in Switzerland. Despite the positive headline, investor reaction has been muted with lackluster performance in Asian stocks. Traders appear to be holding back judgment, at least until US Treasury Secretary Scott Bessent’s full briefing later in the day.

    In the currency markets, commodity currencies including Kiwi, Aussie and Loonie are outperforming slightly, supported by cautious optimism surrounding global trade. Meanwhile, traditional safe-haven currencies, Yen and Swiss Franc, are softening, along with Euro. Dollar and British Pound are trading mixed in the middle..

    This week brings a raft of high-profile US data, with particular attention on CPI, PPI, and retail sales. These releases will offer the first real look at how the sweeping April tariffs are affecting consumer prices and spending behavior.

    Technically, AUD/JPY is showing encouraging signs of strength as risk appetite improves. The rebound from the 86.03 low is resuming, with the pair now trading above 55 D EMA at 92.84. Sustained trading above this EMA will add to the case that correction from 109.36 (2024 high) has completed at 86.03. Next target will be 38.2% retracement of 109.36 to 86.03 at 94.94. However, break of 92.10 support will dampen this bullish view and mix up the outlook.

    In Asia, at the time of writing, Nikkei is up 0.05%. Hong Kong HSI is up 0.93%. China Shanghai SSE is up 0.37%. Singapore is on holiday. Japan 10-year JGB yield is up 0.039 at 1.393.

    Gold Falls as US-China Trade Deal Signals Easing Tensions

    Gold opened the week on the back foot as signs of further easing global trade tensions dented demand for safe-haven assets. The White House posted a surprise announcement of a trade agreement with China after weekend negotiations in Geneva. While no details were released immediately, both sides described the outcome as positive.

    US Treasury Secretary Scott Bessent called the talks a source of “substantial progress,” with a full briefing promised for Monday. US Trade Representative Jamieson Greer said the deal would help resolve the ongoing “national emergency” in trade. China’s Vice Premier He Lifeng confirmed both sides had reached “important consensus” and agreed to create a consultation mechanism for economic and trade issues.

    Markets appear to be cautiously optimistic that the US-China agreement marks a turning point in the broader trade conflict, at least in tone and intent. Investors are likely waiting for concrete details before reassessing the longer-term outlook, but for now, the improved risk sentiment is weighing on Gold’s short-term appeal.

    Technically, Gold’s extended decline suggests that rebound from 3201.70 has completed at 3434.76. Fall from there is now seen as the third leg of the corrective pattern from 3499.79 high. Deeper fall is in favor to 3201.70 support and possibly below. Still, down side should be contained by 38.2% retracement of 2584.24 to 3499.79 at 3150.04, which is close to 55 D EMA (now at 3144.42). Larger up trend is expected to resume after the correction completes.

    Bitcoin losing momentum after strong rally

    Bitcoin posted a strong rally last week, driven by a combination of improved global risk sentiment and sustained institutional demand through exchange-traded funds. A key driver has been BlackRock’s spot Bitcoin ETF, which extended its inflow streak to 19 consecutive trading days, its longest run of the year. These flows have provided strong tailwinds for Bitcoin, helping push prices closer to the 109,571 record high.

    However, signs are emerging that the rally may be losing steam, as seen in 4H MACD. A break below 102,291 support level would confirm short term topping, opening the door for a deeper pullback toward the 93,351 zone.

    The depth and structure of the correction, if realized, will be critical in assessing whether the advance from 74,373 low marks resumption of the long-term uptrend. Or it was merely the second leg in the medium term corrective pattern from the all-time high of 109,571.

     

    US data deluge to reveal first hints of tariff impacts

    This week will be packed with key economic data from the US, Japan, the UK and Australia. In particular for the US, tariffs impacts are beginning to filter through inflation and consumption indicators.

    The US April CPI and PPI reports will be the first meaningful look at how tariffs are affecting price levels. While it’s likely too early to see the full pass-through, any uptick in goods inflation could point to the initial impact of the 10–145% import duties imposed last month. In this round, annual readings will remain relevant, but month-on-month changes could carry more market impact at this early stage of the tariff cycle.

    Alongside inflation, April retail sales data will offer a clearer picture of how US consumers are reacting to any pricing shifts and the broader risk of higher costs on the horizon. The University of Michigan’s consumer sentiment survey, including its forward-looking inflation expectations component, will also provide key insight into how tariffs are feeding further into household psychology.

    In Japan, markets are increasingly convinced that BoJ will hold off on further tightening for longer, especially after it downgraded GDP forecasts. This week’s preliminary Q1 GDP data may confirm a contraction, reinforcing that view. Additionally, the BoJ’s Summary of Opinions from the latest policy meeting will give investors a sense of how concerned board members are about the rising risks from global trade disruptions and fragile domestic demand. A clear dovish tilt in the minutes could further weigh on Yen and push back rate hike expectations even further.

    From the UK, GDP and employment figures are due, but these are unlikely to shift the BoE from its current path of gradual easing—one 25bps cut per quarter—unless the data contains major surprises. Attention is likely to remain on the next phase of the recently announced US-UK trade agreement. With the framework now public, markets are looking for concrete details, timelines, and sector-specific implementations that could affect investment flows and business sentiment in the months ahead.

    Australia’s wage price index and job figures will also draw attention, though they are not expected to derail the current consensus for a rate cut from RBA later this month. Slowing growth, fading inflation momentum, and global uncertainty continue to dominate the domestic narrative.

    Here are some highlights for the week:

    • Monday: Japan current account; Eco Watcher sentiment.
    • Tuesday: BoJ Summary of Opinions; Australia Westpac consumer sentiment, NAB business confidence; UK employment; Germany ZEW economic sentiment; US CPI.
    • Wednesday: Japan PPI; Australia wage price index; Canada building permits.
    • Thursday: Australia employment; UK GDP, trade balance; Swiss PPI; Eurozone GDP revision, industrial production; Canada housing starts, manufacturing sales, wholesale sales; US retail sales, PPI, jobless claims, Empire State manufacturing, Philly Fed manufacturing, industrial production, business inventories, NAHB housing index.
    • Friday: New Zealand BNZ manufacturing, inflation expectations; Japan GDP; Eurozone trade balance; US building permits and housing starts, import prices, UoM consumer sentiment and inflation expectations.

    USD/CHF Daily Outlook

    Daily Pivots: (S1) 0.8192; (P) 0.8232; (R1) 0.8278; More….

    USD/CHF’s breach of 0.8333 suggests that rebound from 0.8038 is resuming. Intraday bias is back on the upside for 38.2% retracement of 0.9200 to 0.8038 at 0.8482. But strong resistance should be seen there to limit upside. On the downside, firm break of 0.8184 support will argue that the corrective rise has completed, and bring retest of 0.8038.

    In the bigger picture, long term down trend from 1.0342 (2017 high) is still in progress and met 61.8% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.8079 already. In any case, outlook will stay bearish as long as 55 W EMA (now at 0.8750) holds. Sustained break of 0.8079 will target 100% projection at 0.7382.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    23:50 JPY Bank Lending Y/Y Apr 2.40% 2.80% 2.80%
    23:50 JPY Current Account (JPY) Mar 2.72T 2.42T 2.32T 2.91T
    05:00 JPY Eco Watchers Survey: Current Apr 42.6 44.5 45.1

     



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  • Sterling and Dollar Lead as Trade Deal Grabs Attention

    Sterling and Dollar Lead as Trade Deal Grabs Attention


    Last week was dominated by developments out of the US and UK, not just because of monetary policy decisions, but also the unexpected announcement of a US-UK trade deal. Fed’s hold and BoE’s cut were were largely overshadowed by the surprise trade breakthrough.

    Importantly, the structure of the agreement offered valuable insights into the US administration’s trade strategy which could set the template for negotiations with other key partners.

    Despite the significance of the agreement, market reactions were relatively restrained. Major US stock indexes and the UK’s FTSE 100 closed slightly lower. Investors remain cautious about the deal’s practical impact and the broader global developments.

    Still, the news did provide meaningful support to the currencies involved: Sterling and Dollar emerged as the week’s top performers. Japanese Yen took third place

    In contrast, Loonie underperformed at the bottom. Kiwi and Swiss Franc also lagged. Euro and Aussie ended in the middle of the pack.

    Historic Pact, Modest Reaction: Investors Cautious Despite US-UK Trade Breakthrough

    While the US-UK trade deal marked a diplomatic milestone, the first bilateral agreement since the sweeping tariff measures enacted in April, financial markets responded with notable indifference. Equities initially rallied on Thursday following the announcement, but the enthusiasm quickly faded. All three major US indexes reversed earlier gains and ended the week in the red, with S&P 500 falling -0.5%, NASDAQ down -0.3%, the DOW slipping -0.2%.

    The structure of the agreement reveals much about the current US approach to trade. The UK, given its trade surplus with the US and its unparalleled security ties, likely received the most favorable terms Washington is willing to offer. If this is the best-case scenario, expectations for more comprehensive or lenient agreements, even with regions like the EU or Japan, may need to be tempered.

    A 10% blanket tariff remains on virtually all UK exports to the US. That is likely the floor for future negotiations with other partners. This baseline may not only serve as a protective measure but also as a consistent revenue stream to fund Trump’s domestic agenda, including tax cuts. Though minor exemptions may be granted, such as on UK automobiles and metals, they are expected to be case-specific rather than systemic.

    What sets this agreement apart is the emphasis on expanding market access for US companies in the UK, particularly in agriculture and industries. It suggests that future trade arrangements will be designed less to eliminate tariffs wholesale and more to create bilateral corridors of opportunity favoring U.S. exporters, negotiated country by country.

    In that context, the muted market response becomes clearer. Investors recognize that this agreement doesn’t signify a return to pre-tariff global trade norms. With 90 days remaining in the current tariff truce, the road ahead includes complex negotiations not only with China and the EU but also within supply chains deeply impacted by the new tariff regime. Optimism about progress must be balanced against the reality that a systemic overhaul is still underway, and clarity will be slow to emerge.

    Technically, DOW’s rebound from 36611.78 is seen as the second leg of the corrective pattern from 45073.63 high. Further rise is in favor as long as 40759.41 support holds. However, DOW could start to lose momentum more apparently above 61.8% retracement of 45073.63 to 36611.78 at 41841.20. Break of 40759.41 will indicate short term topping, and bring pullback first.

    June Fed Cut Going Off the Radar, July Doubtful, Dollar Extends Modest Rise

    Fed held its benchmark interest rate unchanged at 4.25–4.50% last week, as widely anticipated. The key message from Fed Chair Jerome Powell was one of restraint: rate cuts are not imminent. Powell emphasized that with the current level of uncertainty surrounding US trade policy and tariffs, “it’s not a situation where we can be preemptive.” He reiterated that if the current size and scale of tariffs remain in place, the US could face the dual challenge of rising inflation and unemployment.

    Cleveland Fed President Beth Hammack’s comments from an interview published on Friday is worth a mention. She noted that the breadth of tariff measures already discussed and implemented raises “real questions” about their ultimate economic impact. As such, she suggested it may take longer before Fed can confidently begin to ease rates.

    Crucially, Hammack pointed out that there won’t be much new data between now and the next FOMC meeting in June, limiting the Fed’s ability to reassess the situation. Her comments align with current market pricing, which assigns just a 17.2% probability to a June rate cut.

    Looking ahead, July is now the more likely inflection point, though conviction is still weak. Market-implied odds for a 25bps cut in July stand at around 60%. Investors remain far from convinced a rate move is locked in.

    Dollar Index gyrated higher last week, partly supported by expectations that Fed interest rate will stay high for longer, and partly support by improved appetite on US assets as trade negotiations made progress.

    Technically, corrective rise from 97.92 could extend higher towards 55 D EMA (now at 102.08). But strong resistance should be seen from 38.2% retracement of 110.17 to 97.92 at 102.60 limit upside. On the downside, break of 99.17 support would argue that the corrective recovery has completed earlier than expected, and bring retest of 97.92 low next.

    BoE Vote Split Surprises, Top Mover GBP/CAD’s Rally Limited

    BoE delivered a 25bps rate cut to 4.25% as widely anticipated, but the composition of the vote took markets by surprise. The Monetary Policy Committee split three ways: five members supported the cut, two hawkish voices—Catherine Mann and Chief Economist Huw Pill—voted for no change, while Swati Dhingra and Alan Taylor pushed for a deeper 50bps reduction. The presence of two hawkish hold votes gave the overall decision a more cautious tone than markets had anticipated Market expectations for a gradual 25bps-per-quarter path remain intact.

    BoE Governor Andrew Bailey addressed the impact of global trade tensions in a speech following the decision, and raised an interesting perspective. He highlighted how different global tariff scenarios could affect the UK economy in divergent ways. Most notably, Bailey stressed that a demand-driven downside—where both inflation and activity fall—would require a stronger monetary response compared to a supply-driven upside shock, where inflation rises but growth slows. The key distinction lies in the trade-off: when inflation and activity move in opposite directions, policy decisions become more complex and risk-laden, requiring a more delicate balance.

    British Pound ended the week as the strongest major currency. GBP/CAD was the top mover, rising 1.13%. Still, price action in GBP/CAD doesn’t show clear strength. The bounce even failed to break the prior week’s high of 1.8598.

    Technically, GBP/CAD is seen as in consolidation pattern from 1.8777, with current rise from 1.7980 as the second leg. Further rally might be seen but upside should be limited by 1.8777.

    On the downside, break of 1.8280 support will argue that the third has started. Deeper fall should then follow to 1.7980, or even to channel support at around 1.7700.

    AUD/USD Weekly Report

    AUD/USD retreated after edging higher to 0.6511 last week, but downside is contained above 0.6364 support so far. Initial bias stays neutral this week first. On the upside, break of 0.6511 will resume the rally from 0.5913 to 61.8% retracement of 0.6941 to 0.5913 at 0.6548. However, considering bearish divergence condition in 4H MACD, break of 0.6364 support should confirm short term topping. Intraday bias will be turned back to the downside for 38.2% retracement of 0.5913 to 0.6511 at 0.6283.

    In the bigger picture, as long as 55 W EMA (now at 0.6443) holds, down trend from 0.8006 (2021 high) should resume later to 61.8% projection of 0.8006 to 0.6169 from 0.6941 at 0.5806. However, sustained trading above 55 W EMA will argue that a medium term bottom was already formed, and set up further rebound to 0.6941 resistance instead.

    In the long term picture, prior rejection by 55 M EMA (now at 0.6764) is taken as a bearish signal. But for now, fall from 0.8006 is still seen as the second leg of the corrective pattern from 0.5506 long term bottom (2020 low). Hence, in case of deeper decline, strong support should emerge above 0.5506 to contain downside to bring reversal.



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  • Dollar Slips in Holiday Trade, Fed and BoE in Focus This Week

    Dollar Slips in Holiday Trade, Fed and BoE in Focus This Week


    Dollar drifted lower in subdued trading, with many Asian markets closed for holidays. Movements in the currency markets elsewhere were mixed. Traditional safe havens like Yen and Swiss Franc inching higher. But at the same time, risk-sensitive currencies such as Australian and New Zealand Dollars also advanced. Overall risk sentiment lacking clear direction.

    This lack of coherence highlights the current state of indecision. Traders are reasonable to be hesitant to take firm positions ahead of key events later in the week, including Fed and BoE rate decisions. Nevertheless, today’s US ISM Services PMI might still inject some short-term volatility. The manufacturing sector in the US has held up better than expected despite tariff shocks. It’s time for the services sector to face its own resilience test.

    On the trade front, US President Donald Trump announced a new 100% tariff on foreign-produced films, citing what he called a “very fast death” of the US film industry due to global competition. He also signaled that new tariff decisions on select countries could be announced in the coming weeks if negotiations stall.

    Meanwhile, Australian Prime Minister Anthony Albanese celebrated a landslide reelection and confirmed a “positive” conversation with Trump. Albanese reiterated continued engagement on AUKUS and tariff matters. However, despite the friendly rhetoric, markets remain wary of what’s next on the trade front.

    Oil sinks as OPEC+ ramps up output again, WTI heading back to 4-yr low

    Oil prices opened the week with a sharp gap lower, as traders responded to OPEC+’s weekend agreement to accelerate output increases for a second straight month. WTI crude is now heading back toward the four-year low of $55.20 set in April.

    OPEC+ will raise June production by 411k barrels per day. That brings the total additional supply from April to June to nearly one million barrels per day, representing 44% rollback of the group’s 2022-era production cuts.

    This shift has stoked concerns that global oil markets may soon swing into surplus. The broader concern is that OPEC+ may fully unwind voluntary production cuts by October unless compliance among members improves. Such a move would flood the market with more supply just as global demand outlooks remain clouded by trade tensions.

    Technically, prior rejection by 65.24 support turned resistance keeps WTI’s long term down trend intact. Further decline is now expected as long as 60.16 resistance holds. Firm break of 55.20 low will confirm down trend resumption. WTI could then decline through 50 psychological level to 100% projection of 72.37 to 55.20 from 65.32 at 48.20.

    Fed to hold, BoE to cut, and more global data

    Two major central banks will meet this week: Fed and BoE.

    Fed is widely expected to leave interest rates unchanged at 4.25–4.50%, a view fully priced in by markets with over 97% probability. As a result, there’s little room for surprise in the policy decision itself. Instead, attention will be on Chair Jerome Powell’s guidance—particularly on whether he hints at a rate cut in June.

    However, following last week’s solid non-farm payroll report, expectations have already tempered, with the probability of a June cut slipping to just 35%. Also, the US is in a 90-day tariff truce. Negotiations are said to be progressing. But any major developments, positive or negative, may not materialize until closer to early July.

    Given this backdrop, Powell is expected to reiterate that Fed is not in a rush to cut rates again, maintaining a data-dependent and cautious stance, especially while inflation expectations remain sticky and labor markets resilient.

    In the UK BoE is expected to proceed with a 25 bps rate cut, lowering its Bank Rate to 4.25%. Governor Andrew Bailey has recently emphasized the downside risks from global trade tensions, particularly after the IMF revised down UK and global growth forecasts.

    Yet while rhetoric has turned more cautious, markets will be looking to BoE’s updated projections for confirmation on how these concerns are turning into numbers. Inflation progress and growth expectations will be critical in assessing whether BoE will stick to a steady quarterly cutting path.

    Beyond the central banks, markets will be watching a series of key economic data. Highlights include US ISM Services PMI, employment data from Canada and New Zealand, Japan’s wage growth and household spending, Swiss CPI, and China’s trade balance.

    Here are some highlights for the week:

    • Monday: Swiss CPI; US ISM services.
    • Tuesday: China Caixin PMI services; Swiss unemployment rate; EUrozone PMI services final, PPI; UK PMI services final; Canada trade balance; US trade balance.
    • Wednesday: New Zealand employment; Germany factory orders; Swiss foreign currency reserves; UK PMI construction; Eurozone retail sales; FOMC rate decision.
    • Thursday: BoJ minutes; Germany industrial production, trade balance; BoE rate decision; US jobless claims, non-farm productivity.
    • Friday: Japan average cash earnings, household spending; China trade balance; Swiss SECO consumer climate; Canada employment.

    AUD/USD Daily Report

    Daily Pivots: (S1) 0.6384; (P) 0.6427; (R1) 0.6484; More…

    Intraday bias in AUD/USD remains on the upside for the moment. Rise from 0.5913 should continue to 61.8% retracement of 0.6941 to 0.5913 at 0.6548. On the downside, though, break of 0.6364 support will indicate short term topping, and turn bias to the downside for 55 D EMA (now at 0.6325) and below.

    In the bigger picture, as long as 55 W EMA (now at 0.6443) holds, the down trend from 0.8006 (2021 high) should resume later to 61.8% projection of 0.8006 to 0.6169 from 0.6941 at 0.5806. However, sustained trading above 55 W EMA will argue that a medium term bottom was already formed, and set up further rebound to 0.6941 resistance instead.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    01:00 AUD TD-MI Inflation Gauge M/M Apr 0.60% 0.70%
    06:30 CHF CPI M/M Apr 0.20% 0.00%
    06:30 CHF CPI Y/Y Apr 0.30%
    08:30 EUR Eurozone Sentix Investor Confidence May -14.9 -19.5
    13:45 USD Services PMI Apr F 51.4 51.4
    14:00 USD ISM Services PMI Apr 50.6 50.8

     



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