Tag: AUD

  • 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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  • Risk-On Sentiment Regains Control as Data Downplays Severity of Tariff Shock

    Risk-On Sentiment Regains Control as Data Downplays Severity of Tariff Shock


    Global risk sentiment continued to improve last week, with major equity indices staging robust rallies as investor anxiety over the fallout from tariffs eased. The solid US non-farm payroll data was a key turning point, reassuring markets that the early economic impact of the trade shock was not as damaging as initially feared. Added to that, there were signs of progress on multiple trade negotiation fronts, including a potential thaw in US-China relations.

    In the currency markets, Aussie was the top performer, buoyed not only by improving risk appetite but also by stronger-than-expected inflation data, which suggests the RBA’s easing path may remain gradual. Loonie followed as second benefiting from political stability after the Canadian elections. Swiss Franc ranked third.

    On the other hand, Yen fell the most, under pressure from a dovish BoJ that downgraded its growth outlook. Euro was the second weakest performer, reversing some of its earlier strength despite a sharper-than-expected acceleration in core inflation. Sterling also lagged as third worst. Dollar and New Zealand Dollar ended the week in the middle of the pack.

    US Stocks Erase April Losses as Payrolls Soothe Growth Fears, Fed Cut Odds Fall

    The US markets have decisively moved past the turmoil sparked by the reciprocal tariff announcements in April. Investor confidence has fully recovered, especially in equities with both S&P 500 and NASDAQ reversed all losses from April. S&P 500 even notched a remarkable nine consecutive days of gains, its longest winning streak since 2004. DOW is also on track to complete a full reversal.

    Sentiment had wavered briefly after Q1 GDP showed an unexpected contraction. However, those concerns were largely alleviated by April’s non-farm payroll report, which showed solid job creation and stable unemployment. The data suggests that while trade disruptions remain a concern, the labor market is resilient and the broader economy is still on strong footing. This has helped markets conclude that the immediate economic damage from the tariff standoff is more modest than feared.

    Looking ahead, the 90-day tariff truce, set to expire in early July, becomes the next major milestone for investors. There are tentative signs of progress on trade negotiations, including fresh signals from China that it may be open to returning to the table. While expectations for a zero-tariff outcome remain low, the fear of escalation to a worst-case scenario has clearly eased. Markets appear to be pricing in a more constructive path, even if slow-moving and politically complex.

    At the same time, expectations for Fed policy are undergoing a recalibration. With the labor market holding firm and inflation still persistent, the urgency for another rate cut has diminished. Fed fund futures are now pricing just a 35% chance of a cut in June — down sharply from 63% a week ago and nearly 80% at the start of April. Importantly, this moderation in rate cut bets is being absorbed without negative market reaction, signaling that investors are comfortable with Fed remaining on hold for longer.

    Technically, S&P 500’s rally from the 4835.04 low is seen as the second leg in the medium-term pattern from 6147.43 record high. Further upside is favored in the near term as long as 5433.24 support holds. But significant resistance around 6147.43 to bring the third leg of the pattern.

    In the bigger picture, the long term up trend remains intact. S&P 500 is well supported by long term rising channel, and managed to defend 4818.62 resistance turned support (2022 high).

    An upside breakout is possible during the second half of the year. But that would depend on two key elements: the resolution of trade uncertainty and continued economic resilience.

    If July’s truce deadline passes without escalation — or better yet, with concrete de-escalation — and economic data remains firm, then a new record would be on the horizon.

    Yields Rise on Risk-On Flow, But Dollar Fails to Ride the Wave

    US 10-year Treasury yield staged a rally rebound on Friday, in tandem with equities. Unlike previous yield spikes driven by capital flight, this surge appears rooted in a rotation out of safe-haven assets and into equities, as risk appetite returned.

    Technically, 10-year yield’s pull back from 4.592 has likely completed with three waves down to 4.124. Break of 4.407 resistance will solidify this bullish case. Rise from 3.886 could then be resuming through 4.592 resistance to 100% projection of 3.886 to 4.592 from 4.124 at 4.830.

    In contrast, Dollar has failed to capitalize on either yield strength or reduced recession anxiety. Expectations for Fed to keep interest rates elevated longer may provide some underlying support. But if risk sentiment continues to improve, demand for USD as a defensive play may continue to weaken, even as yield support holds.

    Technically, firm break of 100.27 resistance in Dollar Index will bring stronger rebound back to 55 D EMA (now at 102.51). But strong resistance should be seen from 38.2% retracement of 110.17 to 97.92 at 102.60 to limit upside.

    Bullish Case Continue to Build for AUD/JPY, with 94.94 Fibonacci Target in Insight

    AUD/JPY ended last week as the top winner and gained 1.56%, on a potent mix of risk-on sentiment and changes in monetary policy outlooks.

    Aussie’s strength was reinforced by Q1 inflation data from Australia. On the one hand, the trimmed mean CPI returned to RBA’s 2–3% target range for the first time since 2021, cementing expectations of a May rate cut. However, stronger than expected headline CPI reading, and renewed goods inflation pressures points to a cautious and gradual easing path, rather than an aggressive cycle.

    In contrast, Yen suffered after BoJ left rates unchanged and sharply downgraded its growth forecast for fiscal 2025, slashing it by more than half. Additionally, core inflation projections were revised lower, raising the risk of falling short of the 2% target again. The downgrade has pushed back expectations of any near-term rate hikes. A June move now looks off the table.

    Technically, the developments continue to affirm the case that corrective fall from 109.36 (2024 high) has completed with three waves down to 86.03.

    Further rally should be seen in the near term as long as 90.57 support holds, to 38.2% retracement of 109.36 to 86.03 at 94.94. Sustained break there will pave the way to 61.8% retracement at 100.44.

    However, rejection by 94.94 fibonacci resistance, followed by break of 90.57 support, will dampen this bullish view and bring retest of 86.03.

    EUR/USD Weekly Outlook

    EUR/USD gyrated lower last week but recovered after hitting 1.1265. Initial bias remains neutral this week first. On the downside, below 1.1265 will resume the corrective fall from 1.1572 short term top. But downside should be contained by 38.2% retracement of 1.0176 to 1.1572 at 1.1039. On the upside, break of 1.1424 will suggest that the correction has completed and bring retest of 1.1572 high.

    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 1.0776) holds.

    In the long term picture, the case of long term bullish reversal is building up. Sustained break of falling channel resistance (now at around 1.1300) will argue that the down trend from 1.6039 (2008 high) has completed at 0.9534. A medium term up trend should then follow even as a corrective move. Next target is 38.2% retracement of 1.6039 to 0.9534 at 1.2019.



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  • Markets Lifted by US-China Trade Thaw Hopes, But All Eyes on US Jobs Report

    Markets Lifted by US-China Trade Thaw Hopes, But All Eyes on US Jobs Report


    Markets trade on a cautiously optimistic in Asian session, supported by fresh signs that US-China trade tensions may be starting to thaw. China’s Commerce Ministry said the US has repeatedly expressed interest in reopening negotiations, adding that Beijing is “evaluating” these overtures. This marks the most constructive public tone from Beijing since the US enacted sweeping tariffs in April, raising hopes that some form of de-escalation could follow.

    US Treasury Secretary Scott Bessent and White House adviser Kevin Hassett both echoed this optimism. Hassett told CNBC there have been informal discussions across both governments, and China’s recent move to ease duties on select US goods was interpreted as a possible opening gesture.

    Despite the improving geopolitical mood, FX markets remain directionless outside of continued weakness in Yen following BoJ’s dovish posture and downgraded growth forecasts. Kiwi and Euro are also under mild pressure, while commodity currencies like the Aussie and Loonie are faring better, alongside Sterling. Dollar and Swiss Franc are mixed in the middle. This price action hints at budding risk-on sentiment, but conviction is still lacking ahead of today’s key US jobs report.

    Technically, AUD/USD has been struggling in tight range for nearly two weeks already. The resistance from 55 W EMA is notable. Today’s US job data might finally give a clear direction to AUD/USD. Sustained break of the 55 W EMA should confirm that medium term bottom was already formed at 0.5916 in early April, and stronger rally would then be seen towards 0.6941 resistance even as a corrective move. However, rejection by the 55 W EMA will retain bearishness for a break through 0.5916 sooner rather than later.

    In Asia, at the time of writing, Nikkei is up 1.18%. Hong Kong HSI is up 1.72%. China is on holiday. Singapore Strait Times is up 0.36%. Japan 10-year JGB yield is down -0.009 at 1.266. Overnight, DOW rose 0.21%. S&P 500 rose 0.63%. NASDAQ rose 1.52%. 10-year yield rose 0.054 to 4.231.

    Looking ahead, Eurozone CPI flash will be the major focus in European session. Eurozone unemployment rate and PMI manufacturing final, Swiss PMI manufacturing will be released. Later in the day, US non-farm payroll employment and factory orders will be published.

    Downside risks to NFP after ADP miss and rising Claims

    The US April non-farm payroll report today will serve as a critical barometer of the labor market’s resilience amid rising macroeconomic uncertainty. While the recent flip-flopping of reciprocal tariffs may not yet be fully reflected in the data, other indicators suggest growing fragility.

    A notable miss in today’s report could reignite concerns about recession, particularly following this week’s Q1 GDP data which showed unexpected contraction. For Fed, a disappointing jobs print would increase pressure to resume easing in June.

    Markets expect 130K jobs growth in April, following a much stronger-than-expected 228K gain in March. Average hourly earnings are seen rising 0.3% mom. Unemployment rate likely held steady at 4.2%.

    Recent labor market signals, however, lean toward downside risks. Initial jobless claims surged to 241K last week, pushing the 4-week average up to 226K. Meanwhile, ADP Employment report showed private payrolls rising by just 62K, a sharp deceleration from the revised 147K in March. The ISM Manufacturing PMI Employment sub-index also remained in contraction at 46.2, though it did tick up slightly from 44.7.

    Australian retail sales grow 0.3% mom in March, but volumes flat in Q1

    Australian retail sales rose by 0.3% mom in March to AUD 37.28 billion, slightly below expectations of 0.4% growth.

    According to the ABS, food-related spending, particularly in supermarkets and grocery stores, was the main contributor to the uptick, with food and miscellaneous retailing both rising 0.7%. Clothing-related sales also edged higher, but household goods retailing was flat.

    However, the broader trend is subdued, with retail sales volumes—adjusted for inflation—essentially flat over Q1. ABS Head of Business Statistics Robert Ewing noted that the lack of growth reflects weaker household appetite for discretionary goods, following a boost in spending late last year due to heavy promotions.

    USD/CAD Daily Outlook

    Daily Pivots: (S1) 1.3804; (P) 1.3834; (R1) 1.3883; More…

    Intraday bias in USD/CAD is turned neutral again with current recovery. Deeper fall is expected as long as 1.3903 resistance holds. Below 1.3768 temporary low will resume the decline from 1.4791 to 1.3727 fibonacci level next. However, firm break of 1.3903 will indicate short term bottoming, and turn bias back to the upside for stronger rebound towards 55 D EMA (now at 1.4086).

    In the bigger picture, price actions from 1.4791 medium term top could either be a correction to rise from 1.2005 (2021 low), or trend reversal. In either case, further decline is expected as long as 1.4150 resistance turned support holds. Firm break of 38.2% retracement of 1.2005 (2021 low) to 1.4791 at 1.3727 will pave the way back to 61.8% retracement at 1.3069.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    22:45 NZD Building Permits M/M Mar 9.60% 0.70% 0.80%
    23:50 JPY Monetary Base Y/Y Apr -4.80% -2.00% -3.10%
    23:30 JPY Unemployment Rate Mar 2.50% 2.40% 2.40%
    01:30 AUD Retail Sales M/M Mar 0.30% 0.40% 0.20% 0.80%
    01:30 AUD PPI Q/Q Q1 0.90% 0.80% 0.80%
    01:30 AUD PPI Y/Y Q1 3.70% 3.70%
    07:30 CHF Manufacturing PMI Apr 48.7 48.9
    07:50 EUR France Manufacturing PMI Apr F 48.2 48.2
    07:55 EUR Germany Manufacturing PMI Apr F 48 48
    08:00 EUR Eurozone Manufacturing PMI Apr F 48.7 48.7
    08:00 EUR ECB Economic Bulletin
    09:00 EUR Eurozone Unemployment Rate Mar 6.10% 6.10%
    09:00 EUR Eurozone CPI Y/Y Apr P 2.10% 2.20%
    09:00 EUR Eurozone CPI Core Y/Y Apr P 2.50% 2.40%
    12:30 USD Nonfarm Payrolls Apr 130K 228K
    12:30 USD Average Weekly Hours Apr 34.2 34.2
    12:30 USD Unemployment Rate Apr 4.20% 4.20%
    12:30 USD Average Hourly Earnings M/M Apr 0.30% 0.30%
    14:00 USD Factory Orders M/M Mar 4.20% 0.60%

     



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  • Risk Sentiment Sours on US GDP Contraction, Recession Fears Mount

    Risk Sentiment Sours on US GDP Contraction, Recession Fears Mount


    Risk sentiment soured as US session commenced after data showed the economy unexpectedly contracted in the first quarter. Although the decline was heavily influenced by a surge in imports, which mechanically subtract from GDP calculations, the result still serves as a stark reminder that economic momentum was already faltering even before the full impact of President Donald Trump’s reciprocal tariffs in April

    The weak GDP print has reignited recession fears, and a downturn may have already begun. This narrative is also supported by poor ADP employment report. Attention now turns squarely to Friday’s non-farm payroll data. A meaningful uptick in the unemployment rate or significant weakness in job creation would ring alarm bells for the administration, investors, and Fed alike. W

    In currency markets, the initial reaction has seen a mild shift toward Dollar, which is currently the strongest performer of the day, followed by the Loonie and Swiss Franc. On the other side, Yen, Sterling, and Kiwi are underperforming. However, these rankings remain fluid and may change quickly depending on how risk sentiment evolves in the coming sessions.

    Technically, a focus is now on AUD/USD. Break of 0.6343 support, following broader risk aversion, will confirm short term topping at 0.6448. Deeper decline should then be seen to 38.2% retracement of 0.5913 to 0.6448 at 0.6244. Further break there will target 61.8% retracement at 0.6117.

    In Europe, at the time of writing, FTSE is down -0.28%. DAX is down -0.37%. CAC is down -0.19%. UK 10-year yield is down -0.035 at 4.446. Germany 10-year yield is down -0.04 at 2.459. Earlier in Asia, Nikkei rose 0.57%. Hong Kong HSI rose 0.51%. China Shanghai SSE fell -0.23%. Singapore Strait Times rose 0.72%. Japan 10-year JGB yield closed flat at 1.315.

    US GDP shrinks -0.3% annualized in Q1, price pressures building up

    The US economy unexpectedly contracted in the Q1, with GDP shrinking at an annualized rate of -0.3%, marking the first decline since Q2 2022 and falling well short of expectations for modest 0.4% growth.

    The surprise contraction was driven by a surge in imports and a pullback in government spending, which more than offset gains in investment, consumer spending, and exports.

    Compounding the disappointing headline figure, inflation pressures showed renewed strength. The GDP price index jumped to 3.7% yoy, significantly above the 3.1% yoy forecast and accelerating from 2.3% yoy in Q4.

    US ADP jobs rise just 62k in Apr, well below expectations

    US ADP private sector employment rose by just 62k in April, sharply missing expectations of a 130k increase and marking a notable slowdown in hiring.

    Gains were split between goods-producing industries, which added 26k jobs, and service-providing sectors, which contributed 34k. By establishment size, medium-sized firms led with 40k new jobs, while small and large businesses added 11k and 12k, respectively.

    Pay trends were mixed. Job-stayers saw wage growth slow slightly to 4.5% yoy. Job-changers experienced an uptick in pay increases from 6.7% yoy to 6.9% yoy.

    ADP Chief Economist Nela Richardson described the tone as one of “unease,” as employers balance strong economic signals against growing uncertainty tied to fiscal policy and consumer sentiment.

    Canada’s GDP contracts -0.2% mom in Feb, weakness broad-based across sectors

    Canada’s economy unexpectedly shrank by -0.2% mom in February, missing expectations of flat growth, as a broad-based downturn weighed on output.

    Goods-producing sectors led the decline with a -0.6% mom drop, particularly from mining, quarrying, and oil and gas extraction, as well as construction.

    Sservices sector also edged lower by -0.1% mom, dragged down by transportation, warehousing, and real estate

    12 out of 20 industrial sectors posting declines.

    Looking ahead, preliminary data suggests a modest rebound of 0.1% mom in March, led by gains in mining, retail trade, and transportation.

    Eurozone GDP beats expectation of 0.4% qoq growth, EU up 0.3% qoq

    Eurozone GDP expanded by 0.4% qoq in Q1, doubling market expectations of 0.2% and signaling a stronger-than-anticipated start to the year. Across the broader EU, GDP rose by 0.3% qoq.

    On a year-on-year basis, seasonally adjusted GDP grew 1.2% in the Eurozone and 1.4% in the EU, matching growth rates from the previous quarter.

    Ireland led the regional performance with a sharp 3.2% quarterly increase, followed by Spain and Lithuania with 0.6% growth. Hungary was the only member state to post a quarterly contraction, down -0.2%.

    Swiss KOF falls to 97.1, outlook considerably subdued

    The Swiss KOF Economic Barometer slumped to 97.1 in April, down sharply from 103.9 and well below the expected 102.0, marking its first drop below the medium-term average this year.

    The KOF Swiss Economic Institute noted that the outlook for the Swiss economy is now “considerably subdued,” as broad-based weakness weighed on the indicator.

    According to KOF, the sharp deterioration was primarily driven by a significant setback in manufacturing sentiment, with additional pressure seen across the hospitality and broader services sectors. Financial and insurance services were the only areas showing relative stability.

    Australia’s trimmed mean CPI returns to RBA’s target band, services inflation eases further

    Australia’s headline CPI was unchanged at 2.4% yoy in Q1, above expectations of a slight decline to 2.2% yoy. On a quarterly basis, CPI rose 0.9% qoq, also exceeding forecast of 0.8% qoq.

    The closely watched trimmed mean CPI, a core inflation gauge, slowed from 3.3% yoy to 2.9% yoy , falling back within RBA’s 2–3% target range for the first time since 2021, in line with market expectations. However, the quarterly increase of 0.7% qoq was a touch higher than the anticipated 0.6% qoq.

    Annual goods inflation accelerated from 0.8% yoy to 1.3% yoy, driven by a notable rebound in electricity prices. Services inflation eased from 4.3% yoy to 3.7% yoy, its lowest since mid-2022, amid broad-based moderation in rent and insurance costs.

    NZ ANZ business confidence falls to 49.3, inflation expectations steady

    New Zealand’s ANZ Business Confidence fell sharply in April, dropping from 57.5 to 49.3. The own activity outlook also edged lower from 48.6 to 47.7.

    ANZ noted the decline may reflect growing apprehension over the global economic outlook, particularly uncertainty stemming from the escalating US-China trade war and broader policy unpredictability from the US administration.

    Cost expectations three months ahead surged from 74.1 to 77.9, the highest level since September 2023. This contrasts with a slight dip in pricing intentions, which eased from 51.3 to 49.4. Inflation expectations one year out remained largely steady at 2.65%.

    Japan’s industrial output slides -1.1% mom on auto weakness

    Japan’s industrial production fell by -1.1% mom in March, significantly worse than the anticipated -0.7% mom decline.

    According to the Ministry of Economy, Trade and Industry, the sharp drop was led by a -5.9% mom fall in motor vehicle output. Notably, regular passenger car production slipped -4.1% mom due to weaker export demand, while small vehicle output plunged -23.2% mom, reflecting disruptions in auto parts supply chains.

    The slump in production comes against the backdrop of rising trade tensions, with US President Donald Trump imposing a 25% tariff on car and truck imports and a sweeping 24% tariff on all Japanese goods, later temporarily reduced to 10%.

    Japanese manufacturers surveyed by METI project a recovery ahead, with output expected to rise 1.3% mom in April and 3.9% mom in May. But ministry officials remain cautious. “The environment surrounding production remains highly uncertain,” a METI representative warned, adding that manufacturers are clearly worried about the impact of US tariffs, though no changes to production plans have been formally announced yet.

    Also released, retail sales rose 3.1% yoy in March, below expectations of 3.6%. Still, the result marks the 37th consecutive month of gains, indicating that domestic consumption has yet to show significant signs of stress.

    China’s factory activity slumps on trade conflicts, optimism near record lows

    China’s factory activity slumped sharply in April as official NBS Manufacturing PMI dropped from 50.5 to 49.0, its lowest level since December 2023 and below expectations of 49.9. Non-manufacturing PMI also weakened from 50.8 to 50.4.

    The decline points to early signs of strain from escalating trade tensions, with NBS citing “sharp changes in the external environment” as a key driver.

    Private-sector data painted a similarly cautious picture. Caixin Manufacturing PMI dropped to 50.4, its lowest in three months and just narrowly remaining in expansion.

    Caixin’s Senior Economist Wang Zhe noted that while production and demand grew modestly, the pace has slowed and forward-looking optimism weakened significantly—plunging to the third-lowest level ever recorded. Trade-related uncertainty was a key concern for firms, weighing heavily on sentiment despite hopes for more policy support.

    The April PMIs point to early-stage fallout from the China-US tariff standoff. Businesses are already reporting shrinking employment, delayed logistics, and inventory drawdowns. With both consumer and business confidence faltering, the government faces growing pressure to deploy stimulus measures. Unless domestic demand recovers and external risks subside, China’s economy could face more headwinds in Q2 and beyond.

    EUR/USD Mid-Day Outlook

    Daily Pivots: (S1) 1.1362; (P) 1.1394; (R1) 1.1418; More…

    EUR/USD is still bounded in tight range and intraday bias stays neutral. On the downside, break of 1.1306 will extend the correction from 1.1572. But strong support should be seen from 38.2% retracement of 1.0176 to 1.1572 at 1.1039 to contain downside. On the upside, break of 1.1572 will resume larger up trend.

    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 1.0792) holds.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    23:50 JPY Industrial Production M/M Mar P -1.10% -0.70% 2.30%
    23:50 JPY Retail Trade Y/Y Mar 3.10% 3.60% 1.40% 1.30%
    01:00 NZD ANZ Business Confidence Apr 49.3 57.5
    01:30 AUD Monthly CPI Y/Y Mar 2.40% 2.40%
    01:30 AUD CPI Q/Q Q1 0.90% 0.80% 0.20%
    01:30 AUD CPI Y/Y Q1 2.40% 2.20% 2.40%
    01:30 AUD RBA Trimmed Mean CPI Q/Q Q1 0.70% 0.60% 0.50%
    01:30 AUD RBA Trimmed Mean CPI Y/Y Q1 2.90% 2.90% 3.20% 3.30%
    01:30 CNY NBS Manufacturing PMI Apr 49 49.9 50.5
    01:30 CNY NBS Non-Manufacturing PMI Apr 50.4 50.7 50.8
    01:45 CNY Caixin Manufacturing PMI Apr 50.4 49.9 51.2
    05:00 JPY Housing Starts Y/Y Mar 39.10% 1.00% 2.40%
    05:30 EUR France GDP Q/Q Q1 P 0.10% 0.10% -0.10%
    06:00 EUR Germany Import Price Index M/M Mar -1.00% -0.70% 0.30%
    06:00 EUR Germany Retail Sales M/M Mar -0.20% -0.40% 0.80%
    07:00 CHF KOF Economic Barometer Apr 97.1 102 103.9
    07:55 EUR Germany Unemployment Change Mar 4K 15K 26K
    07:55 EUR Germany Unemployment Rate Mar 6.30% 6.30% 6.30%
    08:00 EUR Germany GDP Q/Q Q1 P 0.20% 0.20% -0.20%
    08:00 CHF UBS Economic Expectations Apr -51.6 -10.7
    09:00 EUR Eurozone GDP Q/Q Q1 P 0.40% 0.20% 0.20%
    12:00 EUR Germany CPI M/M Apr P 0.40% 0.30% 0.30%
    12:00 EUR Germany CPI Y/Y Apr P 2.10% 2.20%
    12:15 USD ADP Employment Change Apr 62K 130K 155K 147K
    12:30 CAD GDP M/M Feb -0.20% 0.00% 0.40%
    12:30 USD GDP Annualized Q1 P -0.30% 0.40% 2.40%
    12:30 USD GDP Price Index Q1 P 3.70% 3.10% 2.30%
    12:30 USD Employment Cost Index Q1 0.90% 0.90% 0.90%
    13:45 USD Chicago PMI Apr 45.9 47.6
    14:00 USD Personal Income M/M Mar 0.40% 0.80%
    14:00 USD Personal Spending Mar 0.60% 0.40%
    14:00 USD PCE Price Index M/M Mar 0% 0.30%
    14:00 USD PCE Price Index Y/Y Mar 2.20% 2.50%
    14:00 USD Core PCE Price Index M/M Mar 0.10% 0.40%
    14:00 USD Core PCE Price Index Y/Y Mar 2.60% 2.80%
    14:00 USD Pending Home Sales M/M Mar -0.30% 2%
    14:30 USD Crude Oil Inventories -0.6M 0.2M

     



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  • Markets Ignores Trade News Ahead of Data Barrage; Aussie Outperforms

    Markets Ignores Trade News Ahead of Data Barrage; Aussie Outperforms


    Global financial markets are largely steady ahead of a packed economic calendar, with traders bracing for volatility as Eurozone and US GDP figures, as well as US PCE inflation data, are due shortly. Despite negative signals from China’s latest PMI reports, and another round of trade headlines, market reactions remain muted.

    Risk sentiment is cautiously tilted to the positive side, reflected in the stronger performance of commodity-linked currencies like Australian, New Zealand, and Canadian Dollars. But major moves have yet to materialize. Euro, Sterling, and Yen are on the softer side, while Dollar and Swiss Franc are mixed.

    Trade developments, which dominated headlines in recent weeks, offered some positive news but failed to stir markets significantly. US President Donald Trump signed a set of executive orders to ease the impact of automotive tariffs, including provisions for credits and relief on other levies. Commerce Secretary Howard Lutnick hinted at a breakthrough with one country to permanently remove reciprocal tariffs, though withheld specifics.

    In Australia, Q1 CPI report slightly exceeded expectations on the headline but failed to derail market conviction on RBA policy. Crucially, the trimmed mean CPI—a preferred core measure—returned to within the RBA’s 2–3% target band for the first time since 2021. Services disinflation has also progressed notably. These trends, coupled with a slowing economic backdrop, have cemented expectations for a 25bps rate cut in May.

    Nevertheless, RBA’s path of easing is likely to remain steady and measured. Unless there is a material deterioration in the global or domestic outlook, the central bank is expected to proceed with one cut per quarter.

    Technically, AUD/NZD is extending the rebound from 1.0649 short term bottom today. Nevertheless, this rally is currently seen as a corrective move only. Hence, upside should be limited by 38.2% retracement of 1.1173 to 1.0649 at 1.0849. Break of 1.0742 minor support will turn bias back to the downside for retesting 1.0649, and possibly resuming larger fall. However, firm break of 1.0849 will raise the chance of near term bullish reversal, and target 61.8% retracement at 1.0973 next.

    In Asia, at the time of writing, Nikkei is up 0.30%. Hong Kong HSI is up 0.37%. China Shanghai SSE is down -0.09%. Singapore Strait Times is up 0.44%. Japan 10-year JGB yield is down -0.006 at 1.309. Overnight, DOW rose 0.75%. S&P 500 rose 0.58%. NASDAQ rose 0.55%. 10-year yield fell -0.043 to 4.173.

    Looking ahead, Eurozone GDP is the main focus in European session. Later in the day, Canada GDP will be a feature today. But most attention would be on US ADP employment, Q1 GDP dance, March personal income and spending, and PCE inflation.

    Australia’s trimmed mean CPI returns to RBA’s target band, services inflation eases further

    Australia’s headline CPI was unchanged at 2.4% yoy in Q1, above expectations of a slight decline to 2.2% yoy. On a quarterly basis, CPI rose 0.9% qoq, also exceeding forecast of 0.8% qoq.

    The closely watched trimmed mean CPI, a core inflation gauge, slowed from 3.3% yoy to 2.9% yoy , falling back within RBA’s 2–3% target range for the first time since 2021, in line with market expectations. However, the quarterly increase of 0.7% qoq was a touch higher than the anticipated 0.6% qoq.

    Annual goods inflation accelerated from 0.8% yoy to 1.3% yoy, driven by a notable rebound in electricity prices. Services inflation eased from 4.3% yoy to 3.7% yoy, its lowest since mid-2022, amid broad-based moderation in rent and insurance costs.

    NZ ANZ business confidence falls to 49.3, inflation expectations steady

    New Zealand’s ANZ Business Confidence fell sharply in April, dropping from 57.5 to 49.3. The own activity outlook also edged lower from 48.6 to 47.7.

    ANZ noted the decline may reflect growing apprehension over the global economic outlook, particularly uncertainty stemming from the escalating US-China trade war and broader policy unpredictability from the US administration.

    Cost expectations three months ahead surged from 74.1 to 77.9, the highest level since September 2023. This contrasts with a slight dip in pricing intentions, which eased from 51.3 to 49.4. Inflation expectations one year out remained largely steady at 2.65%.

    Japan’s industrial output slides -1.1% mom on auto weakness

    Japan’s industrial production fell by -1.1% mom in March, significantly worse than the anticipated -0.7% mom decline.

    According to the Ministry of Economy, Trade and Industry, the sharp drop was led by a -5.9% mom fall in motor vehicle output. Notably, regular passenger car production slipped -4.1% mom due to weaker export demand, while small vehicle output plunged -23.2% mom, reflecting disruptions in auto parts supply chains.

    The slump in production comes against the backdrop of rising trade tensions, with US President Donald Trump imposing a 25% tariff on car and truck imports and a sweeping 24% tariff on all Japanese goods, later temporarily reduced to 10%.

    Japanese manufacturers surveyed by METI project a recovery ahead, with output expected to rise 1.3% mom in April and 3.9% mom in May. But ministry officials remain cautious. “The environment surrounding production remains highly uncertain,” a METI representative warned, adding that manufacturers are clearly worried about the impact of US tariffs, though no changes to production plans have been formally announced yet.

    Also released, retail sales rose 3.1% yoy in March, below expectations of 3.6%. Still, the result marks the 37th consecutive month of gains, indicating that domestic consumption has yet to show significant signs of stress.

    China’s factory activity slumps on trade conflicts, optimism near record lows

    China’s factory activity slumped sharply in April as official NBS Manufacturing PMI dropped from 50.5 to 49.0, its lowest level since December 2023 and below expectations of 49.9. Non-manufacturing PMI also weakened from 50.8 to 50.4.

    The decline points to early signs of strain from escalating trade tensions, with NBS citing “sharp changes in the external environment” as a key driver.

    Private-sector data painted a similarly cautious picture. Caixin Manufacturing PMI dropped to 50.4, its lowest in three months and just narrowly remaining in expansion.

    Caixin’s Senior Economist Wang Zhe noted that while production and demand grew modestly, the pace has slowed and forward-looking optimism weakened significantly—plunging to the third-lowest level ever recorded. Trade-related uncertainty was a key concern for firms, weighing heavily on sentiment despite hopes for more policy support.

    The April PMIs point to early-stage fallout from the China-US tariff standoff. Businesses are already reporting shrinking employment, delayed logistics, and inventory drawdowns. With both consumer and business confidence faltering, the government faces growing pressure to deploy stimulus measures. Unless domestic demand recovers and external risks subside, China’s economy could face more headwinds in Q2 and beyond.

    GBP/JPY Daily Outlook

    Daily Pivots: (S1) 190.39; (P) 190.87; (R1) 191.34; More…

    Intraday bias in GBP/JPY is turned neutral first with current retreat. Rebound from 184.35 is in favor to continue as long as 189.28 minor support holds. Above 191.70 will target 195.95 resistance next. However, break of 189.28 will suggest that the rebound has completed and turn bias back to the downside.

    In the bigger picture, price actions from 208.09 are seen as a correction to rally from 123.94 (2020 low). Strong support should be seen from 38.2% retracement of 123.94 to 208.09 at 175.94 to contain downside. However, sustained break of 175.94 will bring deeper fall even still as a correction.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    23:50 JPY Industrial Production M/M Mar P -1.10% -0.70% 2.30%
    23:50 JPY Retail Trade Y/Y Mar 3.10% 3.60% 1.40% 1.30%
    01:00 NZD ANZ Business Confidence Apr 49.3 57.5
    01:30 AUD Monthly CPI Y/Y Mar 2.40% 2.40%
    01:30 AUD CPI Q/Q Q1 0.90% 0.80% 0.20%
    01:30 AUD CPI Y/Y Q1 2.40% 2.20% 2.40%
    01:30 AUD RBA Trimmed Mean CPI Q/Q Q1 0.70% 0.60% 0.50%
    01:30 AUD RBA Trimmed Mean CPI Y/Y Q1 2.90% 2.90% 3.20% 3.30%
    01:30 CNY NBS Manufacturing PMI Apr 49 49.9 50.5
    01:30 CNY NBS Non-Manufacturing PMI Apr 50.4 50.7 50.8
    01:45 CNY Caixin Manufacturing PMI Apr 50.4 49.9 51.2
    05:00 JPY Housing Starts Y/Y Mar 1.00% 2.40%
    06:00 EUR Germany Import Price Index M/M Mar -0.70% 0.30%
    06:00 EUR Germany Retail Sales M/M Mar -0.40% 0.80%
    06:45 EUR France GDP Q/Q Q1 P 0.10% -0.10%
    07:00 CHF KOF Economic Barometer Apr 102 103.9
    07:55 EUR Germany Unemployment Change Mar 15K 26K
    07:55 EUR Germany Unemployment Rate Mar 6.30% 6.30%
    08:00 EUR Germany GDP Q/Q Q1 P 0.20% -0.20%
    08:00 CHF UBS Economic Expectations Apr -10.7
    09:00 EUR Eurozone GDP Q/Q Q1 P 0.20% 0.20%
    12:00 EUR Germany CPI M/M Apr P 0.30% 0.30%
    12:00 EUR Germany CPI Y/Y Apr P 2.20%
    12:15 USD ADP Employment Change Apr 130K 155K
    12:30 CAD GDP M/M Feb 0.00% 0.40%
    12:30 USD GDP Annualized Q1 P 0.40% 2.40%
    12:30 USD GDP Price Index Q1 P 3.10% 2.30%
    12:30 USD Employment Cost Index Q1 0.90% 0.90%
    13:45 USD Chicago PMI Apr 45.9 47.6
    14:00 USD Personal Income M/M Mar 0.40% 0.80%
    14:00 USD Personal Spending Mar 0.60% 0.40%
    14:00 USD PCE Price Index M/M Mar 0% 0.30%
    14:00 USD PCE Price Index Y/Y Mar 2.20% 2.50%
    14:00 USD Core PCE Price Index M/M Mar 0.10% 0.40%
    14:00 USD Core PCE Price Index Y/Y Mar 2.60% 2.80%
    14:00 USD Pending Home Sales M/M Mar -0.30% 2%
    14:30 USD Crude Oil Inventories -0.6M 0.2M

     



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  • Aussie Inflation Set to Cement RBA May Cut; Month-End Calm Prevails

    Aussie Inflation Set to Cement RBA May Cut; Month-End Calm Prevails


    The forex markets are generally holding steady today, with all major pairs and crosses bounded within yesterday’s range. While month-end lull is at play, caution is also dominating sentiment as traders prepare for a heavy barrage of economic data scheduled from Wednesday through Friday. Key reports include US GDP and non-farm payrolls, along with Eurozone GDP and CPI flash estimates.

    Also, in the upcoming Asian session, Australia’s Q1 inflation report will be a major highlight. Focus will be on whether the closely watched trimmed mean CPI falls back within the RBA’s 2-3% target range for the first time since 2021. If realized, this would solidify expectations for a 25bps rate cut in May, a view that has become the base case for three of Australia’s big four banks.

    Some speculation persists about the possibility of a larger 50bps cut by RBA, especially given mounting trade risks. But many analysts argue that such a move would risk sending an unnecessary panic signal to markets. Still, any deep downside surprise in tomorrow’s inflation data could quickly shift those odds.

    Technically, EUR/AUD’s price actions from 1.8554 are seen as a triangle consolidation pattern. Break of 1.8014 resistance will argue that the pattern has completed, and larger rally from 1.5963 is ready to resume through 1.8554 high. However, firm break of 38.2% retracement of 1.5963 to 1.8854 at 1.7750 will dampen this view, and indicate that deeper correction is underway.

    Overall for the week so far, Yen is staying as the strongest on, followed by Sterling, and then Swiss Franc. Kiwi is the worst, followed by Dollar, and then Loonie. Euro and Aussie are positioning in the middle.

    In Europe, at the time of writing, FTSE is up 0.12%. DAX is up 0.56%. CAC is down -0.26%. UK 10-year yield is down -0.026 at 4.487. Germany 10-year yield is down -0.027 at 2.502. Earlier in Asia, Japan was on holiday. Hong Kong HSI rose 0.16%. China Shanghai SSE fell -0.05%. Singapore Strait Times fell -0.17%.

    ECB consumer survey shows inflation expectations ticking higher

    ECB’s Consumer Expectations Survey for March showed that consumers are raising their inflation views in a relatively measured manner rather than in a panic. Overall, the results present a slight inflationary concern on one side, but still subdued growth prospects on the other.

    Median expectations for inflation over the next 12 months rose by 0.3% to 2.9%, the highest level since April 2024.

    Looking further ahead, expectations for inflation three years out edged up by 0.1% to 2.5%, also hitting a one-year high.

    Newly introduced five-year inflation expectations remained stable at 2.1%, suggesting longer-term expectations remain relatively anchored.

    Uncertainty about the inflation outlook remained at its lowest level since January 2022.

    On the broader economic front, the survey indicated that consumers’ income growth expectations stayed unchanged at a modest 1.0% over the next year, while expected nominal spending growth edged down to 3.4%.

    Economic growth expectations remained weak, steady at -1.2% for the next 12 months.

    ECB’s Cipollone warns trade fragmentation could severely hit global and Eurozone growth

    ECB Executive Board member Piero Cipollone warned today that the recent surge in trade policy uncertainty poses a material risk to Eurozone growth. In a speech, he highlighted internal ECB research suggesting that rising uncertainty could trim Eurozone business investment by -1.1% in the first year, while real GDP growth could fall by about -0.2% in 2025-26.

    Financial market volatility, elevated due to the global trade tensions, could further drag on growth. ECB staff estimate that the observed increase in volatility alone could shave an additional -0.2% off Eurozone GDP in 2025.

    Cipollone emphasized that over the medium term, tariffs will have an “unambiguously recessionary effect” across both economies imposing and receiving restrictions, and noted that the ability of exchange rates to “absorb tariff shocks” appears to have diminished.

    ECB’s analysis of fragmentation scenarios paints an even bleaker picture. In a mild East-West decoupling, global output could drop by nearly -2%. In a severe decoupling where trade between blocs halts entirely, global output could plunge by up to -9%.

    Trade-dependent economies would bear the heaviest losses, with the EU facing a GDP decline of between -2.4% and -9.5% depending on the severity. Notably, the US itself could suffer a near -11% contraction in the most extreme case if it “imposed additional trade restrictions against western and neutral economies”.

    While the growth impact of trade fragmentation is clear, the inflationary effects remain less certain. For the Eurozone, recessionary forces, stronger real interest rates, and Euro appreciation could generate a “disinflationary: trend in the near to medium term.

    German Gfk consumer sentiment rises to -20.6, domestic political stability offsets trade concerns

    Germany’s GfK Consumer Sentiment Index for May rose from -24.3 to -20.6 and outperforming expectations for a decline to -26.0.

    In April, key underlying indicators also showed encouraging signs. Income expectations rose sharply for a second straight month, climbing 7.4 points to 4.3, their highest level since October 2024. Economic expectations increased modestly for a third consecutive month. Willingness to save fell, while willingness to buy improved slightly.

    Rolf Bürkl, consumer expert at NIM, noted that US President Donald Trump’s aggressive tariff announcements in early April have “not yet had lasting impacts on consumer sentiment” in Germany.

    Instead, German consumers appear more reassured by the domestic political backdrop, particularly the successful conclusion of coalition negotiations and the imminent formation of a new government. The easing of political uncertainty has helped mitigate potential negative effects from external trade tensions.

    RBA’s Kent highlights surge in FX volatility, stresses importance of market standards

    In a speech today, RBA Assistant Governor Christopher Kent noted that early April saw some of the most extreme movements outside of the global financial crisis. He highlighted that Australian Dollar fluctuated within a range of 4 US cents and at one point suffered a 4.5% daily decline against the greenback — an unusually large move.

    Kent also pointed out that broader measures of FX volatility, such as those derived from options markets, spiked to levels last seen during the pandemic, with liquidity conditions deteriorating noticeably.

    While market conditions have calmed somewhat in recent days, Kent emphasized that such episodes serve as a reminder of the crucial role played by the Foreign Exchange Global Code.

    He stressed that in periods of heightened uncertainty, the Code’s standardized practices and commitment to transparency help maintain trust between participants and ensure smoother market functioning even amid significant economic shocks.

    USD/CHF Mid-Day Outlook

    Daily Pivots: (S1) 0.8159; (P) 0.8239; (R1) 0.8280; More….

    No change in USD/CHF’s outlook and intraday bias remains neutral. On the upside, above 0.8333 will resume the rebound from 0.8038 short term bottom. But upside should be limited by 38.2% retracement of 0.9200 to 0.8038 at 0.8482. On the downside, below 0.8196 minor support will bring retest of 0.8038. Firm break there will resume larger down trend.

    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 0.8783) holds. Sustained break of 0.8079 will target 100% projection at 0.7382.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    23:01 GBP BRC Shop Price Index Y/Y Apr -0.10% -0.20% -0.40%
    06:00 EUR Germany GfK Consumer Sentiment May -20.6 -26 -24.5 -24.3
    08:00 EUR Eurozone M3 Money Supply Y/Y Mar 3.60% 4.00% 4.00% 3.90%
    09:00 EUR Eurozone Economic Sentiment Apr 93.6 94.5 95.2 95
    09:00 EUR Eurozone Industrial Confidence Apr -11.2 -10.7 -10.6 -10.7
    09:00 EUR Eurozone Services Sentiment Apr 1.4 2.4 2.2
    09:00 EUR Eurozone Consumer Confidence Apr F -16.7 -16.7 -16.7
    12:30 USD Goods Trade Balance (USD) Mar P -162.0B -146.3B -147.9B
    12:30 USD Wholesale Inventories Mar P 0.50% 0.70% 0.30%
    13:00 USD S&P/Case-Shiller Home Price Indices Y/Y Feb 4.80% 4.70%
    13:00 USD Housing Price Index M/M Feb 0.30% 0.20%
    14:00 USD Consumer Confidence Apr 87.1 92.9

     



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  • Markets Steady as Trade Headlines Stir Little Reaction

    Markets Steady as Trade Headlines Stir Little Reaction


    Global trading remains subdued, with Japanese markets closed for Showa holiday and investors showing little urgency to take new positions. Canadian dollar saw some choppiness following election results, where the ruling Liberal Party retained power but fell short of a parliamentary majority. Despite the initial volatility, Loonie remained largely range-bound. Broader price action across currency markets has been lackluster, with traders largely holding off on bold moves ahead of major economic data releases later in the week.

    Trade tensions continue to dominate headlines, though markets appear largely desensitized for now. Even news that the Trump administration is preparing to soften the impact of auto tariffs generated minimal reaction. According to reports, the White House plans to reduce the burden on domestic automakers by easing tariffs on imported parts and preventing overlapping duties on finished vehicles, particularly steel and aluminum. Refunds for tariffs already paid are also expected. A White House official confirmed the details, saying a formal announcement would come Tuesday.

    The geopolitical side of trade is also evolving. Foreign ministers from the BRICS countries met to discuss a coordinated response to the latest wave of US tariffs. China, having faced the most severe hit with 145% tariffs on its exports to the US, pushed for a more confrontational stance. However, the final communique is expected to strike a critical yet restrained tone, signaling frustration without escalating tensions further.

    Markets will keep an eye on today’s consumer sentiment releases from Germany and the US, although any impact may be fleeting. The next focus is on tomorrow’s releases of Eurozone and US GDP figures. With recession concerns resurfacing globally, these numbers could shape expectations for the next moves Fed and ECB.

    In terms of currency performance so far this week, Yen leads the pack, followed by Sterling and Swiss Franc. At the other end, Kiwi has reversed to become the weakest performer, trailed by Loonie and Dollar. Euro and Aussie are holding to middle ground.

    Technically, GBP/USD’s breach of 1.3433 (2024 high) suggests that up trend from 1.0351 (2022 low) is trying to resume. Sustained trading above 1.3433 will confirm this bullish case. Next near term target will be 61.8% projection of 1.2706 to 1.3422 from 1.3232 at 1.3674. However, break of 1.3232 support will indicate rejection from 1.3433, and bring deeper decline back to 55 D EMA (now at 1.2978) and possibly below.

    In Asia, Japan is on holiday. At the time of writing, Hong Kong HSI is up 0.11%. China Shanghai SSE is down -0.13%. Singapore Strait Times is up 0.20%. Overnight, DOW rose 0.28%. S&P 500 rose 0.06%. NASDAQ fell -0.10%. 10-year yield fell -0.050 to 4.216.

    RBA’s Kent highlights surge in FX volatility, stresses importance of market standards

    In a speech today, RBA Assistant Governor Christopher Kent noted that early April saw some of the most extreme movements outside of the global financial crisis. He highlighted that Australian Dollar fluctuated within a range of 4 US cents and at one point suffered a 4.5% daily decline against the greenback — an unusually large move.

    Kent also pointed out that broader measures of FX volatility, such as those derived from options markets, spiked to levels last seen during the pandemic, with liquidity conditions deteriorating noticeably.

    While market conditions have calmed somewhat in recent days, Kent emphasized that such episodes serve as a reminder of the crucial role played by the Foreign Exchange Global Code.

    He stressed that in periods of heightened uncertainty, the Code’s standardized practices and commitment to transparency help maintain trust between participants and ensure smoother market functioning even amid significant economic shocks.

    Canadian Dollar steady as Liberals projected to retain power, but lack majority

    Canadian Dollar remained steady following the country’s general election, with only a brief uptick in volatility as early results began to unfold. The ruling Liberal Party, led by Prime Minister Mark Carney, is projected to retain power. But the lack of clarity over whether they will secure a majority quickly tempered any bullish reaction in the Loonie.

    With the Liberals leading in 156 districts versus the Conservatives’ 145, the party still falls short of the 172 seats needed for a majority in the 343-seat House of Commons.

    Carney’s leadership, a former head of both BoC and BoE, is seen as a sign of stability for the country, offering some reassurance to investors. However, his tougher stance toward the US over tariffs suggests that trade relationship could face renewed challenges in the months ahead, with more difficult negotiations expected.

    Technically, USD/CAD is still extending the consolidations from 1.3780 short term bottom. Another bounce could be seen through 1.3903 minor resistance. But upside should be limited by 1.4150 support turned resistance (38.2% retracement of 1.4791 to 1.3780 at 1.4166). Fall from 1.4791 is expected to resume at a later stage.

    AUD/USD Daily Report

    Daily Pivots: (S1) 0.6389; (P) 0.6412; (R1) 0.6456; More…

    Intraday bias in AUD/USD is back on the upside with breach of 0.6438. Rise from 0.5913 should be resuming for 61.8% retracement of 0.6941 to 0.5913 at 0.6548. However, firm break of 0.6343 support will confirm short term topping, and turn bias back to the downside for 55 D EMA (now at 0.6310) and below.

    In the bigger picture, as long as 55 W EMA (now at 0.6440) 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
    23:01 GBP BRC Shop Price Index Y/Y Apr -0.10% -0.20% -0.40%
    06:00 EUR Germany GfK Consumer Sentiment May -26 -24.5
    08:00 EUR Eurozone M3 Money Supply Y/Y Mar 4.00% 4.00%
    09:00 EUR Eurozone Economic Sentiment Apr 94.5 95.2
    09:00 EUR Eurozone Industrial Confidence Apr -10.7 -10.6
    09:00 EUR Eurozone Services Sentiment Apr 2.4
    09:00 EUR Eurozone Consumer Confidence Apr F -16.7 -16.7
    12:30 USD Goods Trade Balance (USD) Mar P -146.3B -147.9B
    12:30 USD Wholesale Inventories Mar P 0.70% 0.30%
    13:00 USD S&P/Case-Shiller Home Price Indices Y/Y Feb 4.80% 4.70%
    13:00 USD Housing Price Index M/M Feb 0.30% 0.20%
    14:00 USD Consumer Confidence Apr 87.1 92.9

     



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  • Markets Stay Subdued Ahead of Big Data and Earnings; Trade Talks Remain in Focus

    Markets Stay Subdued Ahead of Big Data and Earnings; Trade Talks Remain in Focus


    Trading remains notably subdued across global financial markets today as investors adopt a cautious stance. On deck are quarterly earnings from four of the “Magnificent Seven”—Amazon, Apple, Meta Platforms, and Microsoft. On top of that, key releases including US and Eurozone GDP, US non-farm payrolls, and Eurozone CPI flash inflation data will provide critical insights into the impacts of recent trade tensions on the economy.

    Sentiment is caught between two powerful forces. On the pessimistic side, growing risks of a global recession stemming from escalating trade disruptions are weighing heavily. According to a Reuters poll, three-quarters of economists have downgraded their 2025 global growth forecasts, cutting the median forecast to 2.7% from 3.0% just a few months ago. Alarmingly, 60% of surveyed economists rated the risk of a global recession this year as either “high” or “very high.” Investors will be keenly watching this week’s economic releases for validation—or rejection—of these rising recession fears.

    However, there is also a glimmer of optimism. Any tangible breakthrough in ongoing trade negotiations could quickly improve sentiment. US Treasury Secretary Scott Bessent emphasized that “it’s up to China to de-escalate,” highlighting that China’s trade surplus with the US makes their current tariff burden “unsustainable.” Bessent also hinted that India could soon become one of the first countries to finalize a new trade agreement with the US, keeping markets alert for needed boost to sentiment.

    In the currency markets, Kiwi is the weakest performer of the day so far, followed by Swiss Franc and Loonie. On the stronger side, Ten is leading gains, followed by Sterling, and then Aussie. Dollar and Euro are sitting in the middle of the pack.

    Technically, AUD/NZD’s extended recovery suggests that a short term bottom was formed at 1.0649, on bullish convergence condition in 4H MACD. Stronger rally is in favor for the near term. But outlook will stay bearish as long as 38.2% retracement of 1.1173 to 1.0649 at 1.0849 holds. Another decline through 1.0649 is expected at a later stage once the current consolidation completes—especially if RBA moves toward faster rate cuts in response to weakening economic conditions.

    In Europe, at the time of writing, FTSE is up 0.16%. DAX is up 0.55%. CAC is up 0.87%. UK 10-year yield is up 0.039 at 4.521. Germany 10-year yield is up 0.052 at 2.515. Earlier in Asia, Nikkei rose 0.38%. Hong Kong HSI fell -0.04%. China Shanghai SSE fell -0.20%. Singapore Strait Times fell -0.31%. Japan 10-year JGB yield fell -0.025 to 1.315.

    IMF warns US tariffs to outweigh Germany’s stimulus, recommends just one more ECB cut

    Higher infrastructure spending in Germany will offer some support to Europe’s growth outlook, but it won’t be enough to offset the damage caused by US tariffs, according to Alfred Kammer, director of the European department at the IMF.

    Speaking to CNBC, Kammer stressed that “it’s the tariffs and the trade tensions which weigh on the outlook rather than the positive effects on the fiscal side.”

    He noted that the IMF has delivered a “meaningful downgrade” to growth forecasts for Europe’s advanced economies and an even steeper downgrade for the emerging Eurozone countries over the next two years. The IMF cut its Eurozone growth forecasts by -0.2% for each of the next two years, now projecting growth of just 0.8% in 2025 and 1.2% in 2026.

    Kammer also outlined a clear policy recommendation for ECB. Acknowledging the success of the disinflation efforts, he suggested that ECB has room for “one more 25-basis-point cut in the summer,” after which it should hold rates steady at around 2%, barring major shocks.

    ECB’s Villeroy reaffirms gradual rate cut, sees no recession risk

    French ECB Governing Council member Francois Villeroy de Galhau expressed confidence today that there is no imminent recession risk for either France or Europe, while inflation continues to decline.

    Speaking to RTL Radio, Villeroy also reaffirmed that the ECB retains “a gradual margin for rate cuts”, despite global uncertainties.

    Villeroy also issued a strong warning about the risks stemming from US trade policies. He criticized the administration’s protectionist stance, saying it was “playing against the US economy and unfortunately also against the world economy.”

    He stressed that protectionism ultimately leads to “less growth and more inflation.”

    China reaffirms growth target, holds back on major stimulus

    China pledged its full confidence in achieving this year’s growth target of around 5%, vowing to implement timely and multiple support measures as the country is now in full-fledged trade war with the US. However, no major stimulus was announced immediately, giving the impression that Beijing is not in a rush to roll out large-scale interventions. Authorities appear inclined to first monitor the trade shock’s timing and magnitude before deciding on more aggressive measures.

    Zhao Chenxin, deputy head of the National Development and Reform Commission, stressed at a press conference today that China retains “ample policy reserves and plenty of policy space,” and highlighted plans to stabilize employment and strengthen public employment services.

    At a Politburo meeting chaired by President Xi Jinping last week, officials called for a “timely reduction” in interest rates and reserve requirement ratios to support the economy. Additional measures to aid struggling businesses, boost consumption among middle- and lower-income groups, and promote further development in technology and artificial intelligence were also emphasized.

    As a touch of optimism, official data released over the weekend showed China’s industrial profits returning to growth in the first quarter. Cumulative profits rose 0.8% yoy to CNY 1.5T, reversing a -0.3% decline seen in the first two months.

    GBP/USD Mid-Day Outlook

    Daily Pivots: (S1) 1.3268; (P) 1.3318; (R1) 1.3361; More…

    Intraday bias in GBP/USD is turned neutral first with today’s recovery. Correction from 1.3422 short term top could still extend, and break of 1.3232 will turn intraday bias back the downside. But in this case, downside should be contained by 38.2% retracement of 1.2099 to 1.3422 at 1.2917. On the upside, firm break of 1.3422/33 resistance zone will resume larger up trend.

    In the bigger picture, price actions from 1.3433 are seen as a corrective pattern to the up trend from 1.3051 (2022 low). Rise from 1.2099 could either be resuming the up trend, or the second leg of a consolidation pattern. Overall, GBP/USD should target 1.4248 key resistance (2021 high) on break of 1.3433 at a later stage.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    10:00 GBP CBI Realized Sales Apr -8 -20 -41

     



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  • Glimmers of Trade Optimism Lift Asian Markets, But Concrete Progress Still Elusive

    Glimmers of Trade Optimism Lift Asian Markets, But Concrete Progress Still Elusive


    There’s a cautious tone of optimism in Asian markets today, though gains are largely concentrated in Japan, South Korea, and Hong Kong. This moderate rally is being supported by a handful of headlines suggesting incremental movement in global trade diplomacy, even if concrete progress remains limited.

    One of the more notable developments comes from a Bloomberg report indicating that China is considering suspending its 125% tariffs on certain US imports, including medical equipment, industrial chemicals, and possibly even aircraft leases. While such a move would mark a significant de-escalation, it remains speculative at this stage.

    Adding to the mix, U.S. President Donald Trump pushed back on China’s claims that no talks were underway between Washington and Beijing. Trump insisted that “they had a meeting this morning,” although it was unclear who “they” referred to—even he conceded the ambiguity. With no official confirmation from either side, the market reaction has been understandably restrained.

    More tangible, however, was news from Washington of a “very successful” trade meeting between the US and South Korea. Treasury Secretary Scott Bessent expressed unexpected optimism following the bilateral “2+2” talks, suggesting that technical-level negotiations could begin as early as next week. South Korea is hoping to strike a deal with the US by July to avert impending tariffs. The news gave a noticeable lift to South Korean shipbuilding stocks, a sector highly sensitive to global trade developments.

    In Japan, Prime Minister Shigeru Ishiba unveiled an emergency economic package designed to cushion the impact of higher US tariffs. The stimulus includes corporate financing support, consumer-focused measures to boost domestic spending, and targeted relief such as subsidies for energy bills and fuel price reductions. This has added to the positive tone in Japanese equities, as the government shows readiness to act swiftly in cushioning external shocks and stabilizing demand.

    Currency markets are also reflecting shifting sentiment. Kiwi continues to lead the pack this week, followed by Aussie and Dollar. On the weaker end, safe-haven currencies like Swiss Franc, Yen, and Euro remain under some pressure as investors unwind defensive positions.

    Sterling and Loonie are holding in the middle of the pack, awaiting further direction from today’s retail sales reports out of the UK and Canada. Market participants will also be watching for any comments from SNB Chair Schlegel regarding the Franc’s recent strength amid global risk aversion.

    Technically, it’s possible that AUD/JPY’s fall from 102.39 has completed as a five-wave impulse at 86.03, which also marks the completion of the whole three-wave correction from 109.36. For now, further rise is in favor as long as 89.62 support holds. Next target is 55 D EMA (now at 92.97). Sustained trading above there will solidify bullish reversal, and target 38.2% retracement of 109.36 to 86.03 at 94.94 next.

    In Asia, at the time of writing, Nikkei is up 1.80%. Hong Kong HSI is up 1.05%. China Shanghai SSE is up 0.05%. Singapore Strait Times is down -0.02%. Japan 10-year JGB yield is up 0.028 at 1.337. Overnight, DOW rose 1.23%. S&P 500 rose 2.03%. NASDAQ rose 2.74%. 10-year yield fell -0.082 to 4.305.

    Tokyo CPI core surges to 3.4% in April, strengthening case for BoJ June hike

    Inflation in Japan’s capital city surged in April, with Tokyo core CPI (excluding food) accelerating from 2.4% yoy to 3.4% yoy, above the 3.2% yoy forecast. The more domestically focused core-core measure (excluding food and energy) also rose sharply, from 2.2% yoy to 3.1% yoy. Headline CPI jumped from 2.9% yoy to 3.5% yoy.

    Despite the upside surprise, BoJ is still expected to hold rates steady at its May 1 policy meeting as it gauges the broader impact of recent US tariffs and awaits progress in ongoing trade negotiations. However, with inflation gathering pace across key categories, market expectations are shifting toward a rate hike as soon as June.

    BoJ’s Ueda says G20 peers aAlign on tariff risks to trade and sentiment

    BoJ Governor Kazuo Ueda acknowledged growing global concern over the economic impact of tariffs, following discussions with international counterparts at a G20 finance ministers’ meeting.

    Speaking at a press conference, Ueda said many global policymakers “roughly had the same view” that tariffs weigh on trade activity, weaken business sentiment, and increase market volatility. He noted that these factors will be integrated into BoJ’s evolving assessment of Japan’s economic outlook and monetary policy.

    Ueda reaffirmed BoJ’s intention to raise interest rates gradually, provided underlying inflation continues to converge toward the 2% target. But he emphasized a cautious, data-dependent approach.

    “We would like to scrutinize various data that comes in, without pre-conception,” he said.

    Fed’s Kashkari: Trade shift could raise US borrowing costs

    Minneapolis Fed President Neel Kashkari highlighted the economic risks tied to shifts in the US trade balance and lingering uncertainty from ongoing trade disputes.

    Speaking at an event overnight, Kashkari noted that the US’s persistent trade deficit has long been supported by foreign capital inflows, which have helped keep interest rates low. However, if the U.S. were to move toward a trade surplus and lose its status as the “singular premier destination for capital”, borrowing costs could rise, along with the neutral interest rate.

    Kashkari emphasized that resolving current trade disputes with major partners could provide much-needed clarity for businesses and households, reducing the “extraordinary uncertainty” they currently face.

    He warned that a collective loss of confidence could quickly ripple through the economy, “really bring down the economy, really slow it down” and potentially triggering job losses. While such a downturn hasn’t materialized yet, Kashkari said it’s a risk he is “keeping a close eye on.”

    USD/CAD Daily Outlook

    Daily Pivots: (S1) 1.3830; (P) 1.3864; (R1) 1.3889; More…

    Intraday bias in USD/CAD stays mildly on the upside at this point. Recovery from 1.3780 short term bottom could extend higher. However, upside should be limited by 1.4150 support turned resistance (38.2% retracement of 1.4791 to 1.3780 at 1.4166. On the downside, firm break of 1.3780 will resume the whole fall from 1.4791.

    In the bigger picture, the break of 1.3976 resistance turned support (2022 high) and 55 W EMA (now at 1.3982) indicates that a medium term top is already in place at 1.4791. Fall from there would either be a correction to rise from 1.2005, or trend reversal. In either case, firm break of 38.2% retracement of 1.2005 (2021 low) to 1.4791 at 1.3727 will pave the way back to 61.8% retracement at 1.3069.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    23:01 GBP GfK Consumer Confidence Apr -23 -22 -19
    23:30 JPY Tokyo CPI Y/Y Apr 3.50% 2.90%
    23:30 JPY Tokyo CPI Core Y/Y Apr 3.40% 3.20% 2.40%
    23:30 JPY Tokyo CPI Core-Core Y/Y Apr 3.10% 2.20%
    06:00 GBP Retail Sales M/M Mar -0.60% 1%
    12:30 CAD Retail Sales M/M Feb -0.40% -0.60%
    12:30 CAD Retail Sales ex Autos M/M Feb 0.00% 0.20%
    14:00 USD UoM Consumer Sentiment Index Apr 50.7 50.8
    14:00 USD UoM Consumer Inflation Expectations Apr 6.70%

     



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  • Aussie Rises on Risk Rebound; RBA Keeps May Decision Open-Ended

    Aussie Rises on Risk Rebound; RBA Keeps May Decision Open-Ended


    Commodity currencies, including Australian, New Zealand, and Canadian Dollars, are trading broadly higher in today’s Asian session, buoyed by continued recovery in global stock markets. Sterling is also advancing alongside, supported by improving risk sentiment. Meanwhile, traditional safe havens like the Swiss Franc, Japanese Yen, are on the back, along with the greenback foot. Swiss Franc is particularly soft, pulling back after recent strong gains. Euro remains directionless in the middle of the pack, showing little inclination to break out against Dollar yet.

    In RBA’s minutes policymakers explicitly citing China’s response as a pivotal factor shaping Australia’s economic outlook and, by extension, future rate decisions. Given that China remains the only major economy actively retaliating against US tariffs, the fallout from a protracted trade war could be particularly impactful for Australia. While some analysts read the RBA’s language as a signal that a rate cut may come as soon as May, the actual odds remain more evenly balanced than market consensus might suggest. Tomorrow’s Australian employment report could help clarify the picture, at least a little bit.

    Fed Governor Christopher Waller’s speech is worth a read. It offered a structured view of the unfolding US tariff regime. Waller outlined two potential paths: one focused on reshoring manufacturing and reducing trade dependency—implying a prolonged period of elevated tariffs. The other, a route aimed at leveraging tariffs to negotiate lower trade barriers from other countries. The ultimate outcome hinges on the political objectives of the Trump administration. But in reality, the likely result may lie somewhere between those extremes.

    Technically, Bitcoin is showing signs of stabilizing after its recent pullback. It remains well supported by 73812 cluster support (38.2% retracement of 15452 to 109571 at 73617) for now. Bullish convergence condition in D MACD is raising chance of a near term reversal. Firm break of 88769 resistance will argue that correction from 109571 has completed already, and the larger up trend remains intact. Retest of 109571 high should then be seen next.

    In Asia, at the time of writing, Nikkei is up 0.96%. Hong Kong HSI is down -0.11%. China Shanghai SSE is down -0.17%. Singapore Strait Times is up 1.75%. Japan 10-year JGB yield is up 0.032 at 1.372. Overnight, DOW rose 0.78%. S&P 500 rose 0.79%. NASDAQ rose 0.64%. 10-year yield fell -0.129 to 4.364.

    Fed’s Waller weighs two tariff paths

    In a speech overnight, Fed Governor Christopher Waller laid out two divergent scenarios for US tariff policy and their economic fallout.

    The first scenario assumes high tariffs, near average 25% or more, and remain in place for an extended period. This reflects a structural shift toward domestic production and reduced trade dependence. The second scenario envisions a negotiated reduction in foreign trade barriers, which would lower the average tariff rate back to around 10%, closer to the levels anticipated earlier this year.

    Waller warned that if the “high-tariff” regime holds, the US economy is likely to “slow to a crawl” with inflation rising to around 4% before retreating in 2026, assuming inflation expectations remain anchored. In this scenario, the unemployment rate could climb toward 5% next year as business investment weakens under higher costs and persistent uncertainty.

    In contrast, if the current pause in reciprocal tariffs leads to meaningful progress in trade negotiations and the easing of barriers, Waller expects a milder economic impact. Under this “smaller tariff” path, the economy would continue to grow—albeit at a slower pace—while inflation would likely stay on a downward trend toward Fed’s 2% target. In such a case, he said, rate cuts could be warranted later this year as a “good news” policy move.

    Fed’s Bostic cautions against bold policy moves as trade fog stalls US economy

    Atlanta Fed President Raphael Bostic warned that the Trump administration’s tariff measures and broader policy ambiguity have effectively pushed the economy into a “big pause,” making it difficult for the Fed to chart a clear policy path.

    Bostic emphasized that this uncertainty argues against any aggressive policy shifts in either direction. “Moving too boldly with our policy in any direction wouldn’t be prudent.” He likened the current climate to a “really, really thick” fog that hampers effective decision-making.

    On the inflation front, Bostic acknowledged that tariffs are likely to exert upward pressure on prices. He now sees inflation returning to that level no sooner than 2027, well beyond previous expectations.

    Bostic also anticipates that economic growth will decelerate sharply, with GDP expanding just above 1% this year—less than half the pace seen in recent years.

    RBA Minutes: Next rate move not predetermined, China’s tariff response a key variable

    The minutes from RBA’s March 31–April 1 meeting revealed emphasized that it was “not yet possible to determine the timing of the next move in interest rates.” The Board emphasized the importance that the “next decision was not predetermined”.

    Members agreed that the May meeting would offer a more “opportune time” for reassessment, as it would coincide with updated data on inflation, wages, employment, and global tariff developments, as well as a revised set of economic forecasts.

    RBA highlighted that the economic outlook could be significantly shaped by how Chinese authorities respond to global tariff developments. Meanwhile, RBA acknowledged that risks to the outlook exist on both sides.

    On one hand, global trade uncertainties and softening demand may pose disinflationary pressures, while on the other, risks such as supply chain disruptions and currency depreciation could fuel inflation.

    RBA opted to keep the cash rate unchanged at 4.10% at the meeting.

    Looking ahead

    Germany ZEW economic sentiment, and Eurozone industrial production will be featured in European session. Later in the day, main focus is on Canada CPI. US will release Empire state manufacturing and import prices.

    AUD/USD Daily Report

    Daily Pivots: (S1) 0.6287; (P) 0.6315; (R1) 0.6355; More…

    AUD/USD’s rally from 0.5913 is still in progress and intraday bias stays on the upside. Firm break of 0.6407 resistance will pave the way to 61.8% retracement of 0.6941 to 0.5913 at 0.6548, even still as a corrective move. On the downside, below 0.6180 minor support will turn intraday bias neutral first.

    In the bigger picture, fall from 0.6941 (2024 high) is seen as part of the down trend from 0.8006 (2021 high). Next medium term target is 61.8% projection of 0.8006 to 0.6169 from 0.6941 at 0.5806. However, sustained trading above 55 W EMA (now at 0.6441) 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
    01:30 AUD RBA Meeting Minutes
    06:00 GBP Claimant Count Change Mar 18.7K 30.3K 44.2K 16.5K
    06:00 GBP ILO Unemployment Rate (3M) Feb 4.40% 4.40% 4.40%
    06:00 GBP Average Earnings Including Bonus 3M/Y Feb 5.60% 5.70% 5.80% 5.60%
    06:00 GBP Average Earnings Excluding Bonus 3M/Y Feb 5.90% 6.00% 5.90% 5.80%
    09:00 EUR Germany ZEW Economic Sentiment Apr 10.6 51.6
    09:00 EUR Germany ZEW Current Situation Apr -86 -87.6
    09:00 EUR Eurozone ZEW Economic Sentiment Apr 14.2 39.8
    09:00 EUR Eurozone Industrial Production M/M Feb 0.10% 0.80%
    12:15 CAD Housing Starts Y/Y Mar 238K 229K
    12:30 CAD Manufacturing Sales M/M Feb -0.20% 1.70%
    12:30 CAD CPI M/M Mar 0.70% 1.10%
    12:30 CAD CPI Y/Y Mar 2.60% 2.60%
    12:30 CAD CPI Median Y/Y Mar 2.90% 2.90%
    12:30 CAD CPI Trimmed Y/Y Mar 2.90% 2.90%
    12:30 CAD CPI Common Y/Y Mar 2.40% 2.50%
    12:30 USD Empire State Manufacturing Index Apr -14.8 -20
    12:30 USD Import Price Index M/M Mar 0.10% 0.40%

     



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  • Global Markets Rebound in Quiet Trade, Aussie Awaits RBA Insight

    Global Markets Rebound in Quiet Trade, Aussie Awaits RBA Insight


    The global financial markets are enjoying a modest recovery today, with gains seen across Asia and Europe. US futures also point to a higher open, suggesting the bounce from last week’s dramatic selloff are having further legs. News flow is relatively light, with no major economic data releases, and tariff headlines have also slowed. The next big development on that front is expected to involve semiconductors, but traders will have to wait for details. In the meantime, markets appear to be taking a breather from the chaos.

    Several Fed officials are due to speak today, though they are unlikely to provide fresh forward guidance given the highly fluid environment. Fed has so far emphasized the need for patience and data dependence, and that message is likely to be reinforced.

    In the currency markets, Swiss Franc is underperforming as risk sentiment stabilizes, followed by Loonie and then Dollar. Sterling leads the day, buoyed by its risk-sensitive nature, while Kiwi and Aussie are also firm. Euro and Yen are relatively steady in the middle of the pack.

    Looking ahead, RBA meeting minutes in the upcoming Asian session will be closely watched. The minutes may reiterate that the previous rate cut doesn’t necessarily start a new easing cycle. But the views may already be somewhat outdated, as the meeting occurred just before the US reciprocal tariff announcement and the subsequent market chaos. Still, they could offer insights into whether RBA board is leaning more toward inflation control or concerned about downside growth risks.

    Technically, Aussie remains under pressure. It’s the second-worst performer for the month, trailing only Dollar. Technically, while some extraordinarily volatility was even seen in AUD/NZD, near term outlook stays bearish with 1.0904 support turned resistance intact. Fall from 1.1177 is expected to continue to 1.0567 key medium term support next.

    In Europe, at the time of writing, FTSE is up 1.78%. DAX is up 2.56%. CAC is up 2.24%. UK 10-year yield is down -0.102 at 4.665. Germany 10-year yield is down -0.051 at 2.523. Earlier in Asia, Nikkei rose 1.18%. Hong Kong HSI rose 2.40%. China Shanghai SSE rose 0.76%. Singapore Strait TImes rose 1.04%. Japan 10-year JGB yield fell -0.005 to 1.341.

    OPEC trims 2025 oil demand outlook, WTI recovers mildly

    OPEC has cut its forecast for global oil demand growth in 2025, now expecting an increase of 1.30m barrels per day, down -150k bpd from last month’s estimate.

    In its latest monthly report, the group also lowered its projections for world economic growth for both 2024 and 2025, citing mounting uncertainties surrounding international trade policy and rising tariff tensions.

    “The global economy showed a steady growth trend at the beginning of the year, however, recent trade-related dynamics have introduced higher uncertainty to the short-term global economic growth outlook,” OPEC noted.

    WTI crude oil recovers mildly today. But overall development suggests that it’s still in consolidations above last week’s low at 55.20. Outlook will stay bearish as long as 65.24 cluster resistance holds (38.2% retracement of 81.01 to 55.20 at 65.05 holds. Larger down trend is still in favor to resume through 55.20 at a later stage.

    BoJ’s Ueda: US tariffs add downside risks to Japan through various channels

    BoJ Governor Kazuo Ueda warned today that the recently imposed U.S. tariffs are likely to exert “downward pressure” on both the global and Japanese economies through “various channels.”

    While he did not specify the transmission mechanisms, the remarks reflect growing concerns that escalating trade tensions could weigh on exports, dampen corporate sentiment, disrupt supply chains, as well as trigger volatility in the financial markets including currencies.

    Ueda reiterated BoJ’s commitment to achieving its 2% inflation target sustainably, noting that monetary policy would be guided appropriately based on evolving economic, price, and financial developments. He emphasized that the central bank will maintain a data-dependent approach and continue to scrutinize conditions “without any pre-conception”.

    NZ BNZ services rises to 49.1, subdued despite hints of stabilization

    New Zealand’s services sector remained in contraction in March, with the BusinessNZ Performance of Services Index inching up slightly to 49.1 from 49.0. This marks another month below the long-run average of 53.0 highlighting the ongoing weakness.

    While the headline improvement was minimal, underlying components showed a mixed picture—activity/sales dropped from 49.1 to 47.4. But new orders/business climbed from 49.5 to 50.8, the highest since February 2024, suggesting some pickup in future demand. Employment rose from 49.1 to 50.2, ending a 15-month streak of contraction, and offering early signs that firms may be regaining confidence in hiring.

    The share of negative comments from survey participants fell slightly to 56.7%, with ongoing concerns about high interest rates, inflation, weak consumer sentiment, and broader economic uncertainty. Businesses also cited external pressures such as global tariffs and rising input costs.

    China’s export surge 12.4% yoy in Mar, imports down -4.3% yoy

    China’s exports jumped an impressive 12.4% yoy to USD 313.9B in March, significantly beating expectations of 4.4% yoy and marking a sharp acceleration from the 2.3% yoy growth recorded in January-February.

    Particularly notable was the 9.18% yoy rise in shipments to the US, likely due to front-loading ahead of tariff tensions. Exports to ASEAN also strengthened with 11.6% yoy growth , with double-digit growth to major partners like Thailand (27.8% yoy) and Vietnam (18.9% yoy).

    However, Vietnam, a key intermediary in China’s export supply chain, is now under pressure to tighten controls on the origin of goods and materials. According to a ministry document, authorities in Hanoi are urging companies to clamp down on origin fraud to avoid punitive US tariffs, highlighting growing scrutiny on Chinese goods routed through third countries.

    Meanwhile, the strength in exports contrasted with a -4.3% yoy decline in imports, resulting in a larger-than-expected trade surplus of USD 102.6B.

    USD/CHF Mid-Day Outlook

    Daily Pivots: (S1) 0.8079; (P) 0.8173; (R1) 0.8246; More…

    A temporary low is formed at 0.8098 in USD/CHF with current recovery. Intraday bias is turned neutral first for consolidations. While stronger rise might be seen, upside should be limited by 55 4H EMA (now at 0.8449) to bring another fall. On the downside, break of 0.8098 will resume recent down trend to 200% projection of 0.9196 to 0.8757 from 0.8854 at 0.7976 next.

    In the bigger picture, the break of 0.8332 (2023 low) confirms resumption of long term down trend from 1.0342 (2017 high). Next target is 61.8% projection of 1.0146 (2022 high) to 0.8332 from 0.9196 at 0.8075. Firm break there will target 100% projection at 0.7382.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    22:30 NZD Business NZ PSI Mar 49.1 49.1 49
    03:00 CNY Trade Balance (USD) Mar 102.6B 74.3B 170.5B
    04:30 JPY Industrial Production M/M Feb F 2.30% 2.50% 2.50%
    06:30 CHF Producer and Import Prices M/M Mar 0.10% 0.20% 0.30%
    06:30 CHF Producer and Import Prices Y/Y Mar -0.10% -0.10%
    12:30 CAD Wholesale Sales M/M Feb 0.3% 0.40% 1.20% 1.4%

     



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  • Markets Soar on Tariff Truce, Reentry Signal or Perfect Exit Opportunity?

    Markets Soar on Tariff Truce, Reentry Signal or Perfect Exit Opportunity?


    US stocks staged a powerful relief rally overnight, snapping back from the recent tariff-induced collapse. All three major indexes posted gains not seen in years, marking a dramatic reversal in sentiment. Yet, despite the scale of the rebound, it remains unclear whether this marks the beginning of genuine investor re-entry—or simply a massive short-covering rally triggered by a temporary policy U-turn.

    What markets need now isn’t just a pause, but clarity and consistency. If the 90-day negotiation window devolves into more confusion, or if tariffs on China continue to escalate, the gains seen today could vanish just as quickly as they arrived.

    The crux of the matter is whether yesterday’s rally represents just a reflexive bounce driven by short-covering and algorithmic momentum? With the market having been stretched to deeply oversold levels after recent collapse, the slightest spark was bound to trigger a sharp relief jump.

    More improtantly, it is uncertain if long-term investors view this bounce as a reason to re-engage with US assets, or merely as an opportunity to exit at better levels. If the latter proves true, this rally could quickly fade into yet another bear market trap.

    The catalyst behind the surge came from US President Donald Trump’s abrupt announcement that new 10% tariffs on most US trade partners—technically in effect just hours earlier—would be paused for 90 days to facilitate negotiations.

    In contrast, the administration simultaneously escalated its economic conflict with China, announcing an immediate increase in tariffs on Chinese imports to 125%. The White House reinforced the pressure with a warning: “Do not retaliate and you will be rewarded.”

    Technically, for DOW, this week’s low at 36,611.78 offers a potential base for near-term consolidation, especially given its proximity to 55 M EMA (now at 35595.76). However, any upside is likely to be capped by 61.8% retracement of 45073.63 to 36611.78 at 41841.20 to set the range for near term consolidations, well, probably for 90 days? Sustained break of 41841.20 is needed before declaring that this tariff crisis is over.

    In the currency markets, after all the volatility, Aussie is currently the strongest one for the week so far, followed by Kiwi, and then Loonie. Sterling is the worst performer, followed by Dollar, and then Euro. Swiss Franc and Yen are positioning in the middle.

    In Asia, at the time of writing, Nikkei is up 8.01%. Hong Kong HSI is up 1.96%. China Shanghai SSE is up 0.93%. Singapore Strait Times is up 5.73%. Japan 10-year JGB yield is up 0.045 at 1.327. Overnight, DOW rose 7.87%. S&P 500 rose 9.52%. NASDAQ rose 12.16%. 10-year yield rose 0.138 to 4.400.

    Fed minutes highlight pre-tariff caution, hint at tough tradeoffs ahead

    The minutes from the FOMC’s March meeting revealed growing concern among policymakers about the economic outlook, particularly amid rising uncertainty. While these discussions occurred before the dramatic escalation of the US tariff war in April, the insights remain valuable.

    “Almost all” participants viewed inflation risks as tilted to the “upside”, while “downside” risks to employment and growth were also flagged—setting the stage for a policy dilemma.

    Some officials highlighted that the Fed could soon face “difficult tradeoffs,” especially if inflation remains elevated while job and growth prospects deteriorate.

    Notably, a few participants also warned that an “abrupt repricing of risk in financial markets” could magnify the impact of any negative economic shocks. Given what has since transpired with global markets in April, these comments seem prescient.

    While the minutes may now appear somewhat outdated, they nonetheless provide a crucial baseline for understanding how the Fed might react in an increasingly fragile environment.

    Japan’s PPI accelerates to 4.2% while import costs ease

    Japan’s PPI rose 4.2% yoy in March, a slight acceleration from February’s 4.1% yoy and topping expectations of 3.9% yoy rise. The increase was broad-based, with notable gains in food prices, which rose 3.1% yoy, and energy costs, with petroleum and coal prices surging by 8.6% yoy.

    Despite the uptick in domestic producer prices, import costs in Yen terms fell -2.2% yoy in March, extending the -0.9% decline in February. Export prices, however, rose a modest 0.3% yoy, slowing sharply from February’s 1.7% yoy growth.

    China’s CPI falls -0.1% yoy in March, PPI highlights persistent deflationary pressures

    China’s consumer inflation remained in negative territory for a second straight month in March, with CPI falling -0.1% yoy, missing expectations of 0.1% yoy increase. While the decline was narrower than February’s -0.7% yoy, it still reflects subdued demand pressures across the economy.

    Food prices was a drag, down -1.4% yoy, while service prices provided only modest support, rising 0.3% yoy. Core CPI, which excludes volatile food and energy prices, edged up to 0.5% yoy from 0.3% previously, offering a slight glimmer of resilience.

    However, with headline inflation still hovering around zero and signs of consumer caution persisting, the broader disinflation trend appears entrenched.

    On a monthly basis, CPI dropped -0.4% mom, following February’s -0.2% mom decline, suggesting continued weakness in household spending momentum.

    Meanwhile, producer prices extended their decline for a 30th straight month, with PPI dropping -2.5% yoy, deeper than the expected -2.3%.

    AUD/USD Daily Report

    Daily Pivots: (S1) 0.5987; (P) 0.6081; (R1) 0.6249; More…

    AUD/USD’s rebound from 0.5913 extended higher, and it’s now pressing 55 4H EMA (now at 0.6146). Sustained trading above there will should confirm short term bottoming,and bring stronger rebound towards 0.6388 resistance. Nevertheless, rejection by the EMA, followed by break of 0.6057 minor support will bring retest of 0.5913 low, and resumption of larger fall from 0.6941 at a later stage.

    In the bigger picture, fall from 0.6941 (2024 high) is seen as part of the down trend from 0.8006 (2021 high). Next medium term target is 61.8% projection of 0.8006 to 0.6169 from 0.6941 at 0.5806. In any case, outlook will stay bearish as long as 0.6388 resistance holds.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    23:01 GBP RICS Housing Price Balance Mar 2% 8% 11%
    23:50 JPY Bank Lending Y/Y Mar 2.80% 3.10% 3.10% 3.00%
    23:50 JPY PPI Y/Y Mar 4.20% 3.90% 4.00% 4.10%
    01:30 CNY CPI M/M Mar -0.40% -0.20%
    01:30 CNY CPI Y/Y Mar -0.10% 0.10% -0.70%
    01:30 CNY PPI Y/Y Mar -2.50% -2.30% -2.20%
    12:30 CAD Building Permits M/M Feb -0.90% -3.20%
    12:30 USD Initial Jobless Claims (Apr 4) 222K 219K
    12:30 USD CPI M/M Mar 0.20% 0.20%
    12:30 USD CPI Y/Y Mar 2.50% 2.80%
    12:30 USD CPI Core M/M Mar 0.30% 0.20%
    12:30 USD CPI Core Y/Y Mar 3.00% 3.10%
    14:30 USD Natural Gas Storage 60B 29B

     



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  • Reciprocal Tariffs Take Effect; China Hit with 104% Rate

    Reciprocal Tariffs Take Effect; China Hit with 104% Rate


    The rebound in US stock markets proved short-lived, with major indexes slipping back into the red by the end of Tuesday’s session. NASDAQ led the losses, as sentiment turned increasingly fragile. Asian markets followed suit, opening lower with large intraday volatility across the region. Concerns about a global recession continue to weigh heavily on investors’ minds, particularly as the commodity complex offers no reprieve—oil prices plunged to fresh four-year lows on fears of a steep demand collapse.

    Gold, traditionally a safe haven, is fighting to hold above the 3000 psychological level. The safe-haven metal has been benefiting from the market’s defensive posture. In the currency space, Dollar extended its slide, joined by other risk-sensitive currencies including Aussie, Kiwi and Loonie. Sterling wasn’t spared either. Meanwhile, Euro, Yen, and Swiss Franc are holding firm as traders flock toward relative safety amid escalating trade tensions.

    The key driver of current market anxiety is the formal implementation of US reciprocal tariffs today, with the most aggressive action aimed at China. An eye-watering 104% effective tariff rate now applies to Chinese imports, effectively escalating the bilateral conflict into a full-blown trade war. Adding fuel to the fire, US President Donald Trump signed an executive order tripling tariff rates on low-value Chinese packages shipped through international postal systems.

    This rapidly escalating standoff between the world’s two largest economies marks a dangerous phase in global trade, with both nations seemingly unwilling to blink first. The economic fallout remains difficult to quantify at this stage, but the longer the impasse drags on, the more serious the risks to global growth and supply chains. Perhaps most troubling is the collateral damage to third-party nations, which are now caught between the crosshairs of US-China economic warfare.

    More tariff action is on the horizon. Adding more fuel to the fire, Trump indicated during a political dinner that a major new round of tariffs targeting pharmaceuticals would be announced “very shortly.” These measures are expected to be aimed at shifting pharmaceutical production out of China and back into the US, with rates speculated to reach 25% or higher. The move has sparked concern not only about inflation in drug prices but also about global supply chain disruptions in the healthcare sector.

    Elsewhere, Canada confirmed its retaliation, implementing 25% tariffs on US-made vehicles. Japan, another major trading partner, is bracing for heightened scrutiny. Finance Minister Katsunobu Kato noted that exchange rate policies may enter upcoming discussions, indicating that Washington’s pressure on currencies—particularly Yen—could be a brewing flashpoint.

    Technically, an immediate focus in on 1.0741 in GBP/CHF as selloff accelerates further this week. Firm break there will solidify the case that corrective pattern from 1.0183 has already completed, be it counted as at 1.1675 or 1.1501. Larger down trend should then be ready to resume through 1.0183 (2022 low).

    In Asia, at the time of writing, Nikkei is down -4.14%. Hong Kong HSI is down -1.43%. China Shanghai SSE is up 0.21%. Singapore Strait Times is down -2.44%. Japan 10-year JGB yield is down -0.024 at 1.255. Overnight, DOW fell -0.84%. S&P 500 fell -1.57%. NASDAQ fell -2.15%. 10-year yield rose 0.107 to 4.262.

    RBNZ cuts 25bps, trade barriers as downside risk to both growth and inflation

    RBNZ delivered a widely expected 25bps cut in the Official Cash Rate, bringing it to 3.50%. The policy statement highlighted that the recently announced global trade barriers create “downside risks to the outlook for economic activity and inflation” in New Zealand.

    The central bank noted that with inflation close to the midpoint of its target range, it is in the “best position” to respond to economic shifts. RBNZ added it has “has scope to lower the OCR further as appropriate”, depending on how the impact of tariffs evolves.

    This leaves the door wide open for further easing, particularly if global economic headwinds intensify or domestic data disappoints.

    NZD/USD edged lower earlier today with broad risk aversion, but there is no particular selloff after RBNZ’s decision.

    Technically, the breach of 0.5515 support suggests that recent fall from 0.6378 is resuming. Near term risk will stay on the downside as long as 0.5644 resistance holds. Next target is 61.8% projection of 0.6378 to 0.5515 from 0.5852 at 0.5319.

    But more importantly, sustained trading below 0.5467 (2020 low) would confirm resumption of whole downtrend from 0.8835 (2014 high). That would pave the way to 61.8% projection of 0.7463 to 0.5511 from 0.6378 at 0.5172 in the medium term.

    Fed’s Goolsbee: Tariff shock far exceeds expectations; Daly calls for caution

    Chicago Fed President Austan Goolsbee and San Francisco Fed President Mary Daly both sounded cautious overnight amid rising uncertainty from the unfolding global tariff war.

    Goolsbee highlighted the unexpected magnitude of the tariff impact, calling them a “way bigger” shock than anticipated. He likened them to a “negative supply shock” and acknowledged that Fed’s appropriate policy response is unclear.

    He warned of ripple effects through slower consumer and business activity, especially in a post-pandemic economy still scarred by past inflationary surges.

    Meanwhile, Daly struck a more measured tone, noting that while she is “a little concerned” about the inflationary effects of tariffs, she emphasized Fed’s current policy is well-positioned and policymarkers can “just tread slowly and tread carefully.”

    “The thing that’s really important is you stay steady in the boat while you think about not what’s happening over the last two days, but the net effect of the slate of changes that any administration wants to take,” she added.

    EUR/AUD Daily Outlook

    Daily Pivots: (S1) 1.8097; (P) 1.8259; (R1) 1.8560; More…

    EUR/AUD’s rally resumed after brief retreat and intraday bias is back on the upside. Current up trend should target 161.8% projection of 1.6355 to 1.7417 from 1.7047 at 1.8765 next. On the downside, below 1.7957 minor support could now indicate short term topping, possibly on bearish divergence condition in 4H MACD, and bring lengthier consolidations.

    In the bigger picture, up trend from 1.4281 (2022 low) is in progress, and in reacceleration phase as seen in W MACD. Next target is 100% projection of 1.4281 to 1.7062 from 1.5963 at 1.8744. Firm break there will pave the way to 138.2% projection at 1.9806, which is close to 1.9799 (2020 high). Outlook will remain bullish as long as 1.7417 resistance turned support holds even in case of deep pullback.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    02:00 NZD RBNZ Interest Rate Decision 3.50% 3.50% 3.75%
    05:00 JPY Consumer Confidence Index Mar 34.1 34.9 35
    06:00 JPY Machine Tool Orders Y/Y Mar P 3.50%
    14:00 USD Wholesale Inventories Feb F 0.30% 0.30%
    14:30 USD Crude Oil Inventories 2.2M 6.2M
    18:00 USD FOMC Minutes

     



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  • Markets Crumble as Trump Doubles Down on Tariffs, Trade Storm Intensifies

    Markets Crumble as Trump Doubles Down on Tariffs, Trade Storm Intensifies


    The global stock market crash showed no sign of slowing today. Hong Kong’s Hang Seng Index returned from a holiday break and promptly plunged over -10% to catch up with last week’s global carnage. Meanwhile, Japan’s Nikkei suffered another dramatic drop of more than -2200 points, or -6.6%.

    Risk aversion remains the dominant theme as markets digest the full implications of the rapidly escalating trade war. Despite the equity bloodbath, currency markets were relatively calm. Most major pairs and crosses pulled back inside Friday’s ranges after brief spikes.

    Fueling the unease, US President Donald Trump showed no sign of backing away from his aggressive tariff agenda. Over the weekend, he defended the tariffs, likening them to “medicine to fix something” and insisted that countries wishing to avoid the duties must pay the US “a lot of money on a yearly basis.” Treasury Secretary Scott Bessent added that more than 50 countries have opened negotiations with Washington since last week’s announcement, suggesting Trump’s strategy is drawing some to the table.

    Indeed, some notable trade partners are quickly moving to avoid being caught in the crosshairs. Taiwan’s President Lai Ching-te offered to remove trade barriers and match US tariffs with zero duties, while also pledging increased Taiwanese investment in America. That follows Vietnam’s similar proposal last week, raising the possibility that some nations could strike bilateral deals that eliminate tariffs entirely.

    The next few days will be critical. Traders are watching closely to see if any of these bilateral talks bear fruit — specifically, whether they lead to a genuine dismantling of trade barriers. On the other hand, if the US uses these negotiations to extract unrelated concessions, trust may erode further, heightening fears of a full-blown trade conflict.

    The path taken by Taiwan and Vietnam could become a model or a dead-end, depending on how Washington responds. The situation remains extremely fluid as US customs began collecting the baseline 10% tariffs over the weekend, with higher country-specific rates kicking in Wednesday.

    Fed will also be back in the spotlight, with the March FOMC minutes, CPI data, and fresh commentary from policymakers due. Up until last week, Fed officials were signaling a cautious, wait-and-see approach on rate cuts. But the financial market rout has dramatically altered expectations, with Fed funds futures now pricing in nearly a 50% chance of a 25bps cut in May — up from just 14% a week ago.

    A soft CPI print or any hint of dovish pivot in tone from Fed could further fuel expectations of imminent easing—though it would also raise concern that Fed is bracing for deeper economic damage from the trade war

    In Asia, at the time of writing, Nikkei is down -5.99%. Hong Kong HSI is down -10.50%. China Shanghai SSE is down -6.39. Singapore Strait Times is down -7.85%. Japan 10-year JGB yiield is down -0.037 at 1.119.

    Japan’s real wages fall again despite nominal pay boost from bonuses

    Japan’s nominal wages rose 3.1% yoy in February, a notable jump from downwardly revised 1.8%yoy in January, matching expectations.

    However, this strong print was largely driven by a surge in special payments, which skyrocketed 77.4% yoy. Regular pay, considered a more stable indicator of wage trends, actually slowed to 1.6% yoy from the prior month’s 2.1% yoy, signaling only moderate momentum in base salary growth.

    Despite the upbeat headline figure, real wages—which adjust for inflation—fell for the second consecutive month, down -1.2% yoy. This came as consumer inflation, as calculated by the labor ministry, remained elevated at 4.3% yoy, down slightly from January’s 4.7% yoy.

    Gold rebounds from sub-3000 dip as market panic deepens in Asia

    Gold had a shaky start to the week, being dragged below 3000 psychological level briefly, alongside broader risk asset liquidation. But as stock markets across Asia extended their crash into Monday, the precious metal caught some safe haven flows and bounced back above 3030 quickly.

    Meanwhile, a critical 2950/60 zone appears to be providing strong support for Gold too. Reaction to this zone would unveil whether the intensifying global trade tensions and deepening equity losses are re-anchoring Gold as a defensive asset.

    The 2950/60 zone marks the confluence of 2956.09 resistance turned support, 38.2% retracement of 2832.41 to 3167.62 at 2960.46, and trend line support at 2957.62.

    Technically, break above 55 4H EMA (now at 3075.81) will set the range for sideway consolidations. That would also keep outlook bullish for extending the long term up trend at a later stage.

    However, sustained break of 2950/60 will argue that Gold is also in medium term correction, with risk of falling back to 2584.24/2789.92 support zone.

    WTI oil breaches 60 as trade war and OPEC+ output plans weigh

    Oil prices extended their steep losses in Asian trading today, with WTI crude briefly dipping below the psychological level of 60 for the first time in nearly four years.

    The persistent global equity selloff and deepening concerns over the economic fallout from the trade war have triggered fears about demand destruction, which remains difficult to quantify. Until there’s clarity on how much global consumption will be impacted, markets are likely to remain under pressure.

    Adding to the bearish tone, OPEC+ announced last week that it would advance the timeline for increasing output, with plans to raise production by 411,000 barrels per day starting in May, compared to the previous plan of just 135,000 bpd. The supply boost, at a time of growing demand concerns, is exacerbating the imbalance and fueling the sharp price decline.

    Technically, WTI oil might find some support at 100% projection of 81.01 to 65.24 from 72.37 at 56.60 to form a short term bottom. However, firm break of 56.60 could quickly push WTI towards 50 psychological level to 138.2% projection at 50.57.

    Fed’s patience faces test with inflation and consumer sentiment; RBNZ to cut again

    The week ahead is packed with key US economic releases and a major central bank decision in New Zealand, all set against the backdrop of escalating global tariff tensions.

    Fed is clearly stuck between a rock and a hard place. This week’s US CPI data might show a slowdown in both headline and core readings. However, with core reading still hovering around 3%, and risk of tariffs boosting inflation in the near term, there is little room for Fed to rush to resume policy easing.

    Meanwhile, markets, business and consumer sentiment has clearly deteriorated to an extent that recession risks are now real. The University of Michigan’s consumer sentiment index will offer a timely snapshot of how households are responding to the reciprocal tariffs that dominated headlines over the past two weeks. The survey window, March 25 through April 7, overlaps with the US announcement and China’s retaliatory move, making it a valuable real-time pulse check on inflation expectations and confidence.

    FOMC minutes are not expected to deliver any surprises. Markets will be keen to learn how much weight the Committee gave to tariff risks during its March discussions. But of course, with reciprocal tariffs now implemented, any earlier assessments may already be outdated. Nevertheless, insights into the range of views within Fed could help shape expectations for the timing of the next policy move.

    On the central banking front, RBNZ is widely expected to cut its policy rate by 25 bps to 3.50%. This move would be in line with RBNZ’s February guidance, which projected two cuts in the first half of the year to keep inflation within the 1–3% target range. The bank sees 3.00% as the neutral rate, meaning policy will remain mildly restrictive even after the cut. Unless economic conditions have materially changed, a deviation from this path would be surprising.

    However, markets will also be watching how the RBNZ responds to recent global turmoil. The US has slapped a 10% tariff on all New Zealand exports, yet Prime Minister Christopher Luxon has stated that New Zealand will not retaliate. Whether the RBNZ views this as a meaningful threat to growth or simply a policy headwind to monitor could influence how aggressively it plans to ease in the second half of the year.

    Here are some highlights for the week:

    • Monday: Japan labor cash earnings; Germany industrial production, trade balance; Swiss foreign currency reserves; Eurozone retail sales, Sentix investor confidence; Canada BOC business outlook survey.
    • Tuesday: Australia Westpac consumer sentiment, NAB business confidence; US NFIB small business index; Canada Ivey PMI.
    • Wednesday: RBNZ rate decision’ Japan consumer confidence; US FOMC minutes.
    • Thursday: Japan PPI; China CPI, PPI; US CPI, jobless claims.
    • Friday: New Zealand BNZ manufacturing; Germany CPI final; UK GDP, production, trade balance; US PPI, U of Michigan consumer sentiment.

    AUD/USD Daily Report

    Daily Pivots: (S1) 0.5907; (P) 0.6120; (R1) 0.6252; More…

    Intraday bias in AUD/USD stays on the downside for the moment. Current fall from 0.6941 should target 61.8% projection of 0.6941 to 0.6087 from 0.6388 at 0.5860. On the upside, above 0.6062 minor resistance will turn intraday bias neutral and bring consolidations first.

    In the bigger picture, fall from 0.6941 (2024 high) is seen as part of the down trend from 0.8006 (2021 high). Next medium term target is 61.8% projection of 0.8006 to 0.6169 from 0.6941 at 0.5806. In any case, outlook will stay bearish as long as 0.6388 resistance holds.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    23:30 JPY Labor Cash Earnings Y/Y Feb 3.10% 3.10% 2.80% 1.80%
    05:00 JPY Leading Economic Index Feb P 107.9 107.8 108.3
    06:00 EUR Germany Industrial Production M/M Feb -0.90% 2.00%
    06:00 EUR Germany Trade Balance (EUR) Feb 17.8B 16.0B
    07:00 CHF Foreign Currency Reserves (CHF) Mar 735B
    08:30 EUR Eurozone Sentix Investor Confidence Apr -8.7 -2.9
    09:00 EUR Eurozone Retail Sales M/M Feb 0.50% -0.30%
    14:30 CAD BoC Business Outlook Survey

     



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  • Market Turmoil Unleashed as Global Tariff Battlelines Drawn

    Market Turmoil Unleashed as Global Tariff Battlelines Drawn


    The global financial markets were shaken last week as US President Donald Trump’s long-anticipated reciprocal tariff plan arrived with a bang. The magnitude of the tariff rates, the number of countries impacted, and the sheer complexity of implementation shocked investors. What could have been a temporary setback quickly spiraled into a broader risk event, fueling sharp selloffs and potentially igniting a full-fledged bear market.

    Matters only worsened after China swiftly responded with its own retaliatory measures. The rhetoric on both sides is heating up. Trump, doubling down on his hardline stance, declared on social media that his “policies will never change” and accused China of panicking. Meanwhile, Chinese officials dismissed the US measures, mockingly claiming, “The market has spoken.”

    With Washington and Beijing locked in confrontation, global focus now turns to how the rest of the world will react. The first clear sign of diplomacy came from Vietnam, where General Secretary To Lam phoned Trump and offered to negotiate a deal to reduce tariffs on US exports to zero, in exchange for equal treatment. If this sets a precedent, it may provide insight into whether Trump’s long-term vision is truly a bilateral web of lowered trade barriers. Or, he has something else in his mind.

    Still, the true litmus test lies ahead with the US-EU trade negotiations. European Commission President Ursula von der Leyen has shown no signs of backing down, warning that the EU “holds a lot of cards” and that “all instruments are on the table.” Europe’s massive market and leadership in tech give it leverage, and should talks break down, the threat of firm and coordinated countermeasures looms large. The shape and tone of the US-EU discussions will be critical in determining whether a full-blown global trade war materializes, or if some de-escalation is still possible.

    In the currency markets, Swiss Franc emerged as the ultimate winner last week, solidifying its position as the top safe-haven asset, while Yen followed closely. Euro, notably, seems to be replacing Dollar as a safe-haven choice. The

    At the bottom of the currency ladder was the Aussie, which was hammered by China’s retaliation, given its economic dependence on Chinese demand. Kiwi followed while Sterling rounded out the bottom three. Loonie, and Dollar saw mixed results—gaining ground against commodity currencies but faltering against their safe-haven counterparts.

    Oversold Bounce Possible, Yet Trade War Escalations Keep Downside Risks Elevated

    Following last week’s brutal stock market selloff, there’s technical scope for a short-term rebound. Markets are deeply oversold, and some bargain-hunting or short coverers may lift equities from their recent lows in the days ahead. However, any recovery in risk sentiment will likely be capped by the still-heavy cloud of uncertainty surrounding the unfolding global tariff war.

    Despite the market’s hopes, it’s unrealistic to expect trade negotiations — especially those involving sweeping reciprocal tariffs and multiple major economies — to wrap up quickly. The threat of a prolonged standoff or even a complete breakdown in talks remains high. In such a case, a full-blown global trade war could be on the table, with wide-ranging consequences for investment, consumption, and global growth.

    Of particular concern is Europe’s position in this trade crossfire. Both the EU and ECB have previously flagged concerns that China could redirect excess supply to the EU if blocked by US tariffs. Such dumping would put further pressure on already weak growth and inflation in the region. To avoid this, Europe might be forced to erect its own trade barriers against China, risking retaliation and further fragmentation of global trade flows.

    In this increasingly fragile environment, the risks for a synchronized global slowdown looms large. However, unlike the Great Recession of 2008-09, unlikely the country could act as a buffer this time. China itself is now a central target in the trade conflict, and its export-driven model could face unprecedented pressure from multiple fronts. That leaves the world vulnerable to a more prolonged and widespread economic downturn if trade tensions escalate further.

    For traders and investors, the message is clear. Any near-term rally should be treated with caution. Rebounds may be sharp, but as long as key technical resistance levels in major indexes like DOW, Nikkei, or DAX remain intact, it’s premature to call it a return to normal. Until then, the base case remains a fragile market dominated by geopolitical risk, with any relief rallies vulnerable to sudden reversals.

    Technically, for DOW, it’s now at an important support zone of the long term rising trend line and 38.2% retracement of 28660.94 to 45071.29 at 38802.54. A rebound from current level would be reasonable, but risk will stay heavily on the downside as long as 55 W EMA (now at 41260.37) holds. However, sustained break of 38802.54 will raise the change of even deeper correction to next key support at 55 M EMA (now at 35554.06).

    NASDAQ’s outlook was worse with the break of 38.2% retracement of 10088.82 to 20204.68 at 16340.36. Risk will stay on the downside as long as 55 W EMA (now at 17770.58) holds. Fall from 20204.58 should be on track to 55 M EMA (now at 14387.21) on next fall.

    Nikkei’s steep fall confirmed that corrective pattern from 42426.77 (2024 high) has already started the third leg. Strong bounce from current level will keep Nikkei inside the long term rising channel. But risk will stay on the downside as long as 55 W EMA (now at 37604.93) holds. Sustained trading below the channel support will bring even deeper fall to 55 M EMA (now at 31405.39) or even further to 38.2% retracement of 6994.89 (2009 low) to 42426.77 at 28891.80.

    Outlook in DAX is slightly better thanks to the strong rally in March. But still, near term risk will be on the downside as long as 55 D EMA (now at 22102.60) holds. Fall from 23476.01 is seen as corrective the up trend from 11862.84 (2022 low only). There are a few levels ahead that could help floor the correction, including 55 W EMA (now at 19768.44), trend line support at around 19200, and 38.2% retracement of 11862.84 to 23476.01 at 19039.78.

    Will 100 Be the Savior for Sliding Dollar Index?

    Dollar Index staged a notable late-week rebound, closing at 103.02 on Friday, well off the week’s low of 101.26. The move helped ease immediate downside pressure. The 100 psychological level, along with the 55 M EMA (now at 101.01) could provide a floor in the near term and turn the index into consolidations. Still, firm break of 104.68 resistance is needed to confirm short term bottoming first. Or risk will remain on the downside.

    From a broader perspective, the fall from 110.17 is seen as the third leg of a larger correction originating from 114.77 (2022 high). Decisive break below key 99.57/100.15 support zone would open the door for deeper medium term fall to decade-long rising channel support (now at 95.80), or even further to 100% projection of 114.77 to 99.57 from 110.17 at 94.97.

    A critical variable in Dollar’s path is the development of US Treasury yields. The sharp drop in the 10-year yield last week reinforces the view that the broader corrective pattern from 4.997 (2023 high) is in another downleg.

    Risk will stay on the downside as long as 55 W EMA (now at 4.255) holds. Further decline is likely to 3.603 support.

    Even so, solid technical support should emerge from the 38.2% retracement of 0.398 to 4.997 at 3.240 to contain downside. That should provide some support to floor Dollar’s decline in the medium term.

    Swiss Franc Dominates in Europe, Would It Cap EUR/GBP Advance?

    Swiss Franc ended last week as the strongest European currency, outperforming both Euro and the risk-sensitive Sterling by a mile.

    GBP/CHF’s break of 1.1086 support suggests that whole rally from 1.0741 has completed at 1.1501. Deeper fall should be seen back to 1.0741 support first. Firm break there will argue that long term down trend is ready to resume through 1.0183 (2022 low). Meanwhile, above 1.1193 minor resistance will turn bias neutral and bring consolidations first, before staging another fall.

    As for EUR/CHF, focus is back on 0.9331 support after the sharp fall. Firm break there should confirm that rebound form 0.9204 has completed at 0.9660. More importantly, that would also confirm rejection by the long term channel resistance. Larger down trend might then be ready to resume through 0.9204.

    EUR/GBP resumed the rise from 0.8239 and hit as high as 0.8522, just shy of 100% projection of 0.8239 to 0.8448 from 0.8314 at 0.8523. The break of medium term falling channel resistance is a bullish sign. It’s also plausible that down trend from 0.9267 (2022 high) has completed at 0.8221, just ahead of 0.8201 key support (2022 low). Firm break of 0.8523 will affirm this case, and target 0.8624 cluster resistance (38.2% retracement of 0.9267 to 0.8221 at 0.8621) for confirmation of bullish reversal.

    However, for EUR/GBP to extend its bull run decisively, support is needed from a rebound in EUR/CHF. If EUR/CHF breaks down further below 0.9331 and drags on Euro more broadly, EUR/GBP would struggle to gain traction or even come under pressure itself.

    AUD/CAD and AUD/NZD in free fall

    Commodity currencies all declined broadly on risk aversion. But Aussie was the worst by far, particularly hard-hit following China’s announcement of retaliatory tariffs against the US.

    AUD/CAD’s break of 0.8562 (2023 low) suggests that whole down trend from 0.9991 (2021 high) is resuming. Outlook will stay bearish as long as 0.8853 support turned resistance holds, even in case of recovery. Next target is 161.8% projection of 0.9375 to 0.9128 from 0.8853 at 0.8283.

    AUD/NZD’s break of 1.0789 support suggests that rise from 1.0567 has already completed at 1.1177 already. More importantly, whole rebound from 1.0469 (2022 low) could have finished as a three-wave corrective rise too. Near term outlook will now remain bearish as long as 1.0904 support turned resistance holds. Deeper fall would be see back to 1.0567 support next. Firm break there will raise the chance that whole down trend from 1.1489 (2022 high) is ready to resume through 1.0469.

    USD/JPY Weekly Outlook

    USD/JPY’s fall from 158.86 resumed last week and hits as low as 144.54. But a temporary low should be formed with subsequent recovery. Initial bias is turned neutral this week for consolidations first. Outlook will remain bearish as long as 151.20 resistance holds. Below 144.54 will target 61.8% projection of 158.86 to 146.52 from 151.20 at 143.57. Break there will target 139.57 low.

    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.

    In the long term picture, it’s still early to conclude that up trend from 75.56 (2011 low) has completed. A medium term corrective phase should have commenced, with risk of deep correction towards 55 M EMA (now at 137.30) and even below.



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  • China Retaliates, Risk Sentiment Collapses as Market Turmoil Deepens

    China Retaliates, Risk Sentiment Collapses as Market Turmoil Deepens


    Risk aversion deepened across global markets today as China unveiled a forceful response to the sweeping US tariffs announced earlier this week. Beijing will impose an additional 34% tariff on all US goods starting April 10, in a move that effectively escalates the trade war into a full-scale economic confrontation. China sent the signal that it’s prepared to endure economic pain to counter US pressure. The Chinese Commerce Ministry justified the decision on grounds of national security and international obligations, but the timing and scope leave no doubt it’s a retaliatory measure.

    US stock futures plunged in response, with DOW pointing to another 1000-point drop at the open. Wall Street’s mood was already fragile after a volatile week driven by tariff headlines, and the market’s inability to find relief even after a much stronger-than-expected non-farm payrolls report highlights the depth of the panic. Traders are rushing into US Treasuries, pushing the 10-year yield below the key 3.9% level, a sign of rising demand for safe havens amid intensifying uncertainty.

    In the currency markets, Aussie has taken the hardest hit, tumbling sharply after China’s retaliation was announced. Kiwi followed as the second-worst performer. Loonie also weakened notably after domestic employment data showed a surprise job loss in March, though it remains a distant third among the day’s laggards.

    On the flip side, Swiss Franc extended its stellar run to lead the pack again today. Yen is also well supported, though not quite matching the Franc’s gains. Euro remains relatively firm, continuing to draw strength as a liquid alternative to Dollar amid global uncertainty. Meanwhile, Sterling and Dollar are holding in the middle of the pack.

    In Europe, at the time of writing, FTSE is down -3.50%. DAX is down -3.46%. CAC is down -3.22%. UK 10-year yield is down -0.092 at 4.439. Germany 10-year yield is down -0.145 at 2.511. Earlier in Asia, Nikkei fell -2.75%. Japan 10-year JGB yield fell -0.195 to 1.156. Singapore Strait Times fell -2.95%. Hong Kong and China were on holiday.

    US NFP grows 228k, unemployment rate ticks up to 4.2%

    US labor market showed unexpected strength in March, with non-farm payrolls rising by 228k, well above the consensus estimate of 128k. Growth was also notably stronger than the prior 12-month average of 158k.

    The robust job gains highlight continued resilience in hiring, even amid heightened uncertainty surrounding trade policies and financial conditions.

    Unemployment rate ticked up slightly from 4.1% to 4.2%, marking the upper end of its recent range, though the increase was accompanied by a modest uptick in labor force participation to 62.5%.

    Average hourly earnings rose 0.3% month-over-month, aligning with expectations, suggesting that wage pressures remain steady.

    Canada posts surprise -32.6k job loss

    Canada’s labor market delivered a sharp disappointment in March, with employment falling by -32.6k, well below expectations of a 10.4k gain.

    This marked the first monthly job loss since January 2022 and was driven by a steep decline in full-time positions, which dropped by 62k. Employment rate dipped 0.2 percentage points to 60.9%.

    The unemployment rate ticked up to 6.7%, in line with expectations. Wage growth slowed to 3.6% yoy from 3.8% yoy in February.

    BoJ’s Ueda: US tariffs likely to pressure Japan’s economy

    BoJ Governor Kazuo Ueda warned that the 24% tariffs imposed by the US on Japanese goods could have broad implications. He emphasized that heightened uncertainty over the economic outlook may weigh on corporate sentiment and trigger volatile market behavior. This, in turn, could place “downward pressure on global and Japanese economies”.

    Meanwhile, Ueda noted that the effect on inflation remains uncertain, as the tariffs could either suppress prices by weakening demand or push them higher through supply chain disruptions.

    Despite these concerns, Ueda maintained a cautiously optimistic view on Japan’s economy. He pointed out that corporate sentiment remains positive, and capital expenditure plans are stronger than in the same period of prior years.

    He referred to the latest Tankan survey as supportive of BoJ’s baseline view that Japan’s economy is “recovering moderately”. Still, Ueda noted that the survey, conducted from late February to March 31, may not have fully captured the impact of the US tariff announcements.

    BoJ Deputy Governor Shinichi Uchida, also speaking at the session, reiterated that the central bank remains committed to adjusting rates if the likelihood of achieving its 2% inflation target increases.

    Uchida emphasized that future policy decisions will be made on a meeting-by-meeting basis, based on updated forecasts, “without any preconception”.

    AUD/USD Mid-Day Report

    Daily Pivots: (S1) 0.6240; (P) 0.6315; (R1) 0.6403; More…

    AUD/USD’s steep decline today and breach of 0.6087 support indicates resumption of whole fall from 0.6941. Intraday bias is back on the downside. Next target is 61.8% projection of 0.6941 to 0.6087 from 0.6388 at 0.5860. On the upside, above 0.6154 minor resistance will turn intraday bias neutral and bring consolidations first.

    In the bigger picture, fall from 0.6941 (2024 high) is seen as part of the down trend from 0.8006 (2021 high). Next medium term target is 61.8% projection of 0.8006 to 0.6169 from 0.6941 at 0.5806. In any case, outlook will stay bearish as long as 0.6388 resistance holds.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    23:30 JPY Overall Household Spending Y/Y Feb -0.50% -0.70% 0.80%
    06:00 EUR Germany Factory Orders M/M Feb 0.00% 3.30% -7.00% -5.50%
    06:45 EUR France Industrial Output M/M Feb 0.70% 0.50% -0.60% -0.50%
    08:30 GBP Construction PMI Mar 46.4 46.7 44.6
    12:30 USD Nonfarm Payrolls Mar 228K 128K 151K 117K
    12:30 USD Unemployment Rate Mar 4.20% 4.10% 4.10%
    12:30 USD Average Hourly Earnings M/M Mar 0.30% 0.30% 0.30%
    12:30 CAD Net Change in Employment Mar -32.6K 10.4K 1.1K
    12:30 CAD Unemployment Rate Mar 6.70% 6.70% 6.60%

     



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  • Global Markets Plunge, Aussie Down Ahead of RBA

    Global Markets Plunge, Aussie Down Ahead of RBA


    Risk aversion is sweeping through global financial markets today, with equities across Asia and Europe plunging ahead of the US’s so-called tariff “Liberation Day” on April 2. The selloff began in Asia, and continued through European Session. US futures are also pointing sharply lower, with the tech-heavy NASDAQ bearing the brunt of the pressure. Meanwhile, Gold continues to surge, with prices pushing above 3120 and showing no signs of slowing.

    Currency markets reflect the prevailing risk-off tone, with Yen leading gains as investors seek refuge. Dollar and Sterling are also relatively firm. Aussie, Kiwi and Loonie are the weakest performers. Euro and Swiss Franc are trading mixed in the middle.

    Australia’s RBA decision tomorrow will be in focus, though it’s unlikely to trigger fireworks. The central bank is widely expected to keep rates on hold at 4.10%, emphasizing its vigilance on inflation while pushing back on expectations for a rapid easing cycle.

    The big four banks are split on the path forward. CBA, Westpac, and NAB anticipate three more RBA cuts this year starting in May, subject to Australia’s Q1 CPI report due April 2. ANZ, on the other hand, sees just one more cut in August, which would leave the cash rate at 3.85%.

    Technically, Nikkei broke through 35987.13 to resume the decline from 40398.23. The development affirms that case that corrective pattern from 42426.77 (2024 high) is already in its third leg. Firm break of 61.8% projection of 40398.23 to 35987.13 from 38220.69 at 35494.62 could prompt downside acceleration to 100% projection at 33809.58. If realized, the next fall in Nikkei would likely be accompanied by another down leg in USD/JPY.

    In Europe, at the time of writing, FTSE is down -1.26%. DAX is down -1.73%. CAC is down -1.71%. UK 10-year yield is down -0.051 at 4.660. Germany 10-year yield is down -0.04 at 2.695. Earlier in Asia, Nikkei fell -4.05%. Hong Kong HSI fell -1.31%. China Shanghai SSE fell -0.46%. Singapore Strait Times fell -0.23%. Japan 10-year JGB yield fell -0.066 to 1.488.

    ECB Lagarde: Europe must march toward economic independence amid tariff threats

    ECB President Christine Lagarde emphasized the need for Europe to assert more control over its economic future in light of looming US tariffs, set to begin on April 2.

    In a France Inter radio interview, Lagarde reframed the narrative around “Liberation Day,” saying that while the US sees it as a move toward sovereignty, Europe must seize it as an inflection point—“a march toward independence.”

    Lagarde reiterated her previous estimates that tariffs from the US could shave around 0.3% off Eurozone growth in the first year. Should Europe retaliate with reciprocal measures, the negative impact could deepen to as much as 0.5%.

    On inflation, Lagarde noted that keeping it in check remains a “constant battle.” She stressed that while some progress has been made, inflation needs to fall in a sustainable way. That, she said, requires a carefully calibrated interest rate policy.

    ECB’s Panetta: Uncertainty demands caution on rate cuts

    Italian ECB Governing Council member Fabio Panetta warned that the battle against inflation “cannot yet be said to be over.” and urged caution in the timing of interest rate cuts.

    In a speech today, Panetta pointed to the heightened uncertainty stemming from “contradictory” announcements on US trade policy, suggesting that such unpredictability complicates the ECB’s path forward. As a result, the central bank must continue to monitor “all the factors that could hinder the return to the 2% target”

    Panetta emphasized the balancing act the ECB now faces. On one hand, subdued consumption and investment, driven by geopolitical tensions and weak Eurozone growth, are helping to ease inflationary pressures.

    But on the other hand, the resurgence of uncertainty—particularly around US tariffs—means the ECB must remain vigilant and not rush into policy loosening.

    Japan’s industrial production beats with 2.5% mom growth in Feb

    Japan’s industrial production rose 2.5% mom in February, beating market expectations of 1.9% mom gain. The strong growth was driven by key tech-related sectors, with chipmaking machinery output jumping 8.2% and electronic parts and devices surging 10.1%.

    A survey by Ministry of Economy, Trade and Industry projects continued, albeit modest, gains in output of 0.6% mom in March and 0.1% mom in April.

    While the headline data is encouraging, the METI acknowledged that the outlook could quickly shift. Though no direct production impact from the proposed US tariffs has been reported yet, METI emphasized the need to monitor the situation more closely going forward.

    On the consumer side, retail sales grew just 1.4% yoy, missing expectations of a 2.4% rise.

    NZ ANZ business confidence dips to 57.5, rising inflation expectations stir doubts over RBNZ cuts

    New Zealand’s ANZ Business Confidence dipped slightly from 58.4 to 57.5 in March. Own Activity Outlook improved from 45.1 to 48.6.

    However, the data also brought a clear warning on inflationary pressures. Cost expectations surged from 71.3 to 74.1, the highest level in a year. Pricing intentions climbed from 46.2 to 51.3, marking the strongest since May 2023.

    Perhaps more importantly, one-year inflation expectations also ticked up from 2.53% to 2.63%, inching further above the RBNZ’s 2% midpoint target.

    ANZ flagged the rising inflation signals as “a little disconcerting,” cautioning that these developments could influence how enthusiastic RBNZ will be about delivering further rate cuts.

    A rate cut at the April meeting appears locked in, and a second in May is viewed as likely. However, ANZ noted that the odds of a third cut in July are now “more of a coin toss.”

    China’s official PMI manufacturing rises to 50.5, but labor market lags

    China’s official PMI data for March offered modest optimism, with the manufacturing index rising from 50.2 to 50.5, matching expectations and marking its highest level in a year.

    Sub-indices for production and new orders both improved to 52.6 and 51.8, respectively. However, employment index slipped to 48.2, highlighting persistent weakness in labor market conditions within the manufacturing sector.

    Non-manufacturing activity also improved slightly, with the PMI climbing from 50.4 to 50.8, beating expectations of 50.5.

    Still, employment in the non-manufacturing sector deteriorated, with the index falling to 45.8, as both the services and construction sectors shed workers.

    AUD/USD Mid-Day Report

    Daily Pivots: (S1) 0.6275; (P) 0.6293; (R1) 0.6306; More…

    Intraday bias in AUD/USD is back on the downside with break of 0.6257 support. Fall from 0.6390 should now target 0.6186 next. Firm break there e will indicate that corrective pattern from 0.6087 has completed and larger fall from 0.6941 is ready to resume. For now, risk will stay on the downside as long as 0.6329 resistance holds, in case of recovery.

    In the bigger picture, fall from 0.6941 (2024 high) is seen as part of the down trend from 0.8006 (2021 high). Next medium term target is 61.8% projection of 0.8006 to 0.6169 from 0.6941 at 0.5806. In any case, outlook will stay bearish as long as 55 W EMA (now at 0.6467) holds.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    23:50 JPY Industrial Production M/M Feb P 2.50% 1.90% -1.10%
    23:50 JPY Retail Trade Y/Y Feb 1.40% 2.40% 4.40%
    00:00 NZD ANZ Business Confidence Mar 57.5 58.4
    00:30 AUD Private Sector Credit M/M Feb 0.50% 0.50% 0.50%
    01:30 CNY NBS Manufacturing PMI Mar 50.5 50.5 50.2
    01:30 CNY NBS Non-Manufacturing PMI Mar 50.8 50.5 50.4
    05:00 JPY Housing Starts Y/Y Feb 2.40% -1.90% -4.60%
    06:00 EUR Germany Import Price Index M/M Feb 0.30% -0.10% 1.10%
    06:00 EUR Germany Retail Sales M/M Feb 0.80% 0.00% 0.20%
    08:30 GBP M4 Money Supply M/M Feb 0.20% 1.10% 1.30%
    08:30 GBP Mortgage Approvals Feb 65K 66K 66K
    12:00 EUR Germany CPI M/M Mar P 0.30% 0.30% 0.40%
    12:00 EUR Germany CPI Y/Y Mar P 2.20% 2.30%
    13:45 USD Chicago PMI Mar 45.4 45.5

     



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