Tag: BTC

  • Dollar Recovers as Markets Stabilize, Euro Pressured by PMI and Dovish ECB Accounts

    Dollar Recovers as Markets Stabilize, Euro Pressured by PMI and Dovish ECB Accounts


    Dollar staged a broad recovery today as financial markets found some footing following a volatile stretch dominated by US deficit concerns. US futures are trading flat, while 10-year Treasury yield has pared back modestly from recent highs, signaling a pause in the bond selloff. The calmer tone helped the greenback regain some traction.

    Support for Dollar came even after a narrow passage of a sweeping tax and spending bill in the US House of Representatives. The legislation, central to President Donald Trump’s policy agenda, introduces a range of tax breaks, most notably on tips and car loans, while substantially boosting military and border enforcement budgets. The Congressional Budget Office estimates the bill would add approximately USD 3.8 Trillion to debt over the next decade.

    In Europe, Euro came under some pressure following disappointing PMI data. The services sector unexpectedly slipped back into contraction territory in May, highlighting the fragility of the region’s recovery. The PMI Composite also dipped below 50, reinforcing the view that growth momentum is stalling again after a weak start to the year.

    Adding to Euro’s woes, ECB’s latest meeting accounts revealed internal discussions over a more aggressive 50 basis point rate cut in April, although the final decision was a unanimous 25 basis point reduction. While the accounts reflect growing confidence in disinflation trends, they also underscore a heightened sense of caution about weakening growth and the evolving global trade environment.

    Overall in the currency markets, Yen stands out as the strongest performer today so far, followed by Dollar, and then Sterling. Kiwi leads the losers, followed by Euro and Aussie. Loonie and Swiss Franc are positioning in the middle. Overall, today’s market tone isn’t clearly risk-on.

    Technically, Bitcoin finally surged to new record high above 110000 this week. Upside momentum remains strong as seen in D MACD. Current up trend could now be targeting 100% projection of 49008 to 109571 from 73473 at 134936 next. For now, outlook will remain bullish as long as 100692 support holds, in case of retreat.

    In Europe, at the time of writing, FTSE is down -0.77%. DAX is down -0.08%. CAC is down -1.05%. UK 10-year yield is up 0.008 at 4.769. Germany 10-year yield is down -0.002 at 2.652. Earlier in Asia, Nikkei fell -0.84%. Hong Kong HSI fell -1.19%. China SSE fell -0.22%. Singapore Strait Times fell -0.06%. Japan 10-year JGB yield rose 0.041 to 1.562.

    US initial jobless claims fall to 227k vs exp 230k

    US initial jobless claims fell -2k to 227k in the week ending May 17, below expectation of 230k. Four-week moving average of initial claims rose 1k to 232k.

    Continuing claims rose 36k to 1903k in the week ending May 10. Four-week moving average of continuing claims rose 18k to 1888k, highest since November 2021.

    UK PMI composite ticks up to 49.4, price pressures ease from April spike

    UK PMI Services rose modestly from 49.0 to 50.2, while Manufacturing PMI edged lower from 45.4 to 45.1. As a result, the Composite PMI ticked up from 48.5 to 49.4, still below the 50-mark that separates expansion from contraction.

    According to S&P Global’s Chris Williamson, business confidence has improved since April, helped in part by easing trade tensions. However, output across the private sector shrank for a second consecutive month, suggesting that the UK economy may be slipping into contraction for Q2.

    On a more encouraging note, inflationary pressures appear to have cooled significantly from April’s spike. This moderation in price growth, combined with lackluster output and emerging job losses, strengthens the case for further monetary easing by BoE in the coming months.

    ECB accounts: Some members see April rate cut as frontloading a June move

    ECB’s April 16–17 meeting accounts revealed unanimous support for the 25 basis point rate cut, the inflation shock was “nearly over”. The cut was not only as a response to improving inflation outlook but also as insurance against mounting downside risks to growth, driven by escalating global trade tensions.

    Several members specifically cited recent developments around tariffs as rationale for acting sooner rather than later. In their view, a cut at the April meeting could be seen as “frontloading a possible cut at the June meeting”, helping to anchor sentiment amid elevated market volatility.

    Some members noted that the tariff-driven uncertainty did not appear to be translating into inflationary pressure, partly due to Euro’s appreciation role as a “safe-haven currency”. Instead, tariff-related headwinds were increasingly viewed as disinflationary, especially as growth prospects weakened and financial conditions tightened.

    A minority on the Council even argued for a more aggressive 50 bps cut, citing a deterioration in the balance of risks since March. These members emphasized that “even in the event of a relatively mild trade conflict, uncertainty was already discouraging consumption and investment.

    Eurozone PMI composite falls to 49.5, services falter, manufacturing holds tentatively

    Eurozone’s private sector returned to contraction in May, with PMI Composite falling from 50.4 to 49.5, a six-month low. The drag came from the services sector, where the PMI dropped from 50.1 to 48.9, its weakest reading in 16 months. While the manufacturing index rose modestly from 49.0 to 49.4, marking a 33-month high, it remained in contractionary territory.

    According to HCOB Chief Economist Cyrus de la Rubia, the region’s economy “cannot seem to find its footing,” as growth signals remain elusive and sentiment subdued.

    The modest improvement in manufacturing may reflect front-loaded activity as firms seek to get ahead of US tariffs, rather than underlying demand strength. However, the downturn in services, typically more domestically oriented and less exposed to global trade, raises concern about internal demand softness.

    For the ECB, the numbers are “likely to leave it with mixed feelings”. While service sector inflation appears to be moderating, input costs — likely driven by wages — are ticking higher again. Manufacturing purchase prices, by contrast, continue to fall.

    German Ifo rises to 87.5, economy stabilizing with uncertainty eased

    Germany’s Ifo Business Climate Index rose to 87.5 in May, up from 86.9 in April, offering cautious optimism that the economy may be stabilizing.

    The improvement was driven by a notable rise in the Expectations Index, which climbed from 87.4 to 89.9, a sign that firms are growing more confident about future conditions. However, the Current Situation Index dipped slightly from 86.4 to 86.1.

    The Ifo Institute noted that “sentiment among German companies has improved” and that the recent surge in uncertainty has begun to ease.

    BoJ’s Noguchi: Must tread carefully with step-by-step policy normalization

    BoJ board member Asahi Noguchi emphasized the importance of a “measured, step-by-step” pace in raising interest rates, stressing the need to carefully assess the economic impact of each hike before proceeding further.

    Noguchi also addressed the upcoming interim review of BoJ’s bond tapering strategy, indicating that he sees no need for any major adjustments to the current plan, which runs through March 2026.

    He noted that the central bank should approach its long-term reduction in the balance sheet with flexibility, taking the time needed to ensure stability while maintaining the capacity to respond to “sudden market swings”.

    Any emergency increase in bond purchases, he noted, would be strictly conditional and “only be implemented during times of severe market disruption.”

    Japan’s PMI composite falls to 49.8, private sector contracts again

    Japan’s private sector activity fell back into contraction in May, with PMI Composite declining from 51.2 to 49.8. Manufacturing output edged higher from 48.7 to 49.0, but remained below the neutral 50 mark. The services sector, however, lost more momentum, with its PMI falling from 52.4 to 50.8.

    The decline in composite output reflects weakening domestic and external demand, as new business volumes fell for the first time in nearly a year.

    S&P Global’s Annabel Fiddes noted that elevated uncertainty around trade policy and foreign demand weighed heavily on business confidence, which sank to its second-lowest level since the pandemic’s onset.

    RBA’s Hauser: Post-tariff China outlook positive but incomplete

    In a speech focused on his recent visit to China following the sweeping tariff shifts of “Liberation Day”, RBA Deputy Governor Andrew Hauser noted there was a sense of “strong hand” in managing the economic fallout from US-imposed tariffs. Additionally, Australian firms operating in China perceived “opportunities amidst the risks”, as trade patterns began to shift.

    However, Hauser was quick to stress that this view was inherently limited, anchored to a moment in time and shaped by a single national perspective.

    Hauser laid out four key caveats. First, global tariff settings remain fluid, and data on their real-world economic effects is just beginning to emerge. Second, the assessments he heard may prove overly optimistic, domestic stimulus in China may underperform, and public tolerance for economic pain may be lower than expected.

    Third, indirect “general equilibrium” effects could emerge, including the possibility of intensified competition from Chinese firms offloading excess supply originally intended for US markets. While sectoral overlap with Australia is limited, it is a concern shared across the Asia-Pacific region.

    Finally, Hauser acknowledged the broader strategic uncertainties at play—factors beyond economics that could shape Australia’s position.

    Australia’s PMI Composite slips to 50.6; firms cite election drag on demand

    Australia’s private sector showed signs of slowing in May, with PMI Composite falling from 51.0 to a 3-month low of 50.6. Manufacturing index held steady at 51.7. But services weakened from 51.0 to 50.5, its lowest level in six months.

    According to S&P Global’s Andrew Harker, the sluggishness may be tied in part to election-related uncertainty, which “contributed to slower growth of new orders”. Still, firms remained cautiously optimistic, continuing to hire at a “solid pace”. With the political noise expected to ease, attention will turn to whether demand picks up in the months ahead.

    USD/CHF Mid-Day Outlook

    Daily Pivots: (S1) 0.8211; (P) 0.8251; (R1) 0.8251; More….

    Intraday bias in USD/CHF is turned neutral first with current recovery. But risk will remain on the downside as long as 0.8475 resistance holds. Corrective rebound from 0.8038 should have completed already. Below 0.8208 will bring retest of 0.8038 first. Firm break there will resume larger down trend to 61.8% projection of 0.9200 to 0.8038 from 0.8475 at 0.7757 next.

    In the bigger picture, long term down trend from 1.0342 (2017 high) is still in progress and met 61.8% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.8079 already. In any case, outlook will stay bearish as long as 55 W EMA (now at 0.8765) holds. Sustained break of 0.8079 will target 100% projection at 0.7382.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    23:00 AUD Manufacturing PMI May P 51.7 51.7
    23:00 AUD Services PMI May P 50.5 51
    23:50 JPY Machinery Orders M/M Mar 13.00% -1.60% 4.30%
    00:30 JPY Manufacturing PMI May P 49 49 48.7
    00:30 JPY Services PMI May P 50.8 52.4
    06:00 GBP Public Sector Net Borrowing (GBP) Apr 20.2B 17.7B 16.4B
    07:15 EUR France Manufacturing PMI May P 49.5 48.9 48.7
    07:15 EUR France Services PMI May P 47.4 47.7 47.3
    07:30 EUR Germany Manufacturing PMI May P 48.8 49 48.4
    07:30 EUR Germany Services PMI May P 47.2 49.5 49
    08:00 EUR Eurozone Manufacturing PMI May P 49.4 49.4 49
    08:00 EUR Eurozone Services PMI May P 48.9 50.4 50.1
    08:00 EUR Germany IFO Business Climate May 87.5 87.7 86.9
    08:00 EUR Germany IFO Current Assessment May 86.1 87 86.4
    08:00 EUR Germany IFO Expectations May 88.9 88.3 87.4
    08:30 GBP Manufacturing PMI May P 45.1 46.2 45.4
    08:30 GBP Services PMI May P 50.2 50 49
    11:30 EUR ECB Meeting Accounts
    12:30 CAD Industrial Product Price M/M Apr -0.80% -0.50% 0.50% 0.30%
    12:30 CAD Raw Material Price Index Apr -3.00% -2.20% -1% -0.70%
    12:30 USD Initial Jobless Claims (May 16) 227K 230K 229K
    13:45 USD Manufacturing PMI May P 49.9 50.2
    13:45 USD Services PMI May P 51 50.8
    14:00 USD Existing Home Sales Apr 4.10M 4.02M
    14:30 USD Natural Gas Storage 118B 110B

     



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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    NZ BNZ services slips to 48.5, sector remains under pressure

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    Here are some highlights for the week:

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

    AUD/USD Daily Report

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

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

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

    Economic Indicators Update

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

     



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

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


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

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

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

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

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

    Gold Falls as US-China Trade Deal Signals Easing Tensions

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

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

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

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

    Bitcoin losing momentum after strong rally

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

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

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

     

    US data deluge to reveal first hints of tariff impacts

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

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

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

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

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

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

    Here are some highlights for the week:

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

    USD/CHF Daily Outlook

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

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

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

    Economic Indicators Update

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

     



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  • Pound and Dollar Lead FX on UK-US Trade Deal, BoE Cut Overshadowed

    Pound and Dollar Lead FX on UK-US Trade Deal, BoE Cut Overshadowed


    Sterling and the US Dollar are leading gains among major currencies today, lifted by anticipation surrounding the imminent announcement of a comprehensive US-UK trade agreement. The Pound remained resilient after BoE’s expected 25bps rate cut. The three-way split within the BoE’s Monetary Policy Committee and the mixed implications of its economic projections have made it difficult for markets to form a decisive reaction.

    BoE’s updated economic projections included two alternative scenarios, one based on weaker global demand due to trade disruptions, the other on renewed inflation stickiness from second-round effects. But with global trade dynamics in flux, these projections are highly conditional and arguably academic at this stage. A trade deal with the US may relieve some economic pressure on Britain, but its benefit depends on how the US proceeds with other partners, especially the EU and China.

    For now, attention is squarely on the 1400 GMT press conference where US President Donald Trump is expected to formally unveil the UK trade deal. Trump described the agreement as “full and comprehensive,” calling it a first step in a broader realignment of US trade policy. UK Prime Minister Keir Starmer’s office confirmed talks have progressed swiftly and promised an update later today.

    Meanwhile, Euro is also holding firm despite signs of growing transatlantic strain. European Commission has announced preparations for countermeasures in response to Washington’s reciprocal tariff regime, launching a WTO dispute and consulting on duties affecting EUR 95B worth of US imports. Still, EC President Ursula von der Leyen emphasized a preference for negotiation, suggesting room remains for diplomacy.

    In contrast, Yen is the weakest major currency today, Loonie and Swiss Franc. Aussie and Kiwi are positioning in the middle.

    Technically, Bitcoin’s rally from 74373 resumed today by breaking through 97944 resistance. Further rally is expected as long as 93351 support holds, to retest 109571 record high. Nevertheless, barring clear sign of upside acceleration, current rise is seen as the second leg a medium term corrective pattern. Hence, strong resistance is expected from 109571 to limit upside to bring near term reversal.

    In Europe, at the time of writing, FTSE is up 0.17%. DAX is up 0.80%. CAC is up 0.92%. UK 10-year yield is up 0.025 at 4.489. Germany 10-year yield is up 0.018 at 2.494. Earlier in Asia, Nikkei rose 0.41%. Hong Kong HSI rose 0.37%. China Shanghai SSE rose 0.28%. Singapore Strait Times fell -0.44%. Japan 10-year JGB yield rose 0.025 to 1.325.

    US initial jobless claims fall to 228k vs exp 235k

    US initial jobless claims fell -13k to 228k in the week ending May 3, below expectation of 235k. Four-week moving average of initial claims rose 1k to 227k.

    Continuing claims fell -29k to 1879k in the week ending April 26. Four-week moving average of continuing claims rose 9k to 1875k.

    BoE cuts 25bps, three-way vote split reveals growing rift on rate path

    BoE lowered its benchmark Bank Rate by 25 basis points to 4.25% , in line with market expectations. However, the decision revealed a rare three-way split among policymakers.

    Five members supported the 25bps reduction, while Catherine Mann and Chief Economist Huw Pill voted to keep rates unchanged. On the dovish end, Swati Dhingra and Alan Taylor backed a deeper 50bps cut.

    In its accompanying statement, BoE reiterated that a “gradual and careful approach” remains appropriate as it withdraws monetary restraint.

    While acknowledging progress on inflation, the central bank emphasized the need for policy to stay “restrictive for sufficiently long” to ensure inflation returns sustainably to the 2% target.

    In its latest Monetary Policy Report, the BoE’s baseline forecast sees CPI inflation rising to 3.5% in Q3 2025 before easing back to 2% in the medium term.

    But policymakers outlined two risk-laden alternative scenarios. The first, a lower demand scenario, assumes heightened uncertainty depresses domestic spending and inflationary pressures fade more quickly. Under this path, the economy faces a wider output gap and inflation runs -0.3% lower than baseline by the three-year horizon.

    Conversely, the second scenario envisions higher inflation persistence, where near-term rise in headline inflation triggers second-round effects in wages and prices, compounded by weak productivity growth. In this case, the impact on growth is modest, but inflation runs 0.4% above baseline throughout the forecast period.

    RBNZ flags global growth risks as tariffs echo COVID-era disruptions

    RBNZ Governor Christian Hawkesby warned today that rising global tariffs are having a clear and negative impact on global economic activity, prompting the central bank to revise down its projections for global growth.

    Speaking to a parliamentary committee, Hawkesby called the effects of the tariff wave “unambiguously” harmful. He added that while New Zealand’s exposure to a 10% US tariff on exports poses challenges, the softer New Zealand Dollar may help cushion some of the blow. Nonetheless, weaker demand from key trading partners is now a growing concern for the country’s outlook.

    Hawkesby drew a stark comparison between the supply-side disruptions caused by current tariffs and those seen during the COVID-19 pandemic, stressing that both are capable of delivering long-lasting economic distortions.

    “We know from our experience, from the COVID experience, that supply side impacts are significant, and that are long-lasting and can create real challenges,” he said.

    He added that the situation remains fluid, with considerable uncertainty about how the structural dynamics of the global economy will adjust to this new trade regime.

    BoJ minutes: Caught between global uncertainty and domestic price pressures

    Minutes from BoJ’s March meeting revealed growing concern among policymakers over the external risks posed by US tariff policies.

    One member warned that downside risks from these policies had “rapidly heightened” and could significantly harm Japan’s real economy, suggesting BoJ should “be particularly cautious when considering the timing for the next rate hike.”

    However, not all board members advocated for a cautious stance. Another member stressed that even amid heightened uncertainty, BoJ should not automatically default to a cautious stance, stating that BOJ “might face a situation where it should act decisively”.

    A third voice on the board emphasized the importance of incorporating inflation expectations, upside risks to prices, and progress in wage growth into BoJ’s policy deliberations. Domestic developments could still justify tightening if conditions shift meaningfully.

    Separately, BoJ Governor Kazuo Ueda reinforced this message in his remarks to parliament today, acknowledging that while food price volatility, particularly for rice, remains elevated, these pressures would ease over time.

    Nonetheless, Ueda emphasized the importance of monitoring price developments closely, given the elevated uncertainty in the global economic environment.

    USD/JPY Mid-Day Outlook

    Daily Pivots: (S1) 142.81; (P) 143.40; (R1) 144.43; More…

    USD/JPY rebounded further today but stays below 145.90 resistance. Overall, rise from 139.87 could extend through 145.90. But near term outlook will stay bearish as long as 38.2% retracement of 158.86 to 139.87 at 147.12 holds, in case of another bounce. On the downside, firm break of 141.96 will argue that rebound from 139.87 has completed as a corrective move. Retest of 139.87 should then be seen next in this case.

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

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    23:01 GBP RICS Housing Price Balance Apr -3% -4% 2%
    23:50 JPY BoJ Minutes
    06:00 EUR Germany Industrial Production M/M Feb 3.00% 0.80% -1.30%
    06:00 EUR Germany Trade Balance (EUR) Mar 21.1B 18.8B 17.7B
    11:00 GBP BoE Interest Rate Decision 4.25% 4.25% 4.50%
    11:00 GBP MPC Official Bank Rate Votes 2–5–2 0–9–0 0–1–8
    12:30 USD Initial Jobless Claims (May 2) 228K 235K 241K
    12:30 USD Nonfarm Productivity Q1 P -0.80% -0.40% 1.50%
    12:30 USD Unit Labor Costs Q1 P 5.70% 5.30% 2.20%
    14:00 USD Wholesale Inventories Mar F 0.50% 0.50%
    14:30 USD Natural Gas Storage 103B 107B

     



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  • Markets Rebound as Trump Softens on Tariffs and Powell, Risk Sentiment Regains Ground

    Markets Rebound as Trump Softens on Tariffs and Powell, Risk Sentiment Regains Ground


    US stock staged a strong rebound overnight, erasing all of Monday’s steep losses as risk sentiment recovered on signs of potential de-escalation in US-China trade conflicts. The sharp reversal in equities was driven by multiple headlines suggesting a thaw in relations, including comments from US Treasury Secretary Scott Bessent and President Donald Trump that tariffs may soon come down. The recovery extended into Asian markets, with relief spreading after Trump also backed away from threats to fire Fed Chair Jerome Powell.

    In a closed-door meeting with investors, Bessent reportedly said he expects “a de-escalation” in the trade standoff with China in the “very near future,” acknowledging that the current tariff regime—now as high as 145% on Chinese goods—is unsustainable. “We have an embargo now, on both sides, right?” he added, highlighting the urgency to reach a deal. Trump echoed that tone during a press conference in the Oval Office, stating that the current tariff rates “won’t be that high” and expressing optimism that an agreement with Beijing could be reached “pretty quickly.” He also pledged not to “play hardball” during the negotiations, a marked shift in tone from recent weeks.

    In another positive turn for market stability, Trump publicly backed off from his threat to remove Fed Chair Powell. “No, I have no intention of firing him,” he told reporters, although he reiterated his preference for interest rate cuts. The reversal comes just days after sharp market losses partly triggered by growing concerns over Fed independence. Markets took the remarks in stride, viewing them as a sign that political pressure may ease for now, and that the central bank will retain the space to operate without further direct confrontation from the White House.

    In currency markets, Swiss Franc is currently the week’s weakest performer, followed by the Euro and Sterling. On the stronger side, Kiwi leads, with Aussie and Loonie also firming. Dollar, which rebounded notably, and Japanese Yen are holding in the middle of the pack.

    Technically, Bitcoin’s rebound from the 74,373 level gathered momentum a decisive break through 88,769 resistance. This move suggests that the correction from the 109,571 high may have already completed at the 73,812 cluster support area. While it’s still early to confirm a full resumption of the long-term uptrend, the rally may signal an early return of risk-on sentiment. A retest of 109,571 peak appears likely as bullish momentum rebuilds.

    Looking ahead, Eurozone will release PMI flash and trade balance. UK will also release PMI flash. Later in the day, US will release PMI flash and new home sales, as well as Fed’s Beige Book economic report.

    In Asia, at the time of writing, Nikkei is up 1.72%. Hong Kong HSI is up 2.61%. China Shanghai SSE is up 0.10%. Singapore Strait Times is up 1.05%. Japan 10-year JGB yield is up 0.012 at 1.324. Overnight, DOW rose 2.66%. S&P 500 rose 2.51%. NASDAQ rose 2.71%. 10-year yield fell -0.016 to 4.389.

    Japan’s PMI composite rises to 51.1, service leads while manufacturing drags

    Japan’s flash PMI data for April signaled a return to growth in the private sector, with Composite PMI rising from 48.9 to 51.1. The recovery was driven primarily by a rebound in the services sector, where activity rose to 52.2 from 50.0. Meanwhile, manufacturing remained in contraction, though the pace of decline eased slightly, with the PMI inching up from 48.4 to 48.5.

    According to S&P Global’s Annabel Fiddes, the divergence between sectors reflected subdued factory output versus strengthening service demand.

    A closer look at new business trends revealed further divergence. Manufacturers reported the sharpest drop in new orders in over a year, driven by falling foreign demand and persistent concerns over tariffs and client spending. In contrast, service providers saw their strongest rise in new work since January.

    Still, inflationary pressures were strong across the board, with input costs rising at the fastest pace in two years, prompting firms to pass on those costs to customers via higher selling prices.

    Overall optimism for output over the next year fell to its lowest level since August 2020, during the early phase of the COVID-19 crisis.

    Australia’s PMI composite dips to 51.4, cost pressures emerge

    Australia’s flash PMI data for April showed continued, albeit slower, expansion in the private sector, with Manufacturing PMI slipping from 52.1 to 51.7 and Services PMI easing from 51.6 to 51.4. The Composite PMI also declined slightly from 51.6 to 51.4.

    Despite the modest pullback, S&P Global’s Jingyi Pan noted that domestic demand remained a “strong proponent” of business activity, supporting further job creation across sectors. The data suggests a solid start to Q2, underpinned by internal momentum, even as external headwinds mount.

    However, the impact of US tariffs are starting to show. Export performance weakened, and manufacturers reported “intensification of cost pressures” due to currency fluctuations.

    In response, many firms passed on higher costs to clients, pushing overall selling price inflation to a nine-month high.

    Fed’s Kugler stresses caution amid tariff shock and inflation risks

    Fed Governor Adriana Kugler said in a speech that she supports holding interest rates steady as long as upside inflation risks persist, provided that economic activity and employment remain stable.

    Kugler noted that the current policy stance is “well positioned” to adapt to evolving macroeconomic conditions, but emphasized the need for caution given the increasing complexity of the outlook.

    She highlighted a significant rise in uncertainty, pointing to a dual threat: upward pressure on inflation and downside risks to employment.

    The recent escalation in tariffs, described as “significantly larger” than previously expected, has heightened concerns about both growth and price stability.

    Kugler warned that “the economic effects of tariffs and the associated uncertainty are also likely to be larger than anticipated.”

    Fed’s Kashkari warns of policy dilemma amid tariff tensions and market strains

    Minneapolis Fed President Neel Kashkari said overnight that it’s “too soon” to determine the future path of US interest rates. While he acknowledged that tariffs alone may not necessarily reignite persistent inflation, he emphasized that Fed cannot dismiss the risk, especially given the still-elevated price levels in recent months.

    At the same time, Kashkari noted that tariffs are likely to weigh on growth, creating a policy dilemma: Fed cannot simultaneously counter rising inflation and rising unemployment without making difficult trade-offs.

    Kashkari highlighted that the growing uncertainty surrounding US trade policy is compounding the challenge. While resolution could come quickly if negotiations succeed, the current lack of clarity is already deterring both consumer and business activity.

    Adding to the complexity, Kashkari pointed to additional pressure from a weakening dollar and rising Treasury yields, as global investors begin to question the attractiveness of US assets.

    “If we’re no longer the economy that investors around the world say, hey, this is the preeminent competitive economy,” he cautioned, “then we probably have less runway.”

    USD/CHF Daily Outlook

    Daily Pivots: (S1) 0.8106; (P) 0.8149; (R1) 0.8233; More…

    USD/CHF’s break of 0.8196 minor resistance suggests short term bottoming at 0.8038, on bullish convergence condition in 4H MACD. Intraday bias is back on the upside for stronger recovery to 38.2% retracement of 0.9200 to 0.8038 at 0.8482. Strong resistance should be seen there to limit upside. On the downside, break of 0.8038 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 0.8794) holds. Sustained break of 0.8079 will target 100% projection at 0.7382.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    23:00 AUD Manufacturing PMI Apr P 51.7 52.1
    23:00 AUD Services PMI Apr P 51.4 51.6
    00:30 JPY Manufacturing PMI Apr P 48.5 48.7 48.4
    00:30 JPY Services PMI Apr P 52.2 50
    04:30 JPY Tertiary Industry Index M/M Feb 0.50% -0.30%
    06:00 UK Public Sector Net Borrowing (GBP) Mar 15.4B 10.7B
    07:15 EUR France Manufacturing PMI Apr P 47.7 48.5
    07:15 EUR France Services PMI Apr P 47.6 47.9
    07:30 EUR Germany Manufacturing PMI Apr P 47.5 48.3
    07:30 EUR Germany Services PMI Apr P 50.3 50.9
    08:00 EUR Eurozone Manufacturing PMI Apr P 47.4 48.6
    08:00 EUR Eurozone Services PMI Apr P 50.4 51
    08:30 GBP Manufacturing PMI Apr P 44 44.9
    08:30 GBP Services PMI Apr P 51.4 52.5
    09:00 EUR Eurozone Trade Balance (EUR) Feb 14.9B 14.0B
    12:30 CAD New Housing Price Index M/M Mar 0.00% 0.10%
    13:45 USD Manufacturing PMI Apr P 49.3 50.2
    13:45 USD Services PMI Apr P 52.9 54.4
    14:00 USD New Home Sales Mar 679K 676K
    14:30 USD Crude Oil Inventories 1.6M 0.5M
    18:00 USD Fed’s Beige Book

     



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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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  • Stocks Extend Slump; EU Eyes Talks, US Signals Tough Stance

    Stocks Extend Slump; EU Eyes Talks, US Signals Tough Stance


    The global stock market rout continues to deepen today, with no clear signs of easing. Investor focus remains firmly on how the world is responding to the U.S.’s sweeping reciprocal tariffs. While equity markets crumble under the weight of growing uncertainty, developments out of Europe hint at a more constructive path—at least for now.

    A cautiously optimistic signal came from Europe, where leaders appear intent on prioritizing negotiations over immediate retaliation. In Luxembourg, EU ministers convened to assess their next steps, while European Commission President Ursula von der Leyen emphasized that “Europe is always ready for a good deal.” She noted that the EU has offered “zero-for-zero tariffs” on industrial goods in its ongoing attempts to preserve open trade.

    Despite this diplomatic posture, preparations for countermeasures are clearly underway. French Trade Minister Laurent Saint-Martin signaled that nothing is off the table, referencing the EU’s Anti-Coercion Instrument as a possible response. This mechanism would empower the bloc to restrict US service access or exclude American firms from public procurement within the EU—an unmistakable sign that Europe is readying its arsenal if negotiations break down.

    On the other hand, the tone from the US remains uncompromising. White House trade adviser Peter Navarro told CNBC that Vietnam’s offer of zero tariffs is “meaningless” without addressing non-tariff barriers, such as intellectual property theft and value-added tax disparities. “That’s a small first start,” Navarro later added, making it clear that tariff elimination alone won’t satisfy the Trump administration’s trade goals.

    This hardened stance suggests bilateral negotiations with the US will likely be prolonged and complex, especially with dozens of countries seeking exemptions or deals. The realization that tariff disputes are not simply about levies but about deeper structural trade practices is pushing expectations for a swift resolution further into the distance.

    In the currency markets, movement is relatively more measured compared to equities. Sterling is the weakest performer so far today, followed by Loonie and Kiwi. On the stronger end, Swiss Franc leads, followed by Aussie and Yen. Dollar and Euro are positioning in the middle. For now, FX traders may be waiting for further clarity before taking decisive positions, especially as trade negotiations unfold and market volatility remains elevated.

    Technically, Bitcoin is resuming the fall from 109571 today, and immediate focus is now on 73812 cluster support (38.2% retracement of 15452 to 109571 at 73617). Decisive break there will open up deeper correction to 61.8% retracement at 51405 in the medium term. That would be another drag on overall sentiment if realized.

    In Europe, at the time of writing, FTSE is down -4.52%. DAX is down -4.67%. CAC is down -5.02%. UK 10-year yield is up 0.092 at 4.545. Germany 10-year yield is down -0.014 at 2.566. Earlier in Asia, Nikkei fell -7.83%. Hong Kong HSI fell -13.22%. China Shanghai SSE fell -7.34%. Singapore Strait Times fell -7.46%. Japan 10-year JGB yield fell -0.04 to 1.116.

    Eurozone Sentix falls to -19.5, expectations collapse to -15.8 on trade war

    Investor sentiment in the Eurozone suffered a dramatic collapse in April, as the Sentix Investor Confidence Index plunged from -2.9 to -19.5, far below expectations of -8.7 and marking the lowest reading since October 2023. Current Situation Index dipped slightly from -21.7 to -23.3.

    The sharpest shock came from the Expectations Index, which nosedived from 18.0 to -15.8—its lowest level in 18 months and a staggering drop of -33.8 points, the second steepest fall ever recorded in Sentix history.

    Sentix directly attributed the deterioration to US President Donald Trump’s sweeping new tariff measures, stating that last month’s optimism across Germany and the broader EU had “evaporated.”

    The group warned that the early indicators point to a “massive problem,” with global economic stability seriously threatened. With Trump showing no signs of reversing course, Sentix cautioned that the tariff war is likely to “drag on longer than many assume,” fueling deeper disruptions.

    Eurozone retail sales rise 0.3% mom in Feb, EU up 0.2% mom

    Eurozone retail sales volumes rose by 0.3% mom in February, falling short of the expected 0.5% mom increase. The breakdown showed modest improvements across key segments: food, drinks, and tobacco sales were up 0.3% mom; non-food products excluding automotive fuel also rose 0.3% mom; while automotive fuel sales edged up 0.2% mom.

    Retail sales across the broader EU climbed just 0.2% mom, with notable divergence among member states. Cyprus led with a 4.7% gain, followed by Estonia (+2.2%) and Lithuania (+1.7%). Meanwhile, retail trade volumes declined in Bulgaria (-1.7%), the Netherlands (-1.4%), and Poland (-1.2%).

    ECB’s Stournaras: US Tariffs definitely deflationary, growth hit could reach 1%

    Greek ECB Governing Council member Yannis Stournaras warned that the US reciprocal tariffs were “worse than expected” and a source of “unprecedented” global policy uncertainty.

    In an interview with the Financial Times, he characterized the tariffs as “definitely a deflationary measure” for the Eurozone.

    “A notable adverse impact on growth could lead to activity being much weaker than expected, dragging inflation below our targets,” he added.

    While conceding it’s difficult to quantify the exact fallout, Stournaras projected a potential hit of between 0.5 to 1 percentage points to Eurozone growth.

    He refrained from speculating on whether the threat justifies a 50bps rate cut but underscored the seriousness of the downside risks.

    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.

    EUR/USD Mid-Day Outlook

    Daily Pivots: (S1) 1.0889; (P) 1.0999; (R1) 1.1072; More…

    EUR/USD is extending consolidations below 1.1145 and intraday bias remains neutral. Downside of retreat should be contained by 38.2% retracement of 1.0176 to 1.1145 at 1.0775 to bring rebound. On the upside, above 1.1145 will resume the rally from 1.0176 to 1.1213/74 key resistance zone next.

    In the bigger picture, fall from 1.1274 (2024 high) has completed as a three wave correction to 1.0176. Rise from 0.9534 ready to resume. Decisive break of 1.1274 will target 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916. Also, that will send EUR/USD through the multi-decade channel resistance will carries larger bullish implication. This will now be the favored case as long as 1.0731 support 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 -1.30% -0.90% 2.00%
    06:00 EUR Germany Trade Balance (EUR) Feb 17.7B 17.8B 16.0B
    07:00 CHF Foreign Currency Reserves (CHF) Mar 726B 735B
    08:30 EUR Eurozone Sentix Investor Confidence Apr -19.5 -8.7 -2.9
    09:00 EUR Eurozone Retail Sales M/M Feb 0.30% 0.50% -0.30% 0.00%
    14:30 CAD BoC Business Outlook Survey

     



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  • Dollar Recovery Remains Fragile While Bitcoin Struggles for Traction

    Dollar Recovery Remains Fragile While Bitcoin Struggles for Traction


    Dollar continues to grapple with reversing its recent bearish trend, but momentum behind the rebound remains tentative at best. The greenback has received modest support from Fed’s stance, with policymakers emphasizing there’s no urgency to resume rate cuts. This, combined with a general reassessment of earlier bearish bets, has helped slow the pace of decline in Dollar, even as sentiment remains cautious.

    One of the key themes driving recent market behavior has been the ongoing trade war narrative. Despite rising concerns about a recession in the US triggered by escalating tariffs, those fears have yet to materialize in hard data. Even Fed Chair Jerome Powell maintained a relatively balanced tone in this week’s FOMC press conference, holding back from sounding overly pessimistic. Traders may now be stepping back from aggressive short positions, waiting for more clarity—particularly around the reciprocal tariffs due in early April.

    Looking across the currency markets, Yen is the worst performer so far this week, gaining little traction even after stronger-than-expected inflation data from Japan. Aussie follows, pressured by disappointing jobs data, while the Euro is beginning to consolidate gains following renewed optimism over the EU’s large-scale fiscal expansion plans. On the flip side, the Canadian Dollar surprisingly leads, despite Canada’s exposure to US tariffs, with Swiss Franc and Kiwi following Dollar and Sterling are relatively mixed, occupying the middle of the pack.

    Meanwhile, Bitcoin’s recovery is showing signs of fatigue after hitting 87462 earlier in the week. President Donald Trump’s bold declaration that the US will become the global “undisputed Bitcoin superpower” at a recent crypto conference failed to spark meaningful market response. Despite the rhetoric, traders seem more focused on underlying technical and macroeconomic factors than political promises.

    Nevertheless, technically, Bitcoin is still holding firmly above 73812 cluster support (38.2% retracement of 15452 to 109571 at 73617. The choppy decline from 109571 is viewed as a correction only. Firm break of 55 D EMA (now at 89980) will argue that the pullback has already completed, and bring stronger rebound back to retest 109571 high.

    In Asia, Nikkei fell -0.20%. Hong Kong HSI is down -2.06%. China Shanghai SSE is down -1.29%. Singapore Strait Times is down -0.08%. Japan 10-year JGB yield fell -0.004 to 1.527. Overnight, DOW fell -0.03%. S&P 500 fell -0.22%. NASDAQ fell -0.33%. 10-year yield fell -0.023 to 4.233.

    Japan’s CPI core slows less than expected to 3% in Feb

    Japan’s core consumer inflation eased for the first time in four months in February, but less than market expectations. While the data strengthens the case for another BoJ rate hike at the April 30–May 1 meeting, policymakers may still choose to wait until July to better assess the impact of US tariff escalation and broader global financial market risks.

    CPI core (excluding fresh food) slowed from 3.2% yoy to 3.0% yoy, slightly above expectations of 2.9%. The moderation was partly due to the resumption of government subsidies on utility bills. Despite this, core inflation has stayed above BoJ’s 2% target since April 2022.

    More significantly, core-core CPI (excluding food and energy) rose from 2.5% yoy to 2.6% yoy, marking the fastest pace since March 2024. This continued strength in underlying inflation, even as services inflation softened slightly from 1.4% yoy to 1.3% yoy, reflects steady pass-through of higher labor costs.

    Meanwhile, headline CPI slowed from 4.0% yoy to 3.7% yoy.

    New Zealand posts NZD 510m trade surplus as exports surge across key markets

    New Zealand posted a surprise trade surplus of NZD 510m in February, defying expectations of a NZD -235m deficit.

    Goods exports jumped 16% yoy to NZD 6.7B, led by strong demand from key trading partners including China, Australia, and the EU. Notably, exports to China surged by 16% yoy, while shipments to Australia and the EU rose by 17% yoy and 37% yoy, respectively. The only major decline was seen in exports to the US, which slipped by -5.5% yoy.

    Goods imports edged up a modest 2.1% yoy to NZD 6.2B, with notable volatility in country-level data. Imports from the US spiked 41% yoy, while those from South Korea plunged -57% yoy. Imports from Australia (-9.3% yoy) and the EU (-3.3% yoy)also declined. Despite the pickup from the US and China (3.8% yoy), subdued import figures from other regions helped tilt the trade balance into surplus.

    BoC Governor: Crucial to Stop Initial Tariff Price Shocks from Becoming Generalized Inflation

    Bank of Canada Governor Tiff Macklem issued a stark warning on the economic consequences of prolonged US tariffs, emphasizing that broad-based and long-lasting trade barriers will depress Canadian exports, reduce overall output, and push consumer prices higher.

    In a speech overnight, Macklem noted that the unpredictability of US tariffs, marked by “constant policy reversals”, has injected significant uncertainty into the outlook for Canadian businesses and households.

    Macklem highlighted two major areas of concern: uncertainty about which tariffs will be imposed and for how long, and uncertainty about their economic impact.

    Already, the BoC has observed that businesses are cutting back investment and hiring, and many households are growing more cautious with spending. He warned that if broad-based tariffs remain in place, the result will be “less demand, less economic growth and higher inflation”.

    While monetary policy cannot prevent the initial rise in prices caused by tariffs, Macklem stressed that it must act to “prevent those initial, direct price increases from spreading”.

    “We must ensure that higher prices from tariffs do not become ongoing generalized inflation,” he emphasized.

    USD/CAD Daily Outlook

    Daily Pivots: (S1) 1.4290; (P) 1.4346; (R1) 1.4379; More…

    Intraday bias in USD/CAD remains neutral as range trading continues. On the downside, break of 1.4238 support will argue that corrective pattern from 1.4791 has started the third leg already. Intraday bias will be back on the downside for 1.4150 support and below. On the upside, though, break of 1.4541 will resume the rebound from 1.4150, as the second leg of the pattern.

    In the bigger picture, long term up trend is tentatively seen as resuming with prior breach of 1.4667/89 key resistance zone (2020/2015 highs). Next target is 100% projection of 1.2401 to 1.3976 from 1.3418 at 1.4993. This will remain the favored case as long as 1.3976 resistance turned support holds (2022 high), even in case of deep pullback.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    21:45 NZD Trade Balance (NZD) Feb 510M -235M -486M -544M
    23:50 JPY National CPI Y/Y Feb 3.70% 4%
    23:50 JPY National CPI Core Y/Y Feb 3.00% 2.90% 3.20%
    23:50 JPY National CPI Core-Core Y/Y Feb 2.60% 2.50%
    00:01 GBP GfK Consumer Confidence Mar -19 -21 -20
    07:00 GBP Public Sector Net Borrowing (GBP) Feb 10.7B -10.9B -15.4B -13.3B
    09:00 EUR Eurozone Current Account (EUR) Jan 38.4B
    12:30 CAD New Housing Price Index M/M Feb 0.00% -0.10%
    12:30 CAD Retail Sales M/M Jan -0.40% 2.50%
    12:30 CAD Retail Sales ex Autos M/M Jan -0.10% 2.70%
    15:00 EUR Eurozone Consumer Confidence Mar P -13 -14

     



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  • Dollar Stays Soft as Forex Markets Quiet, US CPI Highlights the Week

    Dollar Stays Soft as Forex Markets Quiet, US CPI Highlights the Week


    Forex markets are trading quietly in the Asian session, remaining within Friday’s range and showing little impetus to move decisively in either direction. Dollar is staying on the back foot, with a lack of substantial buying interest to sustain a meaningful rebound. While last week’s non-farm payroll data helped calm fears of a rapid labor market slowdown, market sentiment remains cautious in the face of escalating uncertainties.

    Late last Friday, Morgan Stanley lowered its 2025 economic growth forecast for the US and highlighted mounting concerns about trade tensions. The bank noted that “earlier and broader tariffs should translate into softer growth this year.” In contrast to its previous assumption that any tariff-related drag on growth would be more pronounced in 2026. Morgan Stanley now projects Q4/Q4 2025 growth at 1.5% (down from 1.9%), and 2026 growth at 1.2% (down from 1.3%).

    Goldman Sachs also joined the wave of downward revisions, cutting its 2025 Q4/Q4 GDP growth forecast from 2.2% to 1.7%. Moreover, it raised its 12-month recession probability to 20%. While the odd is still low, it’s a noticeable shift from the previously estimated 15%.

    So far this month, Dollar is the weakest performer among the major currencies. It is trailed by Canadian Dollar and then Australian Dollar. On the other end, Euro leads the pack, followed by Swiss Franc and then British Pound, indicating broad European strength in the current environment. Both Yen and New Zealand Dollar hold the middle ground.

    Looking ahead, the upcoming US CPI release will be the major data focal point this week Meanwhile, BoC is widely expected to deliver another rate cut. UK GDP data will also be a feature.

    Technically, AUD/NZD appears to be building up downside momentum as seen in D MACD. Break of 1.1001 support will pace the way to 1.0940 cluster support zone (38.2% retracement of 1.0567 to 1.1177 at 1.0944). Such development would give Aussie some additional pressure elsewhere.

    In Asia, at the time of writing, Nikkei is up 0.47%. Hong Kong HSI is down -1.53%. China Shanghai SSE is down -0.37%. Singapore Strait Times is down -0.52.

     

    Japan’s nominal wages rises 2.8% yoy in Jan, real wages fall -1.8% yoy

    Japan’s labor cash earnings rose 2.8% yoy in January, falling short of market expectations of 3.2% yoy. Nominal wage growth remained positive for the 37th month.

    Real wages, adjusted for inflation, fell -1.8% yoy, reversing two months of slight gains. The decline was largely driven by a sharp rise in consumer inflation.

    The inflation rate used by the Ministry of Health, Labor and Welfare to calculate real wages—which includes fresh food prices but excludes rent—accelerated to 4.7% yoy, its highest level since January 2023.

    Regular pay, or base salary, rose 3.1% yoy, the largest gain since 1992. This was overshadowed by a sharp -3.7% yoy decline in special payments, which consist largely of one-off bonuses.

    China’s inflation turns negative, but seasonal factors skew the picture

    Released over the weekend, China’s consumer inflation dipped into negative territory for the first time in over a year, with February’s CPI coming in at -0.7% yoy, weaker than the expected -0.5% yoy, and a sharp reversal from January’s 0.5% yoy gain.

    Core CPI, which strips out food and energy prices, also slipped by -0.1% yoy—its first decline since January 2021—signaling weak underlying demand.

    On a month-over-month basis, consumer prices fell -0.2%, more than the expected -0.1%, reversing some of January’s 0.7% increase.

    While the decline may raise concerns about deflationary pressures, NBS attributed much of the drop to seasonal distortions tied to the timing of the Lunar New Year. Stripping out this factor, NBS estimates that CPI actually rose 0.1% yoy.

    Given these distortions, a clearer picture of China’s inflation trajectory will likely emerge in March when seasonal effects fade.

    Meanwhile, producer prices remained in contraction for the 29th consecutive month, with PPU declining -2.2% yoy, slightly better than January’s -2.3% yoy but still below expectations of -2.1% yoy.

    BoC rate cut, US inflation and consumer sentiment

    Expectations for BoC to continue easing policy have surged following weak February job data, which showed that tariff-related uncertainty is already taking a toll on employment. Markets now widely expect BoC to lower its policy rate by another 25bps this week to to 2.75%, This would serve as an insurance move against further trade disruptions. With inflation well-contained, some analysts believe the central bank would continue cutting at this pace in upcoming meetings until rates reach 2%.

    BoC’s rhetoric will be closely scrutinized to gauge how policymakers assess the risks posed by tariffs and trade disputes. If the central bank signals greater concern over the economic fallout, expectations for a sustained easing cycle will strengthen. The stance will be critical in shaping near-term movements in Canadian Dollar, which has just had a roller-coaster ride last week on tariff news.

    Looking south, US inflation data are another pivot point for global markets. Both headline and core CPI rates are expected to edge lower, from 3.0% to 2.9% and from 3.3% to 3.2%, respectively. Yet the outcome remains uncertain due to possible tariff-induced price hikes—or, conversely, weaker consumption dampening inflation. With a surprise in either direction, Fed’s near-term policy path could be thrown into disarray. March is still widely expected to be a hold, but May is increasingly up in the air.

    Adding to the US economic picture is the University of Michigan consumer sentiment survey, which carries added significance. The recent stock market selloff was closely tied to poor January consumer sentiment. Any notable deterioration in confidence could drive renewed risk aversion, compounding existing concerns about trade and growth.

    Elsewhere, other key data, including UK GDP, Japan cash earnings, and household spending, will round out a relatively less busy week for global markets.

    Here are some highlights for the week:

    • Monday: Japan average cash earnings; Germany industrial production, trade balance; Swiss SECO consumer climate; Eurozone Sentix investor confidence.
    • Tuesday: New Zealand manufacturing sales; Australia Westpac consumer sentiment, NAB business sentiment; Japan household spending, GDP final.
    • Wednesday: Japan BSI manufacturing, PPI; US CPI, BoC rate decision.
    • Thursday: Swiss PPI; Eurozone industrial production; US PPI, jobless claims.
    • Friday: New Zealand BNZ manufacturing; Germany GDP final; UK GDP, production, goods trade balance; Canada manufacturing sales, wholesale sales; US U of Michigan consumer sentiment.

    USD/JPY Daily Outlook

    Daily Pivots: (S1) 147.26; (P) 147.73; (R1) 148.51; More…

    Intraday bias in USD/JPY stays on the downside at this point. Sustained trading below 61.8% retracement of 139.57 to 158.86 at 146.32 will pave the way to 139.57 support. On the upside, 149.32 minor resistance will turn intraday bias neutral and bring consolidations again, before staging another fall.

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

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    23:30 JPY Labor Cash Earnings Y/Y Jan 2.80% 3.20% 4.80% 4.40%
    23:50 JPY Bank Lending Y/Y Feb 3.10% 3.10% 3% 2.90%
    23:50 JPY Current Account (JPY) Jan 1.94T 1.99T 2.73T
    05:00 JPY Leading Economic Index Jan P 108 108.1 108.4 108.3
    05:00 JPY Eco Watchers Survey: Current Feb 48.5 48.6
    07:00 EUR Germany Industrial Production M/M Jan 1.50% -2.40%
    07:00 EUR Germany Trade Balance (EUR) Jan 21.2B 20.7B
    09:30 EUR Eurozone Sentix Investor Confidence Mar -10 -12.7

     



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  • Bitcoin Roars Back as Trump Plans Strategic Crypto Reserve; Tariffs, Geopolitics, NFP and ECB to Move Markets

    Bitcoin Roars Back as Trump Plans Strategic Crypto Reserve; Tariffs, Geopolitics, NFP and ECB to Move Markets


    Bitcoin led the charge in an otherwise quiet Asian session, rebounding over 20% from last week’s low after a major announcement from US President Donald Trump. The cryptocurrency sector saw dramatic relief from its steep selloff last week, as Trump revealed the creation of a strategic crypto reserve, including Bitcoin, Solana, XRP, and other digital assets.

    The wording of the post also drew attention, with Trump emphasizing that BTC and ETH would be at the “heart of the reserve.” Unlike a simple stockpile, which implies holding onto existing government-owned crypto assets, a reserve suggests active purchases in regular installments.

    However, the move has not been without criticism. Crypto purists argue that Bitcoin and other decentralized assets were created to exist outside government control, and they reject the notion of a nation-state amassing a large share of the market. Some others see the announcement as politically motivated rather than a structural shift in policy, raising concerns about long-term regulatory implications.

    Technically, Bitcoin’s strong rebound ahead of 73812 cluster zone (38.2% retracement of 15452 to 109571 at 73617) suggests that price actions from 10957 are likely forming a medium term consolidation pattern only, rather than bearish trend reversal. Sustained trading above 55 D EMA (now at 95271) will solidify this bullish case, and extend range trading below 109571 for a while before eventual upside breakout.

    Meanwhile, in the currency markets, Euro is leading gains, followed by Sterling and Aussie. Dollar is the worst performer, trailed by Kiwi and Yen. Swiss Franc and Loonie are positioning in the middle.

    Looking ahead, multiple US tariffs on Canada, Mexico, and China are set to take effect on Tuesday, March 4, and speculation is mounting over retaliatory measures. China has already hinted at countermeasures, including tariffs on U.S. agricultural products and non-tariff barriers.

    On the geopolitical front, all eyes will be on the US response to a new UK-EU effort to draft a Ukraine peace plan, a move coming on the heels of President Volodymyr Zelenskiy’s high-profile clash with Trump at the Oval Office just two days ago.

    In addition, crucial US economic data, including non-farm payrolls and ISM manufacturing and services indexes, will be closely watched. Across the Atlantic, ECB is expected to cut interest rates again this week, continuing its “regular, gradual” easing.

    In Asia, at the time of writing, Nikkei is up 1.70%. Hong Kong HSI is up 1.30%. China Shanghai SSE is up 0.32%. Singapore Strait Times is up 0.47%. Japan 10-year JGB yield is up 0.029 at 1.405.

    Japan’s PMI manufacturing finalized at 49 in Feb, modest improvement but outlook remains weak

    Japan’s manufacturing sector showed slight improvement in February, with PMI finalized at 49.0, up from 48.7 in January. However, the sector remains in contraction territory, reflecting ongoing struggles with weak demand.

    According to Usamah Bhatti at S&P Global Market Intelligence, manufacturers cited soft global and domestic demand, with “muted conditions” in key markets such as the US, Europe, and China. Additionally, purchasing activity saw a solid and sustained decline.

    The “near-term outlook remains clouded”. Business confidence fell to its lowest level since mid-2020, driven by growing concerns over the impact of US trade policies and a slower-than-expected global economic recovery.

    China’s Caixin PMI manufacturing rises to 50.8, but employment remains a concern

    China’s Caixin PMI Manufacturing climbed to 50.8 in February, up from 50.1, exceeding expectations of 50.3.

    Wang Zhe, Senior Economist at Caixin Insight Group, noted that new export orders rebounded, corporate purchasing increased, and logistics remained smooth. However, employment continued to decline, and output prices stayed weak.

    Additionally, official PMI data released over the weekend further reinforced signs of recovery. The official PMI Manufacturing rebounded from 49.1 to 50.2, marking its highest level since November and moving back into expansionary territory. Additionally, the non-manufacturing PMI, which covers services and construction, ticked up to 50.4 from 50.2.

    Market sentiment hinges on US NFP, ECB cut and other data to watch

    While trade war and geopolitics might continue to dominate headlines, key economic events this week could also inject extra volatility into the markets.

    The week’s most significant market-moving event could come from the US. February non-farm payrolls report will be a crucial test for investor sentiment, particularly after recent economic data—including consumer confidence, business activity, and retail sales—showed signs of weakness. Additionally, ISM manufacturing and services data will provide further insight into business conditions. The impact of tariffs on the economy is beginning to surface in economic data, and a set of disappointing data could amplify the emerging concerns.

    It should noted that while a softer NFP print could bring forward expectations for a Fed rate cut, optimism about policy easing may be overshadowed by broader economic worries, which would drive further volatility across asset classes. The key is whether the job market can hold up against growing uncertainty, or if fears of a sharper slowdown will escalate.

    ECB is widely anticipated to proceed with its “regular, gradual” approach to policy easing at its meeting this week, with a 25bps cut to the deposit rate, bringing it down to 2.50%. The latest Economic Bulletin suggests policymakers see neutral rate in the range of 1.75%-2.25%, implying that further rate reductions beyond this week’s move will be calculated cautiously.

    Analysts largely expect two more 25bps cuts by ECB in Q2 to bring an end to the cycle. But the outcome could vary depending on economic growth and inflation developments. Markets will closely analyze ECB’s updated economic projections hints on the central bank’s view, at least the base case.

    Eurozone inflation data will also be in the spotlight. February’s flash CPI is expected to show headline inflation falling to 2.3%, following four consecutive months of increases. Core inflation, which has remained at 2.7% for five straight months, is projected to ease to 2.5%.

    Beyond the US and Eurozone, Australia will also be in focus. Although RBA initiated its easing cycle in February, policymakers have remained cautious about further cuts. RBA meeting minutes will provide more details on the board’s thinking regarding the next steps. Additionally, Australia’s Q4 GDP and January retail sales data will offer insight into whether more imminent easing is necessary.

    Other key data releases include Canada’s employment report and China’s Caixin PMIs.

    Here are some highlights for the week

    • Monday: Japan PMI manufacturing final; China Caixin PMI manufacturing; Swiss PMI manufacturing; Eurozone CPI flash, PMI manufacturing final; UK PMI manufacturing final; Canada PMI manufacturing; US ISM manufacturing, construction spending.
    • Tuesday: New Zealand building permits; Japan unemployment rate, capital spending, monetary base, consumer confidence; Australia RBA minutes, retail sales; Eurozone unemployment rate.
    • Wednesday: Australia GDP; China Caxin PMI services; Eurozone PMI services final, PPI; UK PMI services final; US ADP employment, ISM services, factory orders, Fed’s Beige Book report.
    • Thursday: Australia building permits, goods trade balance; Swiss unemployment rate; UK PMI construction; Eurozone retail sales, ECB rate decision, US jobless claims, trade balance; Canada Ivey PMI.
    • Friday: China trade balance; Germany factory orders; Swiss foreign currency reserves; Eurozone GDP revision; Canada employment; US non-farm payrolls.

    EUR/AUD Daily Outlook

    Daily Pivots: (S1) 1.6660; (P) 1.6717; (R1) 1.6768; More…

    Intraday bias in EUR/AUD stays on the upside for the moment. As noted before, consolidation from 1.6800 should have already completed with three waves down to 1.6355. Firm break of 1.6800 resume the rise from 1.5963 to 61.8% projection of 1.5963 to 136800 from 1.6355 at 1.6872, and then 100% projection at 1.7192, which is close to 1.7180 high. On the downside, below 1.6657 minor support will delay the bullish case and turn intraday bias neutral again first.

    In the bigger picture, with 1.5996 key support (2024 low) intact, larger up trend from 1.4281 (2022 low) is still in favor to resume through 1.7180 at a later stage. Nevertheless, sustained break of 1.5996 will indicate that such up trend has completed and deeper decline would be seen.

    D

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    21:45 NZD Terms of Trade Index Q4 3.10% 1.50% 2.40% 2.50%
    00:00 AUD TD-MI Inflation Gauge M/M Feb -0.20% 0.10%
    00:30 JPY Manufacturing PMI Feb F 49 48.9 48.9
    01:45 CNY Caixin Manufacturing PMI Feb 50.8 50.3 50.1
    08:30 CHF Manufacturing PMI Feb 48.4 47.5
    08:50 EUR France Manufacturing PMI Feb F 45.5 45.5
    08:55 EUR Germany Manufacturing PMI Feb F 46.1 46.1
    09:00 EUR Eurozone Manufacturing PMI Feb F 47.3 47.3
    09:30 GBP Manufacturing PMI Feb F 46.4 46.4
    09:30 GBP Mortgage Approvals Jan 66K 67K
    09:30 GBP M4 Money Supply M/M Jan 0.20% 0.10%
    10:00 EUR Eurozone CPI Y/Y Feb P 2.30% 2.50%
    10:00 EUR Eurozone CPI Core Y/Y Feb P 2.50% 2.70%
    14:30 CAD Manufacturing PMI Feb 51.6
    14:45 USD Manufacturing PMI Feb F 51.6 51.6
    15:00 USD ISM Manufacturing PMI Feb 50.8 50.9
    15:00 USD ISM Manufacturing Prices Paid Feb 56.2 54.9
    15:00 USD ISM Manufacturing Employment Feb 50.3
    15:00 USD Construction Spending M/M Jan -0.10% 0.50%

     



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  • Safe-Haven Demand Fuels Dollar Rally Amid Trade, Geopolitical Turmoil

    Safe-Haven Demand Fuels Dollar Rally Amid Trade, Geopolitical Turmoil


    Market sentiment took a decisive turn for the worse last week, with risk aversion dominating across asset classes. The combination of deteriorating domestic economic conditions in the US and heightened global uncertainties has fueled concerns that risk appetite could weaken further. Equities faced renewed selling pressure, yields dropped sharply.

    Domestically, US economic data painted a troubling picture. Consumer confidence deteriorated sharply, while weak personal spending data and a rise in jobless claims suggested that the labor market could be facing new headwinds. With the economy looking increasingly fragile, concerns are mounting that the economy may struggle to maintain momentum, reinforcing speculation about Fed rate cuts.

    Externally, the risk of a full-blown trade war continues to escalate. US President Donald Trump doubled down on his aggressive tariff agenda, reaffirming the March 4 deadline for 25% tariffs on Canada and Mexico and indicating that the EU would be next in line with reciprocal tariffs.

    Geopolitical tensions also worsened, particularly after a dramatic Oval Office showdown between Trump, Vice President JD Vance, and Ukrainian President Volodymyr Zelenskiy. The meeting, initially expected to pave the way for a mineral deal between the US and Ukraine—potentially a step toward resolving the Russian invasion—ended in failure. With US-Ukraine relations strained and no clear resolution in sight, uncertainty in the region remains elevated.

    On the bright side, markets have scaled up expectations for a Fed rate cut in the first half of the year. However, it’s unclear whether additional monetary easing will truly bolster risk sentiment or simply underscore the extent of the economic challenges ahead. A rate cut could offer short-term relief for risk assets, but it might also underscore fears of an impending downturn in domestic activity.

    In the forex market, Dollar emerged as the clear winner for the week, benefiting from risk aversion rather than rate expectations. Sterling and Swiss Franc followed as the next strongest currencies, with the UK seemingly avoiding US tariff threats and the Franc gaining from both risk aversion and Euro weakness. At the other end of the spectrum, commodity currencies struggled, with New Zealand Dollar leading the declines, followed by Australian and Canadian Dollars. Meanwhile, Euro ended in a mixed manner, with the initial post-German election boost fading as tariff threats weighed. Yen also struggled to extend its rally, leaving it stuck in the middle of the performance ladder.

    Investors Pin Hopes on Fed Easing as Stocks Sell Off, But Is Relief Temporary?

    US equity markets ended February on a weak note, with NASDAQ suffering a sharp -3.5% weekly decline despite a late recovery. S&P 500 also lost nearly -1%, while DOW managed to close about 1% higher, benefiting from recovery after leading the selloff earlier in the month. However, the broader market sentiment remained fragile.

    For the entire month, NASDAQ dropped -4%, marking its worst monthly performance since April 2024. S&P 500 fell -1.5%, while the DOW ended down -1.6%. Several factors weighed on market sentiment, including intensifying trade war risks, particularly as the scheduled 25% tariffs on Canada and Mexico approach on March 4. The more consequential reciprocal tariffs, set to take effect on April 2, also remain a source of significant uncertainty.

    US economic data further exacerbated concerns, with sharp decline in consumer confidence, jump in jobless claims, and contraction in personal spending, all pointing to risk of extended weakness in household demand. These indicators have fueled doubts about the strength of US consumption, which remains a critical driver of economic growth.

    With these headwinds and decline in PCE core inflation as released on Friday, expectations for another Fed rate cut in the first half of the year continued to rise. Fed fund futures now price in a 94% probability of a 25bps cut to 4.00%-4.25% in June, up significantly from 63% just a week ago. This growing optimism about resumed Fed easing has provided some support to market sentiment. But it remains unclear whether it will be enough to reverse the pre-dominating risk-off mood or merely slow the pace of decline.

    Technically, NASDAQ is tentatively drawing support from 38.2% retracement of 15708.53 to 20204.58 at 18487.09. Strong rebound from current level, followed by firm break of 55 D EMA (now at 19440.85) will suggest that the corrective pattern from 20204.58 has completed. That will also keep the medium term up trend intact for another rally through 20204.58 at a later stage.

    However, sustained break of 18487.09 will raise the chance that a larger scale correction has already started. In the bearish case, NASDAQ should be correcting whole uptrend from 10088.82 (2022 low). Further break of 55 W EMA (now at 17866.91) will confirm this bearish case and pave the way to 38.2% retracement of 10088.82 to 20204.58 at 16340.36.

    Risk Aversion Drags Yields Down, But Lifts Dollar Higher

    Risk aversion was also evident in the US bond markets, with 10-year Treasury yield tumbling sharply to its lowest level since December. The sharp drop highlights growing concerns over economic uncertainty and trade tensions.

    Technically, current development suggests that rise from 3.603 (2024 low) has completed at 4.809 already, well ahead of 4.997 (2023 high). Current fall is seen as another downleg in the sideway corrective pattern from 4.997. Deeper decline is expected to 61.8% retracement of 3.603 to 4.809 at 4.063 next. Risk will stay on the downside as long as 55 D EMA (now at 4.452) holds, in case of recovery.

    Dollar Index clear reacted more to risk aversion than falling yields and Fed cut expectations. The’s strong bounce towards the end of the week and the break of 55 D EMA (now at 107.31) suggests that fall from 110.17 has completed at 106.12. That came after defending 38.2% retracement of 100.15 to 110.17 at 106.34. Further rise should be seen to 108.52 resistance. Firm break there will target a retest on 110.17 high.

    In the bigger picture, Dollar Index is holding comfortably above 55 W EMA (now at 105.37), and thus rise from 100.15 and 99.57 should still be intact. Break of 110.17 will pave the way back to 114.77 (2022 high) at a later stage.

    NZD/USD and AUD/USD Sink, Eye 2025 Lows for Support

    Kiwi and Aussie were the worst-performing currencies last week, each losing around -2.4% against the greenback. With risk sentiment deteriorating downside pressure on these two currencies could persistent. The key focus now is whether risk aversion would intensify and push NZD/USD and AUD/USD through this year’s lows to resume the long term down trend. There these key support levels could offer a breather to them.

    Technically, NZD/USD’s steep decline last week suggests that corrective rebound from 0.5515 should have completed at 0.5571 already. Retest of 0.5515 should be seen next. Strong support from there could bring rebound to extend the corrective pattern with another rising leg. But outlook will stay bearish as long as 38.2% retracement of 0.6378 to 0.5515 at 0.5848 holds. Firm break of 0.5515 will resume the long term down trend to 61.8% projection of 0.7463 to 0.5511 from 0.6378 at 0.5172.

    Similarly, AUD/USD’s corrective rebound from 0.6087 should have completed at 0.6407. Retest of 0.6087 low should be seen next. Strong rebound from there would extend the corrective pattern with another rising leg. But outlook will stay bearish as long as 38.2% retracement of 0.6941 to 0.6087 at 0.6413 holds. Firm break of 0.6087 will resume the long term down trend to 61.8% projection of 0.8006 to 0.6169 from 0.6941 at 0.5806.

    Bitcoin and Gold Tumble on Risk-Off Sentiment

    Bitcoin and Gold struggled under renewed risk aversion last week, extending their losses in line with broader market weakness. While Gold retains a comparatively better outlook, both assets remain vulnerable to ongoing volatility.

    Bitcoin suffered a sharp fall, decisively breaking 89127 support, confirming medium-term topping at 109571. The current slide is seen as a correction of the entire uptrend from the 15452 (2022 low). Deeper decline toward 55 W EMA (now at 74129) is expected.

    Strong support could emerge from the 73812 cluster zone (38.2% retracement of 15452 to 109571 at 73617) to bring rebound, at least first attempt. However, downside risks remain as long as 55 D EMA (now at 95288) caps any recovery.

    Decisive break of 73617/73812 zone could extended the decline to 50k mark, which is close to 49008 support and 61.8% retracement at 51405.

    By contrast, Gold’s outlook is less overtly bearish. 2956.09 is seen as a short term top only, for now. Subsequent pullback is viewed primarily as a correction of the rise from 2584.24. Strong support might be seen from 55 D EMA (now at 2792.05) to bring rebound, and set the base for uptrend resumption at a later stage.

    However, considering that Gold was just rejected by 3000 psychological level sustained trading below 55 D EMA would argue that larger scale correction in underway. In the bearish case, Gold could be starting a medium term decline back to 55 W EMA (now at 2522.33).

    EUR/USD Weekly Outlook

    EUR/USD reversed after edging higher to 1.0527 last week, and the development suggests that consolidation from from 1.0176 has already completed. Initial bias stays on the downside this week for retesting 1.0176/0210 support zone first. Firm break there will resume whole fall from 1.1213, and carry larger bearish implications. On the upside, above 1.0419 minor resistance will turn intraday bias neutral. But outlook will stay bearish as long as 38.2% retracement of 1.1213 to 1.0176 at 1.0572 holds.

    In the bigger picture, immediate focus is on 61.8 retracement of 0.9534 (2022 low) to 1.1274 (2024 high) at 1.0199. Sustained break there will solidify the case of medium term bearish trend reversal, and pave the way back to 0.9534. However, reversal from 1.0199 will argue that price actions from 1.1274 are merely a corrective pattern, and has already completed.

    In the long term picture, down trend from 1.6039 remains in force with EUR/USD staying well inside falling channel, and upside of rebound capped by 55 M EMA (now at 1.0929). Consolidation from 0.9534 could extend further and another rising leg might be seem. But as long as 1.1274 resistance holds, eventual downside breakout would be mildly in favor.



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  • Greenback Drops Ahead of Consumer Data, Risk Sentiment in Focus

    Greenback Drops Ahead of Consumer Data, Risk Sentiment in Focus


    Dollar weakened notably against European majors and Yen as markets transitioned into US session, despite subdued overall trading activity. The decline was largely driven by extended fall in US 10-year Treasury yield, which hit its lowest level since mid-December.

    Beyond geopolitical and trade war concerns, market focus has turned toward whether slowing US consumption and softer economic data could force Fed to resume rate cuts sooner than expected, even as inflation remains elevated. Fed funds futures now price in a near 65% chance of a 25bps rate cut in June, a notable increase from 45% just a week ago.

    The next catalyst for Dollar’s direction will be consumer confidence report, set for release shortly. However, Dollar’s next moves may not be straightforward, as risk aversion—if it intensifies—could provide some support due to safe-haven demand. US stocks, particularly the tech-heavy NASDAQ, could be vulnerable on the upcoming Nvidia earnings report later in the week.

    For now, commodity currencies are under the most pressure, with Kiwi leading the declines. On the other hand, Swiss Franc is the strongest performer, followed closely by Sterling and Euro. Dollar and Yen are positioned in the middle.

    Looking ahead to the Asian session, Australia’s monthly CPI reading will draw attention. Consensus suggests inflation might edge up from 2.5% to 2.6% in January, supporting RBA’s cautious stance even after it initiated its easing cycle earlier this month. Still, a downside surprise would provide RBA with added confidence to proceed with additional rate cuts if economic conditions worsen.

    Technically, EUR/AUD’s rebound is gaining some momentum today. Firm break of 1.6631 resistance will argue that the corrective pattern from 1.6800 has completed, and larger rise from 01.5963 is finally ready to resume through 1.6800.

    In Europe, at the time of writing, FTSE is up 0.47%. DAX is up 0.43%. CAC is up 0.04%. UK 10-year yield is down -0.0475 at 4.525. Germany 10-year yield is down -0.0012 at 2.479. Earlier in Asia, Nikkei fell -1.39%. Hong Kong HSI fell -1.32%. China Shanghai SSE fell -0.80%. Singapore Strait Times fell -0.30%. Japan 10-year JGB yield fell -0.0511 to 1.376.

    ECB’s Nagel expects more rate cuts Amid encouraging price trends

    German ECB Governing Council member Joachim Nagel indicated that incoming data suggests the central bank is on track to achieve its inflation target this year, opening the door for further rate cuts.

    Speaking today, Nagel stated, “This would allow us on the Governing Council to lower the key interest rates further,” reinforcing expectations that ECB will continue its gradual easing cycle.

    However, Nagel also cautioned against premature optimism, highlighting “persistently elevated core inflation and the undiminished strength of services inflation.”

    Bitcoin breaches 90K, double top breakdown could trigger deep correction

    Bitcoin’s selloff intensified today, plunging below the 90k mark and hitting its lowest level since November. The immediate catalyst appears to be last week’s massive hack of USD 1.5B worth of Ether from cryptoexchange Bybit—an incident researchers have labeled the biggest crypto heist on record.

    Although Bybit has announced that it fully restored the stolen Ether, market sentiment remains firmly negative, as traders grow wary of systemic risks and question the exchange’s ability to prevent future breaches.

    Technically, Bitcoin now hovers at a critical juncture. The key 89,127 support level is under heavy pressure, and decisive break there would complete a double top pattern (108368, 108571). Such a development would strongly indicate that a larger-scale correction is underway.

    In the bearish scenario, Bitcoin could be entering a correction of the entire rally from 15,452 (2022 low). The correction could target 73,812 cluster support (38.2% retracement of 15,452 to 109,571 at 73,617) before completion.

    GBP/USD Mid-Day Outlook

    Daily Pivots: (S1) 1.2594; (P) 1.2643; (R1) 1.2673; More…

    Intraday bias in GBP/USD stays neutral at this point. Further rise will remain in favor as long as 1.2522 resistance turned support holds. Above 1.2689 will resume the rally from 1.2099 to 1.2810 resistance next. However, firm break below 1.2522 will argue that the rebound might have completed, and bring deeper fall to 1.2331 support.

    In the bigger picture, rise from 1.0351 (2022 low) should have already completed at 1.3433 (2024 high), and the trend has reversed. Further fall is now expected as long as 1.2810 resistance holds. Deeper decline should be seen to 61.8% retracement of 1.0351 to 1.3433 at 1.1528, even as a corrective move. However, firm break of 1.2810 will dampen this bearish view and bring retest of 1.3433 high instead.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    23:50 JPY Corporate Service Price Index Y/Y Jan 3.10% 2.90% 2.90% 3.00%
    07:00 EUR Germany GDP Q/Q Q4 F -0.20% -0.20% -0.20%
    14:00 USD S&P/CS Composite-20 HPI Y/Y Dec 4.30% 4.30%
    14:00 USD Housing Price Index M/M Dec 0.20% 0.30%
    15:00 USD Consumer Confidence Feb 103.3 104.1

     



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  • Trade War 2.0 Shakes Global Markets as Dollar Rallies

    Trade War 2.0 Shakes Global Markets as Dollar Rallies


    Global markets kicked off February under heavy strain as US President Donald Trump’s long-anticipated tariffs on Canada, Mexico, and China came into full effect. Investor sentiment turned sharply negative, with Japan’s Nikkei tumbling over 1,000 points in response. Dollar opened the week with a strong gap higher and maintained solid gains throughout Asian session. Commodity-linked currencies bore the brunt of the selloff, particularly New Zealand and Australian Dollars, which struggled even more than Canadian Dollar—despite Canada being directly targeted by the new tariffs. Meanwhile, Euro and Pound also weakened, though not as severely as the major commodity currencies.

    Looking ahead, the trade dispute theme should continue to dominate market sentiment for the foreseeable future. The US administration has hinted at the likelihood of expanding tariffs to Europe and possibly the UK, though there appears to be some willingness to discuss matters further with London. Beyond trade tensions, upcoming events such as BoE’s policy decision—which is widely expected to involve a 25bps rate reduction—will also command attention. Additionally, a series of key US data releases, including the ISM manufacturing and services indexes plus non-farm payrolls, could further influence the risk mood.

    Another noteworthy shift is taking shape in the cryptocurrency market, where both Bitcoin and Ethereum have taken a steep hit. Although the new tariffs reaffirm Trump’s commitment to his promises—such as turning the US into a major crypto hub—virtual currencies have not benefitted. Instead, global uncertainty has driven investors toward safer assets, prompting a retreat from riskier corners of the market.

    Technically, for now, there’s no panic for Bitcoin yet as 89127 support remains intact. The recent up trend is still in favor to resume for another take on 100k market at a later stage. However, firm break of 89127 support will complete a double top pattern, and could trigger deeper correction back to 73812 resistance turned support and possibly below.

    In Asia, at the time of writing, Nikkei is down -2.74%. Hong Kong HSI is down -0.74%. China is on holiday. Singapore Strait Times is down -0.29%. Japan 10-year JGB yield is down -0.0118 at 1.230.

    Trade War 2.0 kicks off, USD/CAD breaks key resistance with 1.50 in sight

    The long-anticipated escalation in trade tensions has officially materialized as US President Donald Trump imposed sweeping tariffs over the weekend. A 25% tariff is now in effect on imports from Canada and Mexico, while China faces a 10% levy on its exports to the US. The move, widely expected, marks the formal start of what is being called Trade War 2.0.

    In immediate response, Canada announced retaliatory tariffs of 25% on USD 155B worth of US goods, while China indicated that it would file a case against the US at the World Trade Organization.

    Dollar gapped higher as the week started in response to the development. USD/CAD broke through 1.4689 key resistance (2016 high) to resume the long term up trend. Technically, the next medium term target for USD/CAD is 100% projection of 1.2401 to 1.3976 from 1.3418 at 1.4993.

    Though given the scale of uncertainty surrounding the trade dispute, further upside cannot be ruled out. A lack of near-term resolution could see USD/CAD extend even higher toward 61.8% projection of 0.9406 to 1.4689 from 1.2005 at 1.5270 before topping.

    BoJ opinions signal more rate hikes as inflation risks tilt higher

    BoJ’s Summary of Opinions from the January 23-24 meeting indicates a growing shift toward policy normalization, as multiple board members highlighted mounting inflationary pressures.

    Rising import costs driven by the weak yen have led more businesses to raise prices, prompting concerns that inflation could overshoot expectations.

    One member noted that with economic activity and prices remaining stable, “risks to prices have become more skewed to the upside,” emphasizing that rate hikes should be “timely and gradual.”

    Some policymakers warned that continued Yen depreciation and excessive risk-taking could lead to an overheating of financial activities. To counter this, one board member argued for additional rate hikes to stabilize the currency and prevent further distortions in market expectations regarding BoJ policy.

    At the January meeting, the BoJ raised its short-term policy rate from 0.25% to 0.50%, marking another step away from ultra-loose monetary policy. The central bank also revised its price forecasts higher, reinforcing its confidence that rising wages will sustain inflation near the 2% target.

    Japan’s PMI manufacturing finalized at 48.7, deepest contraction in 10 Months

    Japan’s PMI Manufacturing was finalized at 48.7 in January, down from December’s 49.6. This marks the sharpest decline in output since March 2024, as firms faced a steeper drop in new orders. Weak demand conditions forced manufacturers to scale back production, reflecting ongoing headwinds for the sector.

    According to S&P Global, businesses reacted to falling demand by cutting both inventories and raw material holdings, while also reducing input purchases at the fastest pace in nearly a year. Employment growth also slowed, highlighting a cautious approach to hiring amid economic uncertainty.

    Despite the downturn, manufacturers maintained a positive outlook for future output, though confidence fell to its lowest level since December 2022. While firms expect a recovery in demand, concerns persist over when such an improvement will materialize. The slowdown in input price inflation to a nine-month low provides some relief, but overall, sentiment remains fragile.

    Australia’s retail sales dip -0.1% mom in Dec, less than expected

    Australia’s retail sales turnover edged down by -0.1% mom in December, a smaller decline than the expected -0.7% mom. While the contraction marks a pullback from the strong growth seen in previous months—0.7% mom in November and 0.5% in October mom—it suggests that consumer spending remains relatively resilient.

    According to Robert Ewing, head of business statistics at the Australian Bureau of Statistics, retail activity was supported by extended promotional events, helping to smooth spending patterns over the quarter. He noted that Cyber Monday, which fell in early December, boosted demand for discretionary items, particularly furniture, homewares, electronics, and electrical goods.

    China’s Caixin PMI manufacturing slips to 50.1, growth momentum weakens

    China’s Caixin Manufacturing PMI edged down to 50.1 in January from 50.5 in December.

    According to Caixin Insight Group, manufacturers saw improved logistics and a slight pickup in supply and demand. However, employment levels deteriorated notably, and new export orders remained weak, reflecting sluggish global demand.

    External risks also remain a key concern, with rising geopolitical uncertainty adding pressure to China’s export environment. Disruptions in global trade policies could further dampen overseas demand, making it difficult for manufacturers to sustain current production levels.

    Domestically, consumer spending remains sluggish, highlighting the need for policy measures aimed at boosting disposable income and restoring confidence.

    BoE Set to Cut, NFP to Steer Dollar Outlook

    This week’s forex market focus will largely center on BoE upcoming policy decision, where a 25bps rate cut to 4.50% is widely anticipated. Along with the rate announcement, traders will closely watch the MPC voting breakdown and the release of new economic projections.

    Data from the UK since November’s rate cut have painted a mixed picture: GDP growth has stagnated, inflation has eased, but wage growth has unexpectedly picked up. These conflicting signals leave the door open for surprises when the MPC releases its updated forecasts.

    The general consensus favors a gradual easing path for BoE, with a quarterly tempo of 25bps cuts, totaling 100bps for the entire year. However, market expectations are somewhat more conservative, pricing in just over 75bps of easing in 2025.

    Heightened uncertainty stems from several factors, including the domestic effects of the Autumn budget and the fallout from US tariff threats. The new projections and the voting details could help clarify the BoE’s assessment of these risks, especially regarding inflation and growth outlooks.

    MPC voting will be a prime area of focus. Known hawk Catherine Mann aligning with the broader committee in supporting a cut would send a notably dovish signal. Conversely, if the typically dovish Swati Dhingra refrains from advocating a 50bps cut, markets could interpret that as unexpectedly “hawkish”. The interplay of these votes will likely set the tone for Sterling, as traders decipher how unified or divided the committee is on monetary policy strategy.

    Beyond BoE decision, US non-farm payrolls report and ISM manufacturing and services data will grab attention too. After last week’s FOMC hold, Fed Chair Jerome Powell indicated explicitly that the central bank is not in a hurry to cut rates further, even though policy easing remains on course.

    The futures market currently suggests a better-than-even chance that Fed will keep policy on pause at least until May. Unless this week’s data delivers significant surprises—either in job growth or wage pressures—this expectation is unlikely to shift meaningfully.

    The key question revolves around the pace of easing in the second half of the year and the eventual terminal rate. However, given Powell’s recent comments, it’s unlikely that these questions will be answered in the near term.

    Elsewhere, key economic indicators from Eurozone, Japan, Canada, Australia, and New Zealand will also contribute to currency market movements. In particular, Eurozone’s CPI flash, Japan’s wage and household spending, Canada’s employment report, Australia’s retail sales and New Zealand’s employment data will be closely watched.

    Here are some highlights for the week:

    • Monday: BoJ summary of opinions, Japan PMI manufacturing final; Australia retail sales, build approvals; China Caixin PMI manufacturing; Swiss PMI manufacturing; Eurozone PMI manufacturing final, CPI flash; UK PMI manufacturing final; US ISM manufacturing.
    • Tuesday: Japan monetary base; US factory orders.
    • Wednesday: New Zealand employment; Japan labor cash earnings; China Caixin PMI services; Eurozone PMI services final, PPI; UK PMI services final; US ADP employment, trade balance, ISM services; Canada trade balance.
    • Thursday: Australia trade balance, NAB quarterly business confidence; Swiss unemployment rate; Eurozone retail sales; BoE rate decision; US jobless claims, non-farm productivity; Canada Ivey PMI.
    • Friday: Japan household spending, leading indicators; Germany industrial production, trade balance; Swiss foreign currency reserves; Canada employment; US non-farm payrolls.

    AUD/USD Daily Report

    Daily Pivots: (S1) 0.6189; (P) 0.6226; (R1) 0.6249; More…

    AUD/USD’s fall from 0.6941 resumed by breaking through 0.6130 support today. Intraday bias is back on the downside fro 61.8% projection of 0.6687 to 0.6130 from 0.6329 at 0.5985 next. For now, outlook will stay bearish 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 0.6511) holds.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    23:50 JPY BOJ Summary of Opinions
    00:30 AUD Retail Sales M/M Dec -0.10% -0.70% 0.80% 0.70%
    00:30 AUD Building Permits M/M Dec 0.70% 1.00% -3.60% -3.40%
    00:30 JPY Manufacturing PMI Jan F 48.7 48.8 48.8
    01:45 CNY Caixin Manufacturing PMI Jan 50.1 50.5 50.5
    08:30 CHF Manufacturing PMI Jan 48.4
    08:50 EUR France Manufacturing PMI Jan F 45.3 45.3
    08:55 EUR Germany Manufacturing PMI Jan F 44.1 44.1
    09:00 EUR Eurozone Manufacturing PMI Jan F 46.1 46.1
    09:30 GBP Manufacturing PMI Jan F 48.2 48.2
    10:00 EUR Eurozone CPI Y/Y Jan P 2.40% 2.40%
    10:00 EUR Eurozone CPI Core Y/Y Jan P 2.60% 2.70%
    14:30 CAD Manufacturing PMI Jan 52.2
    14:45 USD Manufacturing PMI Jan F 50.1 50.1
    15:00 USD ISM Manufacturing PMI Jan 49.3 49.3
    15:00 USD ISM Manufacturing Prices Paid Jan 52.6 52.5
    15:00 USD ISM Manufacturing Employment Index Jan 45.3
    15:00 USD Construction Spending M/M Dec 0.30% 0.00%

     



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  • Greenback Eases Ahead of Trump’s Executive Actions, Bitcoin Takes Leads and Hits New Record

    Greenback Eases Ahead of Trump’s Executive Actions, Bitcoin Takes Leads and Hits New Record


    Dollar is trading slightly lower today as markets await Donald Trump’s inauguration as the 47th US President. Attention is focused on his inaugural speech, expected to confirm his policy priorities. However, the real market-moving event is likely to be the series of executive actions Trump has promised to enact immediately.

    Over 200 directives are anticipated, including legally binding executive orders and proclamations, with particular interest in measures affecting tariffs and deregulations in sectors like energy and cryptocurrencies.

    One key area of focus is Trump’s potential tariff policies, which would surely reshape US trade relationships with allies and adversaries and impact global market. Deregulation efforts, spanning traditional energy sectors to the fast-growing cryptocurrency industry, are also expected to influence investor sentiment.

    Meanwhile, Bitcoin has reached a new all-time high, reflecting the renewed bullish sentiment in cryptocurrencies. Technically, next near term target is 61.8% projection of 49008 to 108368 from 89127 at 125812. Outlook will stay bullish as long as 89127 support holds, even in case of pull back.

    While Trump’s inauguration and executive actions are dominating headlines, global markets are also preparing for several other key events. BoJ is widely expected to raise its policy rate. UK employment data will provide insight into the labor market’s response to the Autumn Budget. Inflation data from Canada and New Zealand will help shape monetary policy projections of BoC and RBNZ. PMI data from major economies will round out the week’s events.

    ECB’s Holzmann: January rate cut not as certain with elevated inflation risks

    Austrian ECB Governing Council member Robert Holzmann expressed skepticism over a potential rate cut at ECB’s upcoming January meeting. In an interview with Politico, Holzmann stated, “A cut is not a foregone conclusion for me at all,” emphasizing his commitment to approaching the discussion with an “open mind.”

    Holzmann highlighted that ECB decisions are fundamentally data-driven and noted that inflation remained “well above” 2% in December, with January figures expected to reflect similar levels. He cautioned that “cutting interest rates when inflation rises faster than anticipated, even temporarily, risks hurting credibility.”

    As a known policy hawk, Holzmann also revealed increased doubts about inflation settling around ECB’s 2% target by the end of the year. He cited unexpected developments since the December decision, including faster-than-expected depletion of gas reserves due to colder weather, the effective closure of the Ukraine gas transit, and the risks of persistently high energy prices.

    China maintains LPR as offshore Yuan recovers ahead of key support

    China’s central bank maintained its benchmark lending rates unchanged on Monday. The one-year loan prime rate was steady at 3.1%, while the over-five-year LPR, which influences mortgage rates, remained at 3.6%.

    The offshore Yuan strengthened notably against the Dollar, continuing to draw support from a a key long-term level. This comes despite market speculation that China might allow Yuan to weaken further to counteract the economic effects of new tariffs introduced under Donald Trump’s presidency.

    A weaker currency would bolster export competitiveness by making Chinese goods more affordable internationally. However, Beijing faces a dilemma: while a controlled depreciation could help exporters, an uncontrolled fall could lead to heightened volatility in domestic financial markets and reduced investor confidence.

    Acknowledging these risks, PBOC Governor Pan Gongsheng reaffirmed the central bank’s commitment to exchange rate stability last week, stating, “We will resolutely prevent the risk of the exchange rate overshooting, ensuring that the Yuan exchange rate remains generally stable at a reasonable, balanced level.”

    Technically, a short term top should be confirmed at 7.3694 in USD/CNH with today’s dip. But it’s early to call for bearish reversal as long as 55 D EMA (now at 7.2797) hits. Further rally remains in favor through 7.3745 (202 high) to resume the long term up trend.

    Nevertheless, firm break of 55 D EMA should bring deeper pull back to 38.2% retracement of 6.9709 to 7.3694 at 7.2172, which is close to 55 W EMA (now at 7.2097) even just as a correction to rise from 6.9709.

    From BoJ to inflation data and PMIs, global markets have more to focus on than Trump

    While the inauguration of Donald Trump dominates the headlines in US markets, global investors are turning their attention to a week packed with pivotal high-impact economic events that would provide crucial clues about the monetary policy paths of key economies.

    BoJ’s upcoming meeting is a top priority for global markets. After repeated signals from Governor Kazuo Ueda and other top officials, markets should be well-prepared for a 25bps rate hike, raising the policy rate to 0.50%. However, beyond the rate decision, the focus will shift to BoJ’s updated economic projections and policy guidance.

    While Ueda is expected to remain cautious about committing to a specific timeline for normalization, he may strike a more optimistic tone regarding wage growth, based on reports from branch managers. Additionally, BoJ could raise inflation forecasts in its quarterly outlook, both of which would add hawkish tones to the meeting.

    In the UK, attention is squarely on employment data, which will shed light on the labor market’s response to the government’s Autumn Budget. The markets are already pricing in over 75 basis points of BoE rate cuts in 2025. Meanwhile, IMF is projecting an even deeper 100bps reduction. The strength of the labor market will play a pivotal role in determining the scale of monetary easing this year, making this release a key driver for Sterling sentiment.

    Inflation data from Canada and New Zealand also hold significant importance. In Canada, BoC has indicated that the pace of rate reductions will slow, but uncertainty remains over the timing of pauses. A Reuters poll suggests an 80% chance of a 25bps cut on January 29, following December’s larger 50-bps move. CPI data will either reinforce or challenge this expectation.

    Meanwhile, New Zealand’s Q4 inflation report is expected to show further easing in price pressures, consistent with RBNZ’s forecasts. If the trend persists, RBNZ could deliver another 50bs rate cut at its February meeting

    Other data to watch this week include Germany’s ZEW Economic Sentiment Index and PMI reports from several major economies. These releases will provide additional context on global economic momentum and inform central bank decisions in the months ahead.

    Here are some highlights for the week:

    • Monday: Japan machine orders, tertiary industry index; Germany PPI; Swiss PPI; BoC business outlook survey.
    • Tuesday: New Zealand BNZ services; UK employment; Germany ZEW economic sentiment; Canada CPI.
    • Wednesday: New Zealand CPI; UK public sector net borrowing: Canada IPPI and RMPI.
    • Thursday: Japan trade balance; Canada retail sales; US jobless claims.
    • Friday: Australia PMIs; Japan CPI, PMIs, BoJ rate decision; Eurozone PMIs; UK PMIs; Canada new housing price index; US PMIs, US existing sales.

    EUR/USD Daily Outlook

    Daily Pivots: (S1) 1.0247; (P) 1.0289; (R1) 1.0313; More…

    EUR/USD recovers mildly today but stays in the middle of near term range above 1.0176. Intraday bias stays neutral and outlook remains bearish with 1.0435 resistance intact. On the downside, break of 1.0176 will resume the fall from 1.1213 and target 61.8% projection of 1.1213 to 1.0330 from 1.0629 at 1.0083. However, firm break of 1.0435 will confirm short term bottoming, and turn bias back to the upside for stronger rebound.

    In the bigger picture, fall from 1.1274 (2023 high) should either be the second leg of the corrective pattern from 0.9534 (2022 low), or another down leg of the long term down trend. In both cases, sustained break of 61.8 retracement of 0.9534 to 1.1274 at 1.0199 will pave the way back to 0.9534. For now, outlook will stay bearish as long as 1.0629 resistance holds, even in case of strong rebound.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    23:50 JPY Machinery Orders M/M Nov 3.40% -0.70% 2.10%
    00:01 GBP Rightmove House Price Index M/M Jan 1.70% -1.70%
    01:00 CNY 1-y Loan Prime Rate 3.10% 3.10% 3.10%
    01:00 CNY 5-y Loan Prime Rate 3.60% 3.60% 3.60%
    04:30 JPY Tertiary Industry Index M/M Nov -0.30% 0.10% 0.30% 0.10%
    04:30 JPY Industrial Production M/M Nov F -2.20% -2.30% -2.30%
    07:00 EUR Germany PPI M/M Dec -0.10% 0.30% 0.50%
    07:00 EUR Germany PPI Y/Y Dec 0.80% 1.10% 0.10%
    07:30 CHF PPI M/M Dec 0.00% 0.20% -0.60%
    07:30 CHF PPI Y/Y Dec -0.90% -1.50%
    15:30 CAD BoC Business Outlook Survey

     



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