Tag: Germany

  • Sterling Slumps as UK Jobs Data Fuels August BoE Rate Cut Bets

    Sterling Slumps as UK Jobs Data Fuels August BoE Rate Cut Bets


    Sterling is sold off notably today after dismal UK labor market data intensified expectations of a BoE rate cut in August. The most striking element was the -109k drop in payrolled employment—the largest non-pandemic decline since records began in 2014—coupled with a rise in the unemployment rate to its highest level since mid-2023.

    While wage growth remains elevated, its slowdown reinforces the view that inflationary pressures are easing. With signs that labour market cooling is gaining momentum, markets are increasingly pricing in not just an August rate cut, but a follow-up move in November. Traders will, however, closely monitor Chancellor Rachel Reeves’ fiscal statement tomorrow, which may influence expectations depending on the scale and orientation of policy shifts.

    Elsewhere, markets are also eyeing the second day of US-China trade talks in London. Ahead of the meeting, U.S. Commerce Secretary Howard Lutnick said that he expected a full day meeting today, while the negotiations are “going well”. Both sides are expected to issue updates later in the day.

    Overall in the currency markets, Sterling is currently the worst performer, followed by Swiss Franc, and then Dollar. Loonie is the best, followed by Aussie, and then Euro. Yen and Aussie are positioning in the middle.

    Technically, focus is now on 1.1045 support in GBP/CHF with today’s dip. Firm break there will complete a head and shoulder top pattern, which suggest that rise from 1.0610 has completed, at 1.1200. Deeper decline should then be seen to 38.2% retracement of 1.0610 to 1.1200 at 1.0975, and possibly further to 61.8% retracement at 1.0835.

    In Europe, at the time of writing, FTSE is up 0.53%. DAX is down -0.40%. CAC is up 0.01%. UK 10-year yield is down -0.094 at 4.543. Germany 10-year yield is down -0.035 at 2.535. Earlier in Asia, Nikkei rose 0.32%. Hong Kong HSI fell -0.08%. China Shanghai SSE fell -0.44%. Singapore Strait Times fell -0.06%. Japan 10-year JGB yield rose 0.002 to 1.480.

    ECB’s Villeroy: Favorable 2 and 2 zone is not static

    French ECB Governing Council member Francois Villeroy de Galhau said in a conference today that ECB is now in a favorable “2 and 2 zone. That means, inflation is forecast at 2% this year, while deposit rate is also at 2%.

    Nevertheless, he warned that with current uncertainties, this zone “does not mean a comfortable zone or a static zone”. “We will remain pragmatic and data-driven, and as agile as necessary,” Villeroy added.

    Separately, Finnish ECB policymaker Olli Rehn warned that as inflation is projected to stay below 2% this year, the central must be mind of “not slipping towards the zero lower bound.”

    “We must not grow overconfident — instead we must stay vigilant and monitor the risks in both directions,” Rehn said. “The ECB team must remain alert and ready to act with agility as and if needed.”

    Eurozone Sentix surges back into positive territory, recession fears recede

    Investor sentiment in the Eurozone turned notably upbeat in June, as Sentix Investor Confidence index climbed from -8.1 to +0.2—its first positive reading since June 2024 and well above expectations of -6. Current Situation Index also improved markedly from -19.3 to -13.0, while Expectations Index jumped from 3.8 to 14.3.

    Germany led the improvement, with its overall Sentix index rising to -5.9, the highest since March 2022. Expectations climbed by 12 points to 17.5, while current conditions advanced for the fourth consecutive month to -26.8.

    According to Sentix, fears of a recession triggered by the US tariff shock in April have largely dissipated, and the economic outlook for the Eurozone is now tilted toward a cyclical upswing.

    With economic momentum building and the Sentix inflation barometer showing signs of easing price pressures, ECB may view its policy as being in a “comfort zone.” While another rate cut isn’t off the table, any such move could be delayed if the upswing continues to solidify over the summer.

    UK labor market softens as unemployment rises to 4.6% and wage growth slows

    UK labor market data released today point to gradual cooling. In May, payrolled employment dropped by -109k, or -0.4% mom. Claimant count rose sharply by 33.1k, well above the expected 4.5k increase. Wage pressures are also easing, with median monthly pay rising by 5.8% yoy, down from 6.2% previously, though still within a relatively tight band seen this year.

    For the three months to April, unemployment rate ticked up to 4.6% as expected, while both average earnings measures came in softer than forecast. Regular pay (excluding bonuses) rose 5.2% yoy, and total pay increased 5.3% yoy, both under the 5.5% consensus.

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

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

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

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

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

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

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

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

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

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

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

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

    EUR/GBP Mid-Day Outlook

    Daily Pivots: (S1) 0.8419; (P) 0.8424; (R1) 0.8433; More…

    EUR/GBP’s rebound from resumed by breaking through 0.8448 resistance, and intraday bias is back on the upside for 38.2% retracement of 0.8737 to 0.8354 at 0.8500. Strong resistance could be seen from 0.8500 to complete the corrective bounce. On the downside, break of 0.8413 support will bring retest of 0.8354 low. However, firm break of 0.8500 will pave the way to 61.8% retracement at 0.8591 instead.

    In the bigger picture, price actions from 0.8221 medium term bottom are merely forming a corrective pattern. Nevertheless, there is no clear momentum to break through 0.8201 key support (2022 low) yet. Hence, range trading is expected between 0.8221/8737 for now.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    23:01 GBP BRC Retail Sales Monitor Y/Y May 0.60% 2.70% 6.80%
    23:50 JPY Money Supply M2+CD Y/Y May 0.60% 0.50%
    00:30 AUD Westpac Consumer Confidence Jun 0.50% 2.20%
    01:30 AUD NAB Business Confidence May 2 -1
    01:30 AUD NAB Business Conditions May 0 2
    06:00 JPY Machine Tool Orders Y/Y May 3.40% 7.70%
    06:00 GBP Claimant Count Change May 33.1K 4.5K 5.2K -21.2K
    06:00 GBP Average Earnings Excluding Bonus 3M/Y Apr 5.20% 5.50% 5.60% 5.50%
    06:00 GBP Average Earnings Including Bonus 3M/Y Apr 5.30% 5.50% 5.50% 5.60%
    06:00 GBP ILO Unemployment Rate (3M) Apr 4.60% 4.60% 4.50%
    08:30 EUR Eurozone Sentix Investor Confidence Jun 0.2 -6 -8.1
    10:00 USD NFIB Business Optimism Index May 98.8 95.9 95.8

     



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  • Yen Crushed as Super-Long JGB Yields Plunge on Supply Cut Speculation

    Yen Crushed as Super-Long JGB Yields Plunge on Supply Cut Speculation


    Yen is under intense selling pressure today, dragged down by a sharp plunge in super-long JGB yields. The 30-year yield closed at 2.836%, down significantly from 3.165% just days ago. This abrupt move followed a Reuters report suggesting that the Ministry of Finance may reduce super-long bond issuance as part of a potential tweak to its bond program. Discussions with market participants are expected to conclude by mid- to late-June, after which the MOF will formalize its decision.

    The reported consideration comes in response to a surge in super-long yields to multi-decade highs, which had mirrored global trends, particularly a selloff in US long bonds. A reduction in supply could help stabilize Japan’s long-end, which has come under additional pressure amid political calls for fiscal stimulus ahead of July’s upper house elections. Prime Minister Shigeru Ishiba faces growing demands for tax cuts and expansive spending measures, both of which could further exacerbate Japan’s already heavy debt load and add pressure on government financing costs.

    This bond market adjustment has compounded Yen weakness, particularly as global risk appetite revives. European equities are rallying, with DAX hitting a fresh record high, and US equity futures are pointing higher as well. This upswing in sentiment is fueling a rebound in Dollar, while Euro and Sterling are also firming against most peers. In contrast, the Swiss franc is underperforming, second only to Yen on the downside today. However, commodity currencies like Aussie, Kiwi and Loonie are showing muted reactions, failing to capitalize on the improved mood.

    Technically, one focus now is whether EUR/CHF’s rebound from 0.9291 could extend through 0.9419 resistance. In this case, that would signal resumption of rise from 0.9218. Next near term target will be 100% projection of 0.9218 to 0.9445 from 0.9291 at 0.9518.

    In Europe, at the time of writing, FTSE is up 0.72%. DAX is up 0.70%. CAC is up 0.09%. UK 10-year yield is down -0.005 at 4.678. Germany 10-year yield is down -0.018 at 2.544. Earlier in Asia, Nikkei rose 0.51%. Hong Kong HSI rose 0.43%. China Shanghai SSE fell -0.18%. Singapore Strait Times rose 0.53%. Japan 10-year JGB yield fell -0.03 to 1.466.

    US durable goods orders fall -6.3% mom, but core shows resilience

    US durable goods orders fell sharply by -6.3% mom in April to USD 296.3B, driven primarily by a steep -17.1% mom drop in transportation equipment. The headline decline, while severe, was less than the expected -8.0%.

    Orders excluding defense also posted a significant decline of -7.5% mom to USD 279.3B.

    However, the underlying picture was somewhat more stable. Orders excluding the often-volatile transportation component rose by 0.2% mom to USD 197.5B, beating expectations of a flat reading.

    This suggests that while large-ticket and defense-related items dragged the headline figure lower, private sector investment in capital goods is holding up better than feared.

    Fed’s Kashkari leans cautious on tariff shock, favors holding rates to anchor inflation expectations

    Speaking at the IMES conference in Japan, Minneapolis Fed President Neel Kashkari addressed the growing internal debate within Fed over how to respond to the inflationary effects of new US tariffs.

    He noted that some policymakers advocate “looking through” these price shocks, viewing them as “transitory”, akin to a one-time upward shift in the price level rather than persistent inflation. That approach would favor cutting interest rates to support economic activity during the adjustment period.

    However, Kashkari expressed skepticism toward this lenient view. He emphasized that trade negotiations are “unlikely to be resolved quickly”., warning of a prolonged period of elevated uncertainty and the risk of retaliatory measures.

    Tariffs on intermediate goods could lead to delayed but persistent inflationary pressure as cost increases pass through to final goods over time.

    Given these risks, Kashkari said he finds the case for holding rates steady more persuasive, especially in light of the need on “defending long-run inflation expectations”.

    While current policy is likely “only modestly restrictive”, he argued that caution is warranted until the full effects of tariffs become clearer.

    ECB’s Holzmann: Should pause rate cut until at least September

    Austrian ECB Governing Council member Robert Holzmann cautioned against further rate cuts in the near term, citing heightened uncertainty from the US-EU trade conflict and a belief that monetary policy is no longer the main drag on economic activity.

    Arguing that “moving further south would be more risky than staying where we are,” Holzmann said there is no justification for easing in June or July and suggested waiting until at least September before reassessing the need for further action.

    Holzmann also pointed to a notable rise in estimates of the neutral interest rate since early 2022, stating that ECB’s current policy stance is already “at least at the neutral level.”

    In his view, lower rates would provide little economic benefit, as lingering uncertainty, not borrowing costs, is the key factor suppressing growth.

    ECB’s Villeroy and Simuks Signal June rate cut

    Comments from ECB Governing Council members today reinforced expectations for a rate cut in June, as inflation continues to moderate across the Eurozone.

    French central bank chief François Villeroy de Galhau noted that policy normalization is “probably not complete,” and hinted that the upcoming ECB meeting is likely to deliver further action. He pointed to France’s May inflation reading of just 0.6% as a “very encouraging sign of disinflation in action”

    Separately, Lithuania’s Gediminas Šimkus struck a dovish tone, stating that the balance of inflation risks has shifted to the downside, citing trade frictions with the US and a stronger Euro as deflationary forces. He added that current borrowing costs sit at the upper bound of the neutral range, leaving room for more rate reductions.

    German Gfk consumer sentiment edges higher to -19.9, mood remains extremely low

    Germany’s GfK Consumer Sentiment rose for the third straight month, reaching -19.9 in June, its highest reading since November 2024, but slightly below expectations of -19.7. In May, income expectations surged 6.1 pts to 10.4, the best since October last year. Economic expectations climbed 2.9 pts to 13.1, their highest since April 2023.

    According to Rolf Bürkl of the NIM, the mood remains “extremely low,” with uncertainty still elevated due to global trade tensions, stock market volatility, and persistent fears of another year of economic “stagnation”. These concerns are encouraging households to prioritize saving over spending.

    BoJ’s Ueda highlights persistent food inflation and trade uncertainty

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

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

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

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

    USD/JPY Mid-Day Outlook

    Daily Pivots: (S1) 142.35; (P) 142.72; (R1) 143.20; More…

    USD/JPY recovered notably today but stays below 144.31 minor resistance. Intraday bias remains neutral first. On the upside, firm break of 144.31 will argue that fall from 148.64 has completed as a corrective pullback. Intraday bias will be turned back to the upside for 148.64 resistance next. Nevertheless, rejection by 144.31 will keep risks on the downside. Below 142.10 will target a retest on low.

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

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    23:01 GBP BRC Shop Price Index Y/Y May -0.10% 0.00% -0.10%
    23:50 JPY Corporate Service Price Index Y/Y Apr 3.10% 3.00% 3.10% 3.30%
    06:00 CHF Trade Balance (CHF) Apr 6.36B 5.55B 6.35B 6.29B
    06:00 EUR Germany GfK Consumer Sentiment Jun -19.9 -19.7 -20.6 -20.8
    09:00 EUR Eurozone Economic Sentiment May 94.8 94 93.6
    09:00 EUR Eurozone Industrial Confidence May -10.3 -11 -11.2 -11
    09:00 EUR Eurozone Services Sentiment May 1.5 1.4
    09:00 EUR Eurozone Consumer Confidence May F -15.2 -15.2 -15.2
    12:30 USD Durable Goods Orders Apr -6.30% -8.00% 7.50%
    12:30 USD Durable Goods Orders ex Transport Apr 0.20% 0.00% -0.40%
    13:00 USD S&P/CS Composite-20 HPI Y/Y Mar 4.50% 4.50%
    13:00 USD Housing Price Index M/M Mar 0.20% 0.10%
    14:00 USD Consumer Confidence May 87.1 86

     



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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    Gold Eyes Fresh Record High as Safe Haven Flows Persist

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

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

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

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

    GBP/USD Weekly Outlook

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

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

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



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  • 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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  • German Wholesale Price Inflation Eases In April

    German Wholesale Price Inflation Eases In April


    Germany’s wholesale price inflation softened for the second straight month in April, data from Destatis showed on Thursday.

    Wholesale prices grew 0.8 percent year-on-year in April, following a 1.3 percent rise in March.

    The overall inflation in April was due to higher prices for food products, non-ferrous ores and metals, and non-ferrous semi-finished metal products.

    Meanwhile, lower prices were also reported in the wholesale of computers and peripheral equipment and iron, steel, and ferrous semi-finished metal products.

    On a monthly basis, wholesale prices dropped 0.1 percent in April versus an expected increase of 0.2 percent.

    For comments and feedback contact: editorial@rttnews.com

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    What parts of the world are seeing the best (and worst) economic performances lately? Click here to check out our Econ Scorecard and find out! See up-to-the-moment rankings for the best and worst performers in GDP, unemployment rate, inflation and much more.





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  • Dollar Eases as Trade Boost Fades, Sterling Finds Support on Wages and BoE Rhetoric

    Dollar Eases as Trade Boost Fades, Sterling Finds Support on Wages and BoE Rhetoric


    Dollar softened slightly in early US trading today, though the move appears more related to a fading post-trade-deal rally than any direct reaction to economic data. While April’s inflation report showed encouraging progress on headline disinflation, the core CPI reading held firm, suggesting underlying price pressures remain sticky. That dynamic should keep Fed cautious, and today’s market reaction suggests the data did little to shift expectations meaningfully. The more optimistic takeaway, however, is that recent tariffs have yet to significantly lift inflation.

    In contrast, Sterling is gaining some traction, particularly against Euro, following solid UK wage data. Despite signs of softening in overall employment, wage growth remains robust, with average earnings still running well above levels consistent with BoE’s 2% inflation target. BoE Chief Economist Huw Pill reinforced that concern by warning that more aggressive or sustained policy action may be needed to bring inflation under control. His remarks have helped underpin Sterling sentiment.

    Overall in the currency markets, Aussie has overtaken Dollar to become the week’s top performer. Kiwi and Loonie are also firm. At the other end of the spectrum, Yen continues to struggle, while Swiss Franc and Euro are also soft.

    Technically, GBP/JPY is now pressing 195.95 resistance as rise from 184.35 extends. Decisive break of 195.95 will argue that choppy fall from 199.79 has completed at 184.35 already. More importantly, rise from 180.00 might then be ready to resume through 199.79 in this bullish case.

    In Europe, at the time of writing, FTSE is up 0.05%. DAX is up 0.17%. CAC is up 0.23%. UK 10-year yield is up 0.021 at 4.671. Germany 10-year yield is up 0.013 at 2.666. Earlier in Asia, Nikkei rose 1.43%. Hong Kong HSI fell -1.87%. China Shanghai SSE rose 0.17%. Singapore Strait Times rose 0.13%. Japan 10-year JGB yield rose 0.06 to 1.449.

    US CPI hits four year low at 2.3%, but core inflation holds steady at 2.8%

    US headline CPI rose just 0.2% mom, below the expected 0.3% mom. Core CPI, excluding food and energy, also increased by 0.2%, undershooting forecasts of 0.3% mom.

    On an annual basis, headline inflation eased to 2.3% yoy from 2.4% yoy, the lowest rate since April 2021. Core inflation held steady at 2.8% yoy, in line with expectations.

    Shelter remained the key driver of monthly inflation, rising 0.3% mom and accounting for over half of the total increase.

    Energy prices also ticked higher by 0.7% mom, while food prices declined slightly by -0.1% mom. On a year-over-year basis, energy costs dropped by -3.7%, helping to keep overall inflation in check, while food prices rose 2.8%.

    BoE’s Pill: May require more aggressive and persistent effort to bring down inflation

    Speaking at a press conference today, BoE Chief Economist Huw Pill warned that returning inflation to the BoE’s 2% target may prove more difficult than anticipated. Hence, Pill said the central bank may need to respond in a “somewhat more aggressive or more persistent” way to ensure inflation is brought under control within a reasonable time frame.

    He raised concerns that recent shifts in wage and price-setting behavior might reflect a more “structural change”, drawing parallels with inflation dynamics of the 1970s and 1980s.

    Pill emphasized that investors should not interpret BoE’s latest forecast, showing inflation returning to target by early 2027 based on market-implied rates, as a clear endorsement of future rate cuts.

    Instead, he pointed to the Bank’s more inflationary risk scenario, which assumed persistently weak productivity and stronger wage pressures. These conditions, he said, echo past inflation crises, where elevated price levels triggered repeated and entrenched pay demands.

    Last week, Pill voted against the BoE’s quarter-point rate cut, aligning with fellow hawk Catherine Mann in preferring to keep rates unchanged.

    UK payrolled employment falls -33k, wage growth remains elevated

    UK labor market data for April showed signs of softening in employment but continued strength in wage growth. Payrolled employment fell by -33k (-0.1% mom), while the claimant count rose by 5.2k. Median monthly pay rose by 6.4% yoy in April, accelerating from 5.9% yoy in the previous month.

    In the three months to March, unemployment rate in the three months to March edged up from 4.4% to 4.5%, in line with expectations and marking the highest level since late 2021.

    Average earnings including bonuses rose 5.5% yoy, beating expectations of 5.2% yoy. Earnings excluding bonuses rose 5.6% yoy, slightly below forecast of 5.7% yoy.

    German ZEW economic sentiment surges on stabilizing domestic politics and trade progress

    Investor sentiment in Germany and the wider Eurozone improved sharply in May, with ZEW Economic Sentiment Index for Germany jumping from -14.0 to 25.2, well above the expected 9.8. Eurozone sentiment followed suit, rising from -18.5 to 11.6, also beating expectations.

    According to ZEW President Achim Wambach, the rebound reflects growing optimism tied to easing trade tensions, a new German government, and stabilizing inflation, helping to offset last month’s sharp deterioration.

    However, views on current conditions remain deeply negative. Germany’s Current Situation Index edged down further from -81.2 to -82.0, missing forecasts. Eurozone’s improved modestly but still stood at -42.2. This divergence suggests that while expectations for the months ahead are improving, near-term economic conditions remain fragile, particularly in Germany.

    BoJ’s Uchida sees temporary inflation pause, but wage growth to persist

    BoJ Deputy Governor Shinichi Uchida said today that while Japan’s underlying inflation and medium- to long-term inflation expectations may “temporarily stagnate”, wage growth is expected to remain firm as “Japan’s job market is very tight.”

    He added that companies are likely to continue “passing on rising labour and transportation costs by increasing prices”.

    Uchida also stressed that BoJ will assess the economic impact of US trade policy “without pre-conception,” acknowledging the high degree of uncertainty surrounding the global outlook.

    BoJ opinions: Sees tariff risks but maintains flexible rate-hike stance

    BoJ’s Summary of Opinions from its April 30–May 1 meeting revealed a generally cautious view on the impact of US tariffs, with board members acknowledging the potential economic damage but not seeing it as enough to derail the pursuit of the 2% inflation target.

    One member noted that BoJ may enter a “temporary pause” in rate hikes due to weaker US growth. But it’s emphasized that “it shouldn’t be too pessimistic”.

    The member emphasized that rate hikes could resume if conditions improve or US policy shifts.

    Other opinions highlighted the high level of uncertainty facing Japan’s economic and price outlook, driven largely by global trade tensions. One board member noted the policy path “may change at any time.”

    Another reaffirmed that there has been “no change to the BoJ’s rate-hike stance”, as projections continue to show inflation reaching the 2% target and real interest rates remain deeply negative.

    Australian Westpac consumer sentiment rises to 92.1, weak confidence supports RBA cut

    Australia’s Westpac Consumer Sentiment Index rose 2.2% to 92.1 in May, partially recovering from April’s sharp decline triggered by trade-related uncertainty.

    Westpac attributed the modest rebound to stronger financial markets and a decisive outcome in the Federal election. However, sentiment remains subdued, with the index still 3.9% below its March level and firmly in pessimistic territory.

    With all key inflation measures now back within the 2–3% target range, Westpac expects RBA to cut the cash rate by another 25bps to 3.85%. The combination of soft domestic sentiment and a more “unsettled and threatening global backdrop” strengthens the case for further easing.

    Australia’s NAB business conditions weaken to 2, profit pressures mount

    Australia’s NAB Business Confidence Index edged up from -3 to -1 in April. However, the underlying Business Conditions Index slipped from 3 to 2. Trading conditions eased from 6 to 5, while profitability dropped sharply from 0 to -4, highlighting the ongoing strain on margins.

    Purchase cost growth accelerated to 1.7% in quarterly equivalent terms, up from 1.4%. Labor cost growth remained elevated at 1.6%. Rising input costs appear to be eroding profitability, with businesses struggling to pass through the full extent of these increases. This was reflected in modest increases in final product and retail price growth, which rose to 0.8% and 1.4% respectively—still below the pace of input cost growth.

    NAB Chief Economist Sally Auld noted that weaker profitability was at the core of the drop in business conditions, aligning with the uptick in purchase costs and softer trading performance.

    EUR/USD Mid-Day Outlook

    Daily Pivots: (S1) 1.1022; (P) 1.1132; (R1) 1.1199; More…

    Intraday bias in EUR/USD is turned neutral first with current recovery. Overall, strong support should be seen from 38.2% retracement of 1.0176 to 1.1572 at 1.1039 to bring rebound. On the upside, break of 1.1380 will suggest that the correction from 1.1572 has completed, and bring retest of 1.1572. However, sustained break of 1.1039 will dampen this view and target 61.8% retracement at 1.0709 next.

    In the bigger picture, rise from 0.9534 long term bottom could be correcting the multi-decade downtrend or the start of a long term up trend. In either case, further rise should be seen to 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916. This will now remain the favored case as long as 55 W EMA (now at 1.0789) holds.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    23:50 JPY BoJ Summary of Opinions
    23:50 JPY Money Supply M2+CD Y/Y Apr 0.50% 0.60% 0.80%
    00:30 AUD Westpac Consumer Confidence May 2.20% -6%
    01:30 AUD NAB Business Conditions Apr 2 4
    01:30 AUD NAB Business Confidence Apr -1 -3
    06:00 GBP Claimant Count Change Apr 5.2K 22.3K 18.7K -16.9K
    06:00 GBP ILO Unemployment Rate (3M) Mar 4.50% 4.50% 4.40%
    06:00 GBP Average Earnings Including Bonus 3M/Y Mar 5.50% 5.20% 5.60% 5.70%
    06:00 GBP Average Earnings Excluding Bonus 3M/Y Mar 5.60% 5.70% 5.90%
    09:00 EUR Germany ZEW Economic Sentiment May 25.2 9.8 -14
    09:00 EUR Germany ZEW Current Situation May -82 -77 -81.2
    09:00 EUR Eurozone ZEW Economic Sentiment May 11.6 -4.4 -18.5
    10:00 USD NFIB Business Optimism Index Apr 95.8 94.5 97.4
    12:30 USD CPI M/M Apr 0.20% 0.30% -0.10%
    12:30 USD CPI Y/Y Apr 2.30% 2.40% 2.40%
    12:30 USD CPI Core M/M Apr 0.20% 0.30% 0.10%
    12:30 USD CPI Core Y/Y Apr 2.80% 2.80% 2.80%

     



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  • EUR/JPY attracts bids below 162.00 as German Merz secures majority in second attempt

    EUR/JPY attracts bids below 162.00 as German Merz secures majority in second attempt


    • EUR/JPY bounces back from below 162.00 as German Friedrich Merz is confirmed as new Chancellor.
    • German Merz failed to secure an absolute majority in the first voting process at the Bundestag.
    • Trump’s tariff threats on pharmaceutical imports have increased the JPY’s safe-haven demand.

    The EUR/JPY pair rebounds above 162.00 during the North American trading session after attracting bids near 161.60, which is the intraday low. The pair bounces back as Germany’s Conservative leader Friedrich Merz secures an absolute majority after getting 325 votes in the second attempt in the Bundestag, or the lower house of Parliament.

    Friedrich Merz received 310 votes in the first attempt, six short of 316 required to be elected as Chancellor of Germany, despite the CDU/CSU and Social Democrats collectively commanding 326 votes in Bundestag.

    The confirmation of Friedrich Merz as Chancellor has diminished fears of political instability and is expected to boost defense spending measures approved in March.

    However, firm expectations that the European Central Bank (ECB) will reduce interest rates in the June policy meeting will limit the Euro’s (EUR) upside. The ECB is widely expected to cut interest rates by 25 basis points (bps). This would be the seventh interest rate cut by the ECB in a row. The reasoning behind firm ECB dovish bets is high conviction that the Eurozone inflation is on track to return to the central bank’s target of 2% by the year-end.

    Meanwhile, the Japanese Yen (JPY) performs strongly as fresh tariff threats from United States (US) President Donald Trump have increased its safe-haven demand. Trump threatened to impose tariffs on pharmaceutical imports, which will be announced in two weeks.

    Japanese Yen PRICE Today

    The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the Swiss Franc.

    USD EUR GBP JPY CAD AUD NZD CHF
    USD -0.22% -0.55% -0.59% -0.23% -0.14% -0.45% 0.22%
    EUR 0.22% -0.34% -0.36% -0.02% 0.07% -0.23% 0.44%
    GBP 0.55% 0.34% -0.04% 0.32% 0.44% 0.11% 0.81%
    JPY 0.59% 0.36% 0.04% 0.35% 0.45% 0.22% 0.82%
    CAD 0.23% 0.02% -0.32% -0.35% 0.09% -0.22% 0.48%
    AUD 0.14% -0.07% -0.44% -0.45% -0.09% -0.31% 0.39%
    NZD 0.45% 0.23% -0.11% -0.22% 0.22% 0.31% 0.69%
    CHF -0.22% -0.44% -0.81% -0.82% -0.48% -0.39% -0.69%

    The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).

    On the domestic front, investors await the Bank of Japan (BoJ) monetary policy meeting minutes, which will be published on Wednesday.

     



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  • Franc and Euro Falter, Yen Strengthens as Risk-Off Returns

    Franc and Euro Falter, Yen Strengthens as Risk-Off Returns


    Both Swiss Franc and Euro are under some selling pressure today, especially against Sterling. The Franc suffered after SNB Chair Martin Schlegel signaled the willingness to reintroduce negative interest rates if deflationary risks persist. Meanwhile, Euro came under pressure as fresh political instability emerged in Germany

    CDU/CSU leader Friedrich Merz’s failure to secure a parliamentary majority in his bid to become chancellor. Merz’s defeat highlighted cracks within his coalition and prompted concern across Europe. Eighteen coalition lawmakers reportedly broke ranks. European observers warned that Berlin’s political instability could have ramifications for EU-wide cohesion, especially at a time when coordinated responses to US tariffs are essential.

    Euro’s fragility was further compounded by European Trade Commissioner Maros Sefcovic’s remarks in the European Parliament. He emphasized that all options remain on the table if US tariff negotiations fail. The EU is preparing contingency measures ahead of the July 8 deadline, with Sefcovic warning that US tariffs now affect 70% of EU exports and could rise to 97%.

    Markets will be closely watching the results of the EU’s trade diversion task force due in mid-May, especially given the risk of redirected Chinese exports flooding European markets. While Sefcovic emphasized the EU’s preference for a negotiated settlement with the US, his tone reflected limited optimism for swift progress.

    Despite Sterling rally again its European peers, it was Yen that claimed the top spot among major currencies today. The Pound is sitting at the second place, with Kiwi as the third. On the other hand, Swiss Franc is the worst performer, followed by Dollar and then Aussie. Euro and Loonie are positioning in the middle.

    Technically, as USD//JPY’s decline from 145.90 gathers momentum, focus is now on 141.90 support. Firm break there will suggest that recovery from 139.87 has completed as a three-wave corrective move. Larger fall from 158.86 should then be ready to resume to 139.26 key long term fibonacci support.

    In Europe, at the time of writing, FTSE is down -0.01%. DAX is down -0.54%. CAC is down -0.23%. UK 10-year yield is flat at 4.524. Germany 10-year yield is up 0.023 at 2.541. Earlier in Asia, Japan was on holiday. Hong Kong HSI rose 0.70%. China Shanghai SSE rose 1.13%. Singapore Strait Times rose 0.19%.

    SNB’ Schlegel signals willingness to revisit negative rates

    SNB Chairman Martin Schlegel said that while the central bank does not favor negative interest rates, it remains fully prepared to reintroduce them if necessary.

    Speaking at an event today, Schlegel said “if we have to do it, the negative interest rates, we’re certainly prepared to do it again”.

    “For the last couple of quarters, we have always said we are ready to intervene in the forex market if it’s necessary,” Schlegel said.

    The comments come just a day after Swiss CPI data revealed that inflation slowed to 0% in April — the lowest reading in four years. The data has triggered market expectations that SNB will cut its policy rate from the current 0.25% at its upcoming meeting on June 19. Expectations are also mounting that rates could eventually fall back below zero this year.

    Eurozone PPI falls -1.6% mom in March on steep energy decline

    Eurozone PPI fell -1.6% mom in March, dragged down by a steep -5.8% mom drop in energy costs. Excluding energy, however, PPI ticked up 0.1% mom. Annually, PPI stood at 1.9% yoy, down from prior month’s 3.0% yoy.

    Modest monthly gains was seen across most segments — 0.1% mom for capital goods, 0.2% mom for durable consumer goods, and 0.5% mom for non-durable goods. Intermediate goods were unchanged.

    In the broader EU, PPI also fell -1.6% m/m and rose 2.1% yoy. The largest monthly decreases in industrial producer prices were recorded in Estonia (-8.0%), Spain (-3.9%) and Italy (-3.3%). The highest increases were observed in Greece (+1.3%), Luxembourg (+0.9%) and Slovenia (+0.6%).

    Eurozone PMI services finalized at 50.1, cost pressure easing, hiring hesitant

    Eurozone’s PMI Composite was finalized at 50.4 in April, down from 50.9 in March, confirming a sluggish start to Q2. The services sector, a critical growth engine, nearly stalled with a reading of 50.1, down from 51.0.

    Nationally, Ireland (54.0) led the bloc in growth, followed by Spain (52.5) and Italy (52.1). Germany (50.1) was in slight expansion, while France (47.8) fell deeper into contraction territory.

    Cyrus de la Rubia of Hamburg Commercial Bank noted that cost pressures in services remain “relatively high”, but easing price trends are adding weight to expectations for an ECB rate cut in June.

    Employment growth across the Eurozone has stabilized, though businesses remain hesitant to expand their workforce amid continued uncertainty.

    Country-level divergence is also growing more apparent. Germany’s growth is fragile but could improve in coming months, supported by its new fiscal stimulus measures.

    UK PMI servies finalized at 49.0, tariffs and wage costs hit outlook

    UK PMI Services was finalized at 49.0 in April, down from 52.5 in March, its lowest level since January 2023. PMI Composite also dropped into contraction at 48.5, marking the first negative reading in 18 months.

    S&P Global’s Tim Moore pointed to heightened business uncertainty as a major drag on activity. Export conditions were the weakest since early 2021. Rising payroll costs linked to National Insurance hikes and increased National Living Wage rates contributed to the sharpest input cost growth since mid-2023. Service providers responded with their steepest price increases in nearly two years.

    Business confidence deteriorated significantly as “service sector firms braced for an extended period of global economic turbulence and heightened recession risks.” 22% of firms forecasted a decline in activity over the next 12 months—more than triple the level seen after the 2024 general election.

    China’s Caixin PMI composite falls to 51.1, tariff impact to deepen in Q2–Q3

    China’s Caixin PMI Services dropped to 50.7 in April, down from 51.9 and missing expectations of 51.7. PMI Composite also slipped from 51.8 to 51.1, signaling weaker momentum across both manufacturing and services.

    According to Caixin’s Wang Zhe, the expansion in supply and demand has decelerated amid growing trade friction. Export-driven sectors remain under particular pressure, while job losses and muted pricing power continue to squeeze business margins. The employment component of the composite index also contracted.

    Perhaps most concerning, expectations for future activity plunged to the lowest levels on record, reflecting rising uncertainty among firms. “The ripple effects of the ongoing China-US tariff standoff will gradually be felt in the second and third quarter”, Wang added.

    EUR/GBP Mid-Day Outlook

    Daily Pivots: (S1) 0.8504; (P) 0.8518; (R1) 0.8527; More…

    EUR/GBP’s fall from 0.8737 resumed after brief consolidations and intraday bias is back on the downside. Sustained trading below 55 D EMA (now at 0.8457) will suggest that whole rise from 0.8221 has already complete and turn outlook bearish. Nevertheless, rebound from current level, followed by break of 0.8539 resistance, will suggest that the correction from 0.8737 has completed, and retain near term bullishness.

    In the bigger picture, down trend from 0.9267 (2022 high) should have completed at 0.8221, just ahead of 0.9201 key support (2024 low). Rise from 0.8221 is likely reversing the whole fall. Further rise should be seen to 61.8% retracement of 0.9267 to 0.8221 at 0.8867 next. This will remain the favored case as long as 0.8472 resistance turned support holds. However, firm break of 0.8472 will argue that the down trend hasn’t completed yet.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    01:30 AUD Building Permits M/M Mar -8.80% -1.70% -0.30% -0.20%
    01:45 CNY Caixin Services PMI Apr 50.7 51.7 51.9
    06:45 EUR France Industrial Output M/M Mar 0.20% 0.40% 0.70% 1.00%
    07:50 EUR France Services PMI Apr F 47.3 46.8 46.8
    07:55 EUR Germany Services PMI Apr F 49 48.8 48.8
    08:00 EUR Eurozone Services PMI Apr F 50.1 49.7 49.7
    08:30 GBP Services PMI Apr F 49 48.9 48.9
    09:00 EUR Eurozone PPI M/M Mar -1.60% -1.60% 0.20%
    09:00 EUR Eurozone PPI Y/Y Mar 1.90% 2% 3%
    12:30 CAD Trade Balance (CAD) Mar -0.5B -1.7B -1.5B -1.4B
    12:30 USD Trade Balance (USD) Mar -140.5B -124.7B -122.7B -123.2B
    14:00 CAD Ivey PMI Apr 51.2 51.3

     



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  • Germany Brandenburg CPI (YoY) rose from previous 2.3% to 2.4% in April




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

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


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

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

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

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

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

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

    ECB consumer survey shows inflation expectations ticking higher

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    USD/CHF Mid-Day Outlook

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

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

    In the bigger picture, long term down trend from 1.0342 (2017 high) is still in progress and met 61.8% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.8079 already. In any case, outlook will stay bearish as long as 55 W EMA (now at 0.8783) holds. Sustained break of 0.8079 will target 100% projection at 0.7382.

    Economic Indicators Update

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

     



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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    China reaffirms growth target, holds back on major stimulus

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

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

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

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

    GBP/USD Mid-Day Outlook

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

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

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

    Economic Indicators Update

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

     



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  • Global Risk Sentiment Brightens, But Caution Lingers Around US Assets

    Global Risk Sentiment Brightens, But Caution Lingers Around US Assets


    Global risk sentiment showed further improvement last week, with stock markets around the world posting impressive gains. Although headlines continued to focus on the confusing state of U.S.-China trade tensions, there was quiet but notable progress on multiple trade fronts, including US talks with Japan, South Korea and India.

    US equities rebounded alongside the global rally even though they still lack the decisive momentum needed to confirm that a durable bottom has been established. European markets, on the other hand, painted a far more encouraging picture.

    The strength of the rebound in European equities suggests that the worst of the April selloff may already be behind us. Moreover, there is a growing sense that the sharpest phase of the tariff crisis has passed, and that incremental improvements could take root from here.

    The shift in sentiment was clearly reflected in the currency markets too. Kiwi ended the week as the strongest performer, followed by Aussie and Sterling. All three currencies benefited from the rebound in risk appetite, with investors rotating out of safe-haven assets and into higher-yielding or growth-linked currencies. On the other end, the safe-haven trio—Swiss Franc, Yen, and Euro—underperformed, as investors rotated away from defensive assets amid easing fears. Dollar and Loonie finished in the middle of the pack.

    While the equity rally suggests a return of broader risk appetite, investor interest in US assets has yet to fully recover. This is likely due to ongoing concerns over U.S. policy consistency and the uncertain path for trade negotiations. Until clearer signals emerge from Washington and stronger technical confirmations develop in US stock markets, Dollar may continue to lag behind the recovery seen elsewhere.

    Markets Rally on Trade Progress, But Major Hurdles with China and EU Remain

    Global stock markets extended their strong rally last week. There seems to be growing optimism that the worst phase of the tariff crisis may be behind us, at least for now. Trade negotiations appear to be picking up momentum across several fronts, offering hope for partial resolutions. Recent economic data, particularly PMI surveys from the Eurozone and the US, suggest that businesses have been bracing well for uncertainty, cushioning the blow from trade tensions.

    In an interview with Time magazine on Friday, US President Donald Trump said he expects “many” trade deals to fall into place over the next three to four weeks. Positive signals are emerging from several bilateral channels too. Japan’s Economy Minister Ryosei Akazawa is set to visit Washington this week for a second round of talks. US Treasury Secretary Scott Bessent has hinted that a US-South Korea trade deal could be finalized as early as next week. US and India are reported to have agreed on the terms for a bilateral deal covering trade in goods, services, and critical sectors like e-commerce and minerals. Switzerland also announced it was among a group of 15 countries given “somewhat preferential treatment” in tariff talks, with Swiss President Karin Keller-Sutter indicating that the 90-day truce could be extended for active negotiating partners.

    However, not all fronts are moving smoothly. Despite initial discussions, talks between the US and the EU have yet to yield tangible compromises. Progress remains slow, even in setting a basic framework for formal negotiations. The slow movement with Europe highlights that achieving broad global de-escalation is far from guaranteed.

    Meanwhile, the situation with China remains the murkiest. Rumors continue to swirl about informal discussions, but no clear confirmation has been provided by either side. Trump insists that some communication with Beijing is ongoing, while Chinese officials deny that any talks are happening. Although there were earlier hopes for de-escalation, Trump has reiterated that tariffs on China will remain in place unless “they give us something substantial.”

    Without a clear breakthrough or even a defined negotiation channel, US-China trade tensions remain a major overhang for global markets, tempering some of the broader optimism.

    European Strength Offers Hope, Caution Persists for US Indexes

    While US stocks have staged a strong rebound recently, the technical backdrop remains somewhat unconvincing. The recovery lacks decisive confirmation, particularly in DOW. In contrast, the outperformance seen in European markets is offering hope that the worst of the market correction could already be behind us. Particularly in the UK and Germany, technical signals suggest that early April’s steep selloff may have been a medium-term shakeout rather than the start of a long-term bearish trend.

    In the UK, FTSE ‘s breach of 55 D EMA (now at 8420.51) and break of 55 W EMA (now at 8260.66) suggest that corrective fall from 8900.82 has already completed at 7554.83. Price actions from 8908.82 is likely just a medium term consolidations pattern, rather than a long term bearish trend reversal. The range of the consolidations should be set between 38.2% retracement of 4898.79 to 8902.82 at 7376.99 and 8908.82.

    Nevertheless, for the near term, while further rise could be seen as long as 8166.53 support holds, FTSE should start to lose momentum above 55 D EMA.

    Germany’s DAX tells a similar story. The index’s corrective fall from the 23476.01 has likely completed at 18489.91. What we are seeing now is a medium-term consolidation rather than a full trend reversal. The range is set between 38.2% retracement of 8255.65 to 23476.01 at 17661.83 and 23476.01.

    For the near term, further rise is in favor as long as 21044.61 support hold. But DAX should lose momentum as it approaches 23476.01 high.

    Turning to the US, developments in Europe suggest that DOW may eventually find solid support from 38.2% retracement of 18213.65 to 45073.63 at 34813.12 to contain downside even in case of another fall, should another selloff occur. Still, firm break of 55 D EMA (now at 41361.53) is needed to indicate that fall from 45703.63 has completed. Or risk will remain on the downside for the near term.

    NASDAQ’s picture is a little bit more promising than DOW. Firm break of 55 D EMA (now at 17604.27) will indicate that fall from 2024.58 has completed at 14783.03, after defending 38.2% retracement of 6631.42 to 20204.58 at 15019.63. That should set the range for medium term consolidations for NASDAQ.

    Dollar Struggles Despite Risk Stabilization, Policy Uncertainty Remains a Drag

    While risk sentiment has shown signs of stabilizing in global markets, and even hints at a return of risk appetite, this does not necessarily imply a renewed interest in US assets. In particular, both the Dollar and US. Treasuries continue to face headwinds until investors see more policy consistency from the Trump administration. Markets remain wary of abrupt shifts in trade policy, tariff threats, and broader economic strategies, which cloud the overall investment climate for Dollar-based assets.

    Another important factor is the evolving US trade balance. Should the Trump administration succeed in narrowing the US trade deficit, there could be a meaningful structural impact on the demand for Dollar-denominated assets. A narrower deficit would mean fewer surplus Dollars circulating abroad to be recycled into US Treasuries and other assets, potentially pushing yields higher and softening the Dollar’s appeal at the same time, particularly if fiscal deficits remain large.

    Technically, Dollar Index’s recovery from 97.92 short term bottom is lacking decisive momentum. As long as 100.27 resistance holds, near term risk will remain on the downside for another fall through 97.92 sooner rather than later. Break of 97.92 will pave the way to 100% projection of 114.77 to 99.57 from 110.17 at 94.97 next.

    Nevertheless, firm break of 100.27 would set the stage for stronger rebound to 38.2% retracement of 110.17 to 97.92 at 102.60, even still as a corrective move.

    NZD/JPY Extends Rebound, Bullish Reversal Hinges on 87.35 Break

    NZD/JPY extended the rebound from 79.79 last week as risk sentiment continued to improve. The breach of falling trend line resistance is a tentative sign that fall from 92.45 has completed at 79.79. Further rise is now in favor as long as 83.88 support holds.

    On the upside, decisive break of 87.35 cluster resistance (38.2% retracement of 99.01 to 79.79 at 87.13) will argue that corrective decline from 99.01 has already completed too. Further rally should then be seen to 61.8% retracement at 91.66.

    However, rejection by 87.13/35 will keep near term outlook bearish. Break of 83.88 support will bring retest of 79.79, and possibly resumption of the down trend from 99.01 too.

    EUR/CHF Weekly Outlook

    EUR/CHF’s stronger than expected rebound last week suggests that fall from 0.9660 has already completed at 0.9218, ahead of 0.9204 low. Rebound from 0.9218 is either a corrective move, or the third leg of the pattern from 0.9204. In either case, further rally is expected this week as long as 0.9336 support holds, towards 0.9660. However, break of 0.9336 will bring retest of 0.9204/18 support zone.

    In the bigger picture, prior rejection by long-term falling channel resistance (now at 0.9555) retains medium term bearishness. That is, down trend from 1.2004 (2018 high) is still in progress. Firm break of 0.9204 (2024 low) will confirm resumption. This will remain the favored case as long as 0.9660 resistance holds.

    In the long term picture, overall long term down trend is still in force in EUR/CHF. Outlook will continue to stay bearish as long as 55 M EMA (now at 0.9962) holds.



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  • Dollar Rebound Stalls as US-China Trade Talks Hit a Wall

    Dollar Rebound Stalls as US-China Trade Talks Hit a Wall


    The forex markets remain subdued today, with all major pairs and crosses trading inside yesterday’s range. After a brief bounce, Dollar’s recovery appears to be losing momentum. While it’s too soon to confirm whether the rebound has fully run its course, fading trade optimism is clearly starting to weigh on sentiment, especially as the broader macro picture continues to be dominated by uncertainty surrounding US trade policy.

    One of the key sources of hesitation remains the unresolved state of US trade negotiations. Despite market hopes earlier in the week for progress, there has been no meaningful development between the US and its key trading partners regarding tariff reductions. More critically, the much-anticipated talks with China appear not to have even started at all—deflating sentiment that had briefly lifted risk assets and commodity currencies earlier in the week.

    China’s Ministry of Commerce poured cold water on any speculation of near-term breakthroughs, stating unequivocally that there are “absolutely no negotiations” currently underway with the US on trade. The Foreign Ministry further emphasized that reports of ongoing talks or agreements are “false news,” and reiterated that Washington must first cancel its unilateral measures for talks to begin. The firm stance from Beijing signals a hardening of positions, making the path toward de-escalation far less certain than previously hoped.

    For now, Dollar and other major currencies are in wait-and-see mode, with traders looking for more concrete signals before re-engaging decisively. As for the week so far, Kiwi is still sitting at the top of the performance ladder, followed by Aussie, and then Sterling. On the weaker side, safe-haven currencies continue to lag, with Swiss Franc underperforming, followed by Euro and Yen. The Dollar and Loonie position in the middle of the pack.

    In Europe, at the time of writing, FTSE is down -0.19%. DAX is down -0.24%. CAC is down -0.03%. UK 10-year yield is down -0.048 at 4.515. Germany 10-year yield is down -0.049 at 2.455. Earlier in Asia, Nikkei rose 0.49%. Hong Kong HSI fell -0.74%. China Shanghai SSE rose 0.03%. Singapore Strait Times fell -0.01%. Japan 10-year JGB yield fell -0.014 to 1.310.

    US durable goods orders surge 9.2% mom on transportation demand, but underlying momentum stalls

    US durable goods orders soared by 9.2% mom in March to USD 315.7B, far surpassing expectations of a 1.5% mom gain. The sharp rise was driven almost entirely by a surge in transportation equipment, which jumped 27% mom to USD124.6B, marking a third consecutive monthly increase.

    Orders excluding defense also posted a strong 10.4% mom gain to USD 300.0B, highlighting a significant boost in civilian aircraft and related components.

    However, the underlying momentum in business investment appeared far less robust. Core orders excluding transportation were flat at USD 191.1B, missing forecasts for a modest 0.2% mom increase.

    US initial jobless claims rise to 222k, matched expectations

    US initial jobless claims rose 6k to 222k in the week ending April 19, matched expectations. Four-week moving average of initial claims fell -1k to 220k. Continuing claims fell -37k to 1841k in the week ending April 12. Four-week moving average of continuing claims fell -1.5k to 1864k.

    ECB’s Nagel and Lane warn of growth hit from tariffs, downplay recession risk

    German ECB Governing Council member Joachim Nagel acknowledged today that Germany faces significant downside risks to growth due to US tariffs.

    “As far as economic growth is concerned, which of course also depends on the level of the respective tariffs, the impact in Europe will also be significant for Germany,” he warned.

    But on inflation, “we are relatively certain that the impact on inflation in the US will be stronger than in the euro zone,” Nagel added.

    Separately, ECB Chief Economist Philip Lane told Bloomberg News that while the tariff shock will likely drag on Eurozone growth, the region is not on an automatic path toward recession.

    Lane emphasized the bloc’s diversified trade relationships beyond the US, which could act as a cushion against a more severe downturn.

    German Ifo climbs slightly to 86.9, but rising uncertainty signals turbulence ahead

    Germany’s Ifo Business Climate Index edged higher in April, rising from 86.7 to 86.9 and beating market expectations of 85.2. Current Assessment Index climbed to 86.4 from 85.7. Expectations, while slightly lower at 87.4 compared to March’s 87.7, still surpassed the anticipated 85.0.

    However, a closer look at the sectoral breakdown reveals growing divergence and fragility. Manufacturing sentiment deteriorated further, dropping from -16.6 to -18.1, while trade confidence took a notable hit, falling from -23.8 to -27.0. On the other hand, modest gains in services (from -1.1 to -0.8) and construction (from -24.3 to -21.9) offered some relief, though both remain firmly in negative territory.

    The Ifo Institute cautioned that “uncertainty among the companies has increased,” adding that “the German economy is preparing for turbulence.”

    USD/CHF Mid-Day Outlook

    Daily Pivots: (S1) 0.8215; (P) 0.8264; (R1) 0.8355; More….

    USD/CHF’s rebound from 0.8038 is still in progress and intraday bias stays mildly on the upside. However, strong resistance should be seen from 38.2% retracement of 0.9200 to 0.8038 at 0.8482 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
    23:50 JPY Corporate Service Price Index Y/Y Mar 3.10% 3% 3% 3.20%
    08:00 EUR Germany IFO Business Climate Apr 86.9 85.2 86.7
    08:00 EUR Germany IFO Current Assessment Apr 86.4 85.5 85.7
    08:00 EUR Germany IFO Expectations Apr 87.4 85 87.7
    12:30 USD Initial Jobless Claims (Apr 18) 222K 222K 215K 216K
    12:30 USD Durable Goods Orders Mar 9.20% 1.50% 1.00%
    12:30 USD Durable Goods Orders ex-Trans Mar 0.00% 0.20% 0.70%
    14:00 USD Existing Home Sales Mar 4.14M 4.26M
    14:30 USD Natural Gas Storage 69B 16B

     



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  • US data, Germany’s morale gauges, and tariffs take centre stage

    US data, Germany’s morale gauges, and tariffs take centre stage


    The Greenback extended their recovery on the back of auspicious headlines around the US-China trade crisis and mitigating fears around potential threats to the Fed’s independence by President Trump.

    Here is what you need to know on Thursday, April 24:

    The US Dollar Index (DXY) advanced further and retargeted the psychological 100.00 barrier, up for the second straight day. The weekly Initial Jobless Claims are due, seconded by the Chicago Fed National Activity Index, Durable Goods Orders, and Existing Home Sales.

    EUR/USD came under extra selling pressure, challenging the 1.1300 key support, or multi-day troughs. Germany’s IFO Business Climate will be only released on the domestic calendar.

    GBP/USD broke below the 1.3300 support to reach new four-day lows amid the persistent advance in the Greenback. Next on tap across the Channel will be the CBI Business Optimism Index, seconded by Industrial Trend Orders.

    USD/JPY gained extra steam and broke above the 143.00 hurdle, hitting fresh multi-day peaks. The weekly readings of Foreign Bond Investment are expected.

    Prices of WTI dipped to four-day lows, breaching the $62.00 mark per barrel following the likelihood that the OPEC+ could hike the crude oil output next month.

    The better tone in the risk-linked assets as well as the higher US Dollar and easing US-China trade concerns all weighed on the yellow metal, dragging Gold prices below the $3,300 mark per troy ounce. Silver prices, in the meantime, rallied to three-week highs around the $33.70 zone per ounce.



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  • Euro Softens on ZEW Shock, Loonie Dips on CPI, Kiwi Leads

    Euro Softens on ZEW Shock, Loonie Dips on CPI, Kiwi Leads


    Euro is trading on the softer side in relatively quiet markets today, weighed down by a fresh round of weak economic data. The sharp plunge in German and Eurozone ZEW economic sentiment, triggered largely by mounting uncertainty over US trade policy, has deepened concerns about the region’s growth outlook. Adding to the dovish tone, ECB’s latest bank lending survey revealed that credit standards tightened and corporate loan demand weakened further in Q1, even before the tariff-driven turmoil of early April. Together, these developments strengthen the case for another ECB rate cut when the Governing Council meets this Thursday.

    Canadian Dollar is also under some pressure following the latest CPI data, which showed headline inflation slowing more than expected. Core measures, including trimmed and common CPI, also came in softer than forecast. The figures mark a welcome reversal from February’s surprise inflation spike and give BoC added flexibility to stay on hold at its policy meeting tomorrow. However, having already lowered rates from a peak of 5.00% to the current 2.75%, BoC may opt to preserve remaining policy ammunition while assessing the broader impact of US tariffs.

    Overall in the currency markets, the New Zealand and Australian Dollars are leading gains for today, buoyed by stabilization in risk sentiment. Sterling is also firmer, as mixed UK labour market data is unlikely to derail BoE’s slow and steady approach to policy normalization. On the weaker end, the Swiss Franc is underperforming the most, followed by Loonie and Euro. Dollar and Yen are trading closer to the middle of the pack.

    Technically, NZD/USD’s strong break of 0.5852 resistance this week firstly confirms short term bottoming at 0.5484. More importantly, the break of 55 W EMA also suggests that a medium term bottom was formed, just ahead of 0.5467 key support (2020 low). Rise from 0.5484 could now be heading back to 38.2% retracement of 0.7463 to 0.5484 at 0.6240, even as a corrective bounce.

    In Europe, at the time of writing, FTSE is up 0.88%. DAX is up 0.98%. CAC is up 0.23%. UK 10-year yield is down -0.004 at 4.662. Germany 10-year yield is up 0.037 at 2.548. Earlier in Asia, Nikkei rose 0.84%. Hong Kong HSI rose 0.23%. China Shanghai SSE rose 0.15%. Singapore Strait Times rose 2.14%. Japan 10-year JGB yield rose 0.035 to 1.376.

    Canada’s CPI slows to 2.6%, CPI common down to 2.3%

    Canada’s headline inflation cooled more than expected in March, with the annual CPI rate easing to 2.3% yoy from 2.6% yoy, below consensus forecasts for no change. The deceleration was largely driven by falling prices in travel-related services and gasoline. On a monthly basis, CPI rose 0.3% mom, undershooting expectations of a 0.7% mom increase.

    Core inflation metrics also pointed to moderation. CPI median held steady at 2.9% yoy, in line with expectations. But the trimmed mean slipped to 2.8% yoy from 2.9% yoy, and the common core fell to 2.3% yoy from 2.5% yoy, both coming in below forecast.

    German ZEW collapses to -14 as trade uncertainty rattles outlook

    Investor confidence in Germany took a sharp turn for the worse in April, with ZEW Economic Sentiment Index plummeting from 51.6 to -14, its steepest decline since the onset of the Russia-Ukraine war in 2022.

    The drop came in well below expectations of 10.6 and reflects mounting concerns over US trade policy, which ZEW President Achim Wambach described as marked by “erratic changes.” The Current Situation Index, however, showed a modest improvement, rising from -87.6 to -81.2, slightly better than forecast.

    Eurozone also saw a significant deterioration in investor sentiment, with ZEW expectations gauge falling from 19.8 to -18.5, missing the anticipated 14.2 reading. Current Situation Index dropped by -5.7 points to -50.9.

    According to ZEW, sectors most vulnerable to trade disruptions—such as autos, chemicals, and engineering—are now under renewed pressure, despite recent signs of stabilization. The growing unpredictability in global trade dynamics is weighing heavily on future expectations, dampening optimism across the bloc.

    Despite the worsening sentiment, financial market participants do not foresee a renewed surge in inflation. This perception, ZEW notes, gives ECB some room to continue its easing cycle in an effort to support growth.

    Eurozone industrial output surges in 1.1% mom in Feb, driven by consumer and capital goods

    Eurozone industrial production posted a stronger-than-expected gain of 1.1% mom in February, well above the 0.1% mom forecast. The increase was largely driven by a 2.8% jump in non-durable consumer goods and a solid 0.8% rise in capital goods output. Intermediate goods also rose modestly by 0.3%, while energy production and durable consumer goods declined by -0.2% -and 0.3%, respectively.

    Across the broader EU, industrial production rose 1.0% on the month, with Ireland (+10.8%), Belgium (+7.4%), and Luxembourg (+6.3%) leading the gains. Meanwhile, Croatia (-3.9%), Greece (-3.6%), and Romania (-2.1%) recorded the steepest declines.

    UK payolled employment falls -78k, wage growth slows

    UK payrolled employment falling -by 78k in March, down 0.3% mom. Median monthly pay growth also moderated to 4.8% yoy from 5.5% yoy, pointing to easing wage pressures. Meanwhile, claimant count rose by 18.7k, less than the expected 30.3k increase.

    In the three months to February, unemployment rate held steady at 4.4%, in line with expectations. Wage growth came in slightly below forecasts across the board. Average earnings including bonuses rising 5.6% yoy (unchanged from the previous month) and those excluding bonuses up 5.9%, a touch softer than the anticipated 6.0% yoy.

    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.

    EUR/USD Mid-Day Outlook

    Daily Pivots: (S1) 1.1289; (P) 1.1357; (R1) 1.1418; More…

    EUR/USD dips mildly today as consolidation continues below 1.1472. Deeper pull back might be seen but downside should be contained by 1.1145 resistance turned support to bring another rally. On the upside, break of 1.1472 will target 161.8% projection of 1.0358 to 1.0953 from 1.0731 at 1.1694.

    In the bigger picture, rise from 0.9534 long term bottom could be correcting the multi-decade downtrend or the start of a long term up trend. In either case, further rise should be seen to 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916. This will now remain the favored case as long as 55 W EMA (now at 1.0745) holds.

    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 -14 10.6 51.6
    09:00 EUR Germany ZEW Current Situation Apr -81.2 -86 -87.6
    09:00 EUR Eurozone ZEW Economic Sentiment Apr -18.5 14.2 39.8
    09:00 EUR Eurozone Industrial Production M/M Feb 1.10% 0.10% 0.80%
    12:15 CAD Housing Starts Y/Y Mar 214K 238K 229K 221K
    12:30 CAD Manufacturing Sales M/M Feb 0.20% -0.20% 1.70% 1.60%
    12:30 CAD CPI M/M Mar 0.30% 0.70% 1.10%
    12:30 CAD CPI Y/Y Mar 2.30% 2.60% 2.60%
    12:30 CAD CPI Median Y/Y Mar 2.90% 2.90% 2.90%
    12:30 CAD CPI Trimmed Y/Y Mar 2.80% 2.90% 2.90%
    12:30 CAD CPI Common Y/Y Mar 2.30% 2.40% 2.50%
    12:30 USD Empire State Manufacturing Index Apr -8.1 -14.8 -20
    12:30 USD Import Price Index M/M Mar -0.10% 0.10% 0.40% 0.20%

     



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  • A Whirlwind Week Leaves US Assets Reeling Amid Tariff Turmoil

    A Whirlwind Week Leaves US Assets Reeling Amid Tariff Turmoil


    It has been a brutally volatile week across global markets, driven by a whirlwind of US tariff implementations, abrupt reversals, and rapid retaliatons. Investors were left scrambling to make sense of the White House’s constantly shifting trade stance. We won’t attempt to recap every step of the tariff saga, when even members of the administration seemed unable to track the unfolding policy moves.

    The most consequential outcome of the week was the broad-based pressure on US assets. The sharp selloff in Treasuries drew the most concern, raising alarms over whether the bedrock of the financial markets is beginning to erode. That said, while the jump in yields was certainly eye-catching, it has yet to cross the threshold into full-blown crisis territory.

    US stocks, after plunging to their lowest levels in months mid-week, managed to stage a strong rebound. Key technical support levels held, keeping the long-term uptrend intact—for now. However, that doesn’t mean the risks are gone. If the mounting tariffs ultimately tip the US into recession, the bounce may prove to be nothing more than a bear market rally.

    Dollar also struggled, ending as the week’s worst performer. Despite rising yields and some risk-off mood, neither provided the greenback any meaningful support. Dollar Index is now on the verge of resuming its broader medium-term downtrend.

    In the broader forex markets, Sterling and Yen also underperformed. On the other end, Swiss Franc stood tall as the market’s safe-haven anchor, followed by Australian and New Zealand Dollars. Euro and Canadian Dollar ended the week in middle ground.

    Tariff Shock and Yield Spike Rattle Markets; Not a Crisis Yet, But Warnings Are Flashing

    The essence of the market chaos: US reciprocal tariffs officially went into effect—only to be paused within hours to allow room for negotiation, except for China. On the surface, that might have calmed markets. And indeed, it opened the door to dialogue, with Taiwan reportedly holding the first video talks, while delegations from the EU and Japan are en route for face-to-face meetings in Washington in the coming days.

    But on the other side of the equation was deepening hostilities between the US and China. Both sides escalated tariffs beyond economically meaningful levels, effectively moving toward full-scale trade decoupling. The narrative is no longer about negotiation—it’s about economic separation.

    What spooked markets the most wasn’t just the trade conflict, but the simultaneous selloff in US assets—equities, Dollar, and perhaps most importantly, Treasuries. This rare alignment of outflows suggested something deeper: a loss of confidence. Some speculate this is precisely why US President Donald Trump reversed course and paused the reciprocal tariffs—because of the violent reaction in the bond market.

    Indeed, Trump and his economic advisors have repeatedly cited the importance of keeping bond yields low to support the broader economic agenda. As yields spiked and refinancing costs soared, concerns within the White House likely escalated. A persistent rise in yields would undermine everything from fiscal stimulus to housing affordability and corporate balance sheets.

    There are several theories about what triggered the Treasury selloff. Some point to the unwinding of the “Treasury basis trade”—a leveraged strategy used by hedge funds that collapsed under margin stress. Others blame foreign governments, particularly China, for dumping US debt in retaliation.

    But perhaps the most straightforward explanation is the simplest: long-term investors are losing interest in US assets, shifting instead into alternatives like Gold in this time of uncertainty, which surged to fresh record highs this week.

    Importantly, not all global bond markets are suffering. Germany’s 10-year yield remained within a calm 2.5–2.7% range.

    Japan’s 10-year yield held steady around 1.3–1.4% after being pulled up by US yields.

    In contrast, US 10-year yields soared, nearing 4.6%, a stark rise from just 3.89% a week ago.

    Technically, the picture in US 10-year yields is worrying but not yet in panic mode. For the near term, the decline from 4.809 should have bottomed at 3.886% as a correction. As long as 4.289 support holds, further rise toward 4.809 is expected.

    That said, this is still within the bounds of a broad consolidation pattern from the 2023 peak at 4.997%. Current rally might just be one of the legs.

    However, if 10-year Treasury yields were to break decisively above the symbolic 5% level, the impact could be seismic. Borrowing costs across the economy would surge along, from mortgages to corporate debt, tightening financial conditions at a pace that could choke off growth.

    Beyond the US, such a move could trigger forced selling by foreign holders, particularly if trade tensions worsen or FX reserves are rebalanced. The result could be a broad and disorderly repricing of global assets, especially in equity markets and emerging economies, ushering in a new chapter where financial stability, rather than inflation, becomes the dominant concern.

    Stock Rebound Preserves Uptrend, But Recession Could Break the Spell

    The steep intra-week selloff in US equities, among the sharpest in years, has been met with an equally aggressive rebound. Key technical levels held, for example in DOW, which bounced decisively ahead of the 55-month EMA, preserving the long-term uptrend from the 2009 low. For now, market action points to a deep medium-term correction rather than the beginning of a full-blown bear market. However, it would be premature to call the all-clear.

    Many economists and central bankers globally have described the US tariff hikes as a textbook stagflationary shock—simultaneously dampening growth and fueling price pressures. According to estimates from the European Commission, the existing 10% blanket tariffs and the 25% metal duties could shave 0.8% to 1.4% off US GDP by 2027. For the EU, the impact is more muted at around 0.2%. But if the tariff regime becomes entrenched or if retaliations escalate further, those numbers could rise dramatically—especially with US-China tariffs not yet fully factored in.

    Inflation expectations are also flashing warning signs. While the March US CPI data delivered some relief by slowing more than expected, the University of Michigan’s consumer survey painted a grimmer picture. One-year inflation expectations surged to 6.7%—a level last seen in 1981—up sharply from 5.0% in March. Inflation could reaccelerate ahead if supply shocks persist or if inflation expectations become unanchored.

    Adding to the concern is the historical warning from the yield curve, something that we have mentioned a number of times. The spread between the US 10-year and 2-year Treasuries—the classic recession signal—inverted in mid-2022 and uninverted last August. Historically, this un-inversion has preceded recessions around 6 to 12 months. That puts the timeline for a economic downturn squarely within 2025. That clock is ticking.

    Technically, DOW’s defense of 55 M EMA (now at 3558.57) keeps long-term uptrend from 6369.96 (2009 low) alive. For the near term tough, firm break of 61.8% retracement of 45703.63 to 36611.78 at 41841.20 is needed to confirm that correction from 45703.63 has completed. Without that, the best investors can expect is range-bound consolidation.

    The worst-case scenario? Decisive break of 55 M EMA would open up deeper fall to 38.2% retracement of 6469.95 to 45703.64 at 30327.02 at least.

    Dollar Index Cracks 100 Psychological Level, Heading to 95?

    Dollar Index dived to as low as 99.01 last week as fall from 110.17 reaccelerated. The break of 100.15 support (2024 low) affirms the case that whole down trend from 114.77 (2022 high) is resuming. Further break of 99.57 (2023 low) should confirm this bearish case. Meanwhile, near term risk will stay heavily on the downside as long as 103.22 support turned resistance holds, even in case of recovery.

    So where will Dollar Index head to? Price actions from 114.77 are so far still viewed as a corrective pattern. The next line of defense could come at 38.2% retracement of 70.69 (2008 low) to 114.77 at 97.93. If not, the next target will be 100% projection of 114.77 to 99.57 from 110.17 at 94.97.

    The development in EUR/USD should also be considered. Last week’s break of 1.1274 resistance (2023 high) should confirm resumption of whole rise from 0.9534 (2022 low). More importantly, EUR/USD is now breaking through the falling channel resistance that lasted more than 1.5 decade. Rise from 0.9534 is likely to extend to 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916, or slightly further to 38.2% retracement of 1.6039 (2008 high) to 0.9534 at 1.2019.

    Given the EUR/USD’s bullish outlook, and that Yen is also strong against Dollar, Dollar index is more likely to hit above mentioned 94.97 projection level than not.

    USD/CAD Weekly Outlook

    USD/CAD’s fall from 1.4791 high continued last week and accelerated through 1.3946/76 key support zone. There is no sign of bottoming yet. Initial bias stays on the downside this week for 100% projection of 1.4791 to 1.4150 from 1.4414 at 1.3773. On the upside, break of 1.4150 support turned resistance is needed to indicate short term bottoming. Otherwise, outlook will stay bearish in case of recovery.

    In the bigger picture, the break of 1.3976 resistance turned support (2022 high) and 55 W EMA (now at 1.3992) indicates that a medium term is already in place at 1.4791. Fall from there would either be a correction to rise from 1.2005, or trend reversal. In either case, firm break of 38.2% retracement of 1.2005 (2021 low) to 1.4791 at 1.3727 will pave the way back to 61.8% retracement at 1.3069.

    In the long term picture, as long as 55 M EMA (now at 1.3479) holds, up trend from 0.9056 (2007 low) should still resume through 1.4791 at a later stage. However, sustained trading below 55 M EMA will argue that the up trend has already completed, with rise from 1.2005 to 1.4791 as the fifth wave. 1.4791 would then be seen as a long term top and deeper medium term correction should then follow.



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  • Markets Rush to Safe Haven as Tariff Clock Ticks Down

    Markets Rush to Safe Haven as Tariff Clock Ticks Down


    While US investors managed to stay relatively composed through most of last week, the calm cracked heading into the weekend. Stocks saw extended selloffs, Treasury yields dropped, and Gold surged to yet another record high — all classic signs of a decisive flight to safety. With risk appetite now clearly under pressure, traders are no longer waiting to see what happens next. They’ve begun positioning defensively ahead of April 2, dubbed “Liberation Day,” when the US is expected to announce sweeping reciprocal tariffs.

    That looming event, along with inevitable retaliatory measures from trading partners, has injected a fresh wave of uncertainty into the outlook. Risk-off sentiment is likely to dominate US markets in the near term, at least until the full scale of the tariff fallout becomes clear — including possible re-retaliations.

    A big question is whether European markets, which showed notable resilience through March, can continue to defy the global jitters. Stocks in Germany and the UK have largely outperformed US peers, and Euro has led major currencies higher for the month. But the divergence might be tested soon, especially if the trade conflict spills into sectors crucial to the Eurozone’s export-heavy economy.

    Meanwhile, forex markets have remained relatively stable, with most major pairs stuck inside the prior week’s ranges. Kiwi was the lone exception. However, late-week price action across several currency pairs — particularly EUR/USD — suggests that breakouts may be imminent. The common currency is showing signs of bullish potential, with traders watching closely to see whether March strength can evolve into something even more meaningful.

    Ultimately, April could be a make-or-break month for the Euro. Either it confirms a genuine bullish turn, reversing the multi-decade downtrend, or it becomes just another short-lived bounce in a longer-term bearish cycle. Otherwise, the March rally risks being remembered as another false dawn in the common currency’s struggle to reverse its long-term decline.

    Wall Street Sinks as Markets Front-Run Trump’s “Liberation Day” Tariff Blitz

    US equities closed out the week with sharp losses, as fears over the looming escalation in trade tensions and persistent inflation sent risk sentiment spiraling. S&P 500 fell -1.53% on the week, while DOW dropped -0.96%. Tech bore the brunt of the selloff, with NASDAQ sliding -2.59%. That puts the NASDAQ on track for a painful monthly decline of over -8%, which would mark its worst monthly performance since December 2022.

    The market is being squeezed from two ends. On one side, uncertainty over the scope and scale of US tariffs is weighing on sentiment. On the other, resilient inflation data, especially in core readings, is reinforcing expectations that Fed will keep interest rates higher for longer. Together, these twin pressures are raising fears of a broader slowdown in consumer spending, business investment, and overall economic growth, with the risk of tipping the US into recession.

    Trump’s steel and aluminum tariffs have already been in place, but tensions intensified last week as he announced a fresh 25% levy on imported cars and auto parts. That was a mere prelude to what he has dubbed “Liberation Day” on April 2, when the broader reciprocal tariff regime is expected to be unveiled. Stock markets may already be bracing for impact, with traders possibly front-running the announcement, despite the usual quarter-end rebalancing flows.

    The broader concern is that even after the April 2 announcement, the tariff saga won’t be over. Canada and the EU are almost certain to respond with retaliations, and China’s stance remains unclear. Others, like the UK and Australia, are expected to hold back. But should retaliation begin to pile up, there is every chance that Trump will double down with even more aggressive measures, setting off a full-blown global trade war.

    Still, there is a glimmer of hope. If current market anxiety is more about the “uncertainty” surrounding tariffs rather than the “actual impact” of tariffs themselves, there may be room for a sentiment rebound once the details are made clear — hopefully sometime in Q2.

    But that’s a big assumption, and one that relies heavily on the scope, implementation, and global response to the tariffs.

    Technically, S&P 500’s rebound from 5504.65 should have completed at 5786.95, ahead of falling 55 D EMA (now at 5833.15). Focus for the next few days will be back on 5504.65 support. Firm break there will resume the corrective decline from 6147.47 high to 38.2% retracement of 3491.58 to 6147.43 at 5132.89. Strong support should be seen there to contain downside and bring rebound, at least on first attempt.

    Similarly, NASDAQ’s corrective recovery from 17238.23 should have completed at 18281.13, ahead of falling 55 D EMA (now at 18608.86). Break of 17238.23 in the next week days will resume the corrective fall from 20204.58 to 38.2% retracement of 10088.82 to 20204.58 at 16340.36. Strong support should be seen there to bring rebound, at least on first attempt. However, firm break there will pave the way to 15708.53 support next.

    Yields Tumble on Safe Haven Flows, Dollar Index Relatively Resilient

    US 10-year Treasury yields fell sharply on Friday, even as core PCE inflation surprised to the upside. The data highlighted persistent inflationary pressures, with the core PCE accelerating to 2.8% yoy, above expectations and well above Fed’s 2% target. Typically, such data would push yields higher as markets price out rate cuts. However, Friday’s yield decline suggests a different narrative dominated—one of risk aversion.

    Technically, corrective recovery from 4.106 could have already completed at 4.387 after hitting falling 55 D EMA (now at 4.3650). Break of 4.174 support will argue that the whole decline from 4.809 is ready to resume through 4.106 short term bottom. Next target will then be 61.8% projection of 4.809 to 4.106 from 4.387 at 3.952, which is below 4% psychological level.

    More importantly, the next fall will solidify that decline from 4.809 is another leg inside the medium term pattern from 4.997 (2023 high) with risk of extending to 3.603 (2024 low) and below.

    Dollar Index only dipped slightly on Friday and the development argues that corrective recovery from 103.19 might still extend. But even in case of another rise, upside should be limited by 55 D EMA (now at 105.64). Break of 103.19 will resume the fall from 110.17 to 100.15 support next.

    Crucially, the next fall will further solidify the case that decline from 110.17 is the third leg of the pattern from 114.77 (2022 high). Break of 100.15 support will pave the way through 99.57 (2023 low) to 100% projection of 114.77 to 99.57 from 110.17 at 94.97.

    March Belongs to Europe, But Can Momentum Survive April’s Storm?

    Despite rising global trade tensions and the looming threat of reciprocal US tariffs, European currencies and assets have emerged as the standout performers for March. In the equity space, major European indices like Germany’s DAX and the UK’s FTSE have remained relatively insulated from the sharp selloff seen on Wall Street.

    Meanwhile, Euro has led the charge in the currency markets, with Sterling and, to a lesser extent, Swiss Franc following closely. The coming weeks will be critical in determining whether this resilience in European markets can be sustained or even turn into renewed momentum.

    Technically, with 8474.41 resistance turned support intact, FTSE’s price actions from 8908.82 are viewed as a sideway consolidation pattern only. Larger up trend is expected resume through 8908.82 to 100% projection of 7404.08 to 8474.41 from 8002.34 at 9072.67 at a later stage.

    As for the stronger DAX, outlook is staying bullish with 22226.34 support intact, which is close to 55 D EMA (now at 22150.63). Another rise is till expected to 161.8% projection of 14630.21 to 18892.92 from 17024.82 at 23921.87, or even further to 24000 psychological level.

    It’s also important for EUR/USD. The near term pull back from 1.0953 could have already completed at 1.0731, ahead of 38.2% retracement of 1.0358 to 1.0953 at 1.0726. Break of 1.0857 minor resistance should affirm this bullish case, and push EUR/USD through 1.0953 to resume the whole rally from 1.0176.

    More significantly, the next rally would set up EUR/USD for a test on key resistance between 1.1274 (2023 high) and multi-decade falling channel resistance (now at around 1.1380). This resistance zone is crucial to determine whether EUR/USD is reversing the long term down trend.

    USD/JPY Weekly Outlook

    USD/JPY recovered further to 151.20 last week but retreated sharply ahead of 151.29 cluster resistance (38.2% retracement of 158.86 to 146.52 at 151.23). Initial bias remains neutral first and outlook stay bearish. On the downside, below 149.53 minor support will argue that the corrective recovery has completed and bring retest of 146.52 low. Firm break there will resume whole fall from 158.86. However, firm break of 151.23/9 will turn bias back to the upside for 154.79 resistance instead.

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

    In the long term picture, it’s still early to conclude that up trend from 75.56 (2011 low) has completed. A medium term corrective phase should have commenced, with risk of deep correction towards 55 M EMA (now at 136.94).



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