Tag: New Zealand

  • Geopolitical Escalation Fuels Risk Aversion; Dollar Still Lags Despite Bounce

    Geopolitical Escalation Fuels Risk Aversion; Dollar Still Lags Despite Bounce


    Risk aversion dominates global markets today as geopolitical tensions in the Middle East intensify, though the broader equity selloff has remained contained so far. The trigger came early Friday when Israel launched a series of airstrikes deep into Iranian territory, targeting key military and nuclear infrastructure. In response, Iran retaliated with a wave of drone attacks aimed at Israel—estimated at around 100 drones. The development marked a sharp escalation in hostilities that took markets by surprise. While the US has so far distanced itself from the conflict, analysts have warned that any Iranian attack on American bases could pull Washington into the war, an outcome that would significantly raise the stakes for global markets.

    In currency markets, risk-sensitive assets are bearing the brunt of the shift in sentiment. Aussie and Kiwi have fallen to the bottom of the weekly performance board, weighed down by geopolitical fear and, in the Kiwi’s case, a sharp deterioration in domestic manufacturing activity too. Dollar has managed to rebound modestly today, but remains the third worst-performing major for the week. Earlier inflation data, both CPI and PPI, came in softer than expected, reinforcing expectations for a Fed rate cut in September and limiting the Dollar’s momentum.

    Swiss Franc stands out as the strongest performer for the week, benefiting from traditional safe-haven demand amid heightened geopolitical uncertainty. Euro has also held firm, underpinned by a steady flow of ECB commentary indicating that the easing cycle is nearing its end. Loonie ranks third, supported by surging oil prices. Yen and Sterling are trading in the middle of the pack. The Yen, despite an early jump, has given back gains as safe-haven flows rotate toward the Franc.

    In Europe, at the time of writing, FTSE is down -0.02%. DAX is down -1.08%. CAC is down -0.78%. UK 10-year yield is up 0.042 at 4.524. Germany 10-year yield is up 0.016 at 2.500. Earlier in Asia, Nikkei fell -0.89%. Hong Kong HSI fell -0.59%. China Shanghai SSE fell -0.75%. Singapore Strait Times fell -0.27%. Japan 10-year JGB yield fell -0.058 to 1.402.

    Eurozone industrial production down -2.4% mom in April, broad-based weakness

    Eurozone industrial production dropped sharply by -2.4% mom in April, significantly below expectations of a -1.6% decline. Output fell in all major categories, with non-durable consumer goods posting the steepest drop at -3.0%. Capital goods, energy (-1.1%), and intermediate goods (-0.7%) also contracted. Durable consumer goods saw a modest -0.2% fall, offering little relief in an otherwise dismal report.

    At the EU level, industrial output slipped -1.8% mom, driven by steep declines in Ireland (-15.2%), Malta (-6.2%), and Lithuania (-3.0%). While a few economies such as Denmark (+3.5%) and Luxembourg (+3.2%) managed modest gains, the regional picture remains weak.

    EU exports drop -1.9% yoy in April as shipments to China plunge -15.9% yoy

    Eurozone trade data for April showed signs of weakening external demand, with goods exports falling -1.4% yoy to EUR 243.0B, while imports edged up 0.1% yoy to EUR 233.1B. Despite the drop in exports, the region maintained a trade surplus of EUR 9.9B, helped by subdued import growth. Intra-Eurozone trade also declined, down -2.0% yoy to EUR 217.3B.

    Across the broader European Union, the trade picture reflected similar pressures. EU exports dropped -1.9% yoy to EUR 218.2B, while imports increased 0.5% yoy to EUR 210.7B, yielding a surplus of EUR 7.4B. Intra-EU trade fell -1.7% yoy to EUR 341.9B.

    While exports to the US remained a bright spot, rising 3.8% yoy, exports to China plunged -15.9% yoy. On the import side, EU purchases from China rose 8.4% yoy. Imports from the U.S. rose modestly by 2.4% yoy.

    NZ BNZ manufacturing fall to 47.5, slumps back into contraction

    New Zealand’s manufacturing sector slipped sharply back into contraction in May, with the BusinessNZ Performance of Manufacturing Index plunging from 53.3 to 47.5. The reading not only marks a decisive reversal from April’s expansion but also sits well below the historical average of 52.5.

    Key components of the index showed broad-based weakness: production dropped from 53.0 to 48.7, employment tumbled from 54.6 to 45.7, and new orders fell sharply from 50.8 to 45.3—all signaling deteriorating activity across the sector.

    The sharp decline was echoed in business sentiment, with 64.5% of survey respondents offering negative comments—up from 58% in April. The commentary reflects a growing sense of pessimism as manufacturers grapple with falling demand, weak forward orders, and subdued consumer spending. Rising input costs, ongoing economic uncertainty, and stalled investment plans are compounding pressures.

    BNZ’s Senior Economist Doug Steel said that “the New Zealand economy can claw its way forward over the course of 2025, but the PMI is yet another indicator that suggests an increased risk that the bounce in GDP reported for Q4, 2024 and Q1, 2025 could come to a grinding halt”.

    EUR/USD Mid-Day Outlook

    Daily Pivots: (S1) 1.1503; (P) 1.1567; (R1) 1.1649; More…

    Intraday bias in EUR/USD remains neutral and more consolidations could be seen below 1.1630 temporary top. . Further rally is expected as long as 1.1372 support holds. Above 1.1630 will resume the rally from 1.0176 to 61.8% projection of 1.0176 to 1.1572 from 1.1064 at 1.1927. However, break of 1.1372 support will indicate short term topping, and turn bias to the downside for deeper pullback.

    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 1.1604 support holds.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    22:30 NZD Business NZ PMI May 47.5 53.9 53.3
    04:30 JPY Tertiary Industry Index M/M Apr 0.30% 0.20% -0.30% -1.00%
    04:30 JPY Industrial Production M/M Apr -1.10% -0.90% -0.90%
    06:00 EUR Germany CPI M/M May F 0.10% 0.10% 0.10%
    06:00 EUR Germany CPI Y/Y May F 2.10% 2.10% 2.10%
    08:30 GBP Consumer Inflation Expectations 3.20% 3.40%
    09:00 EUR Eurozone Industrial Production M/M Apr -2.40% -1.60% 2.60% 2.40%
    09:00 EUR Eurozone Trade Balance (EUR) Apr 14.0B 22.5B 27.9B 28.8B
    12:30 CAD Manufacturing Sales M/M Apr -2.80% -2.00% -1.40%
    12:30 CAD Capacity Utilization Q1 80.10% 79.80% 79.80% 79.70%
    12:30 CAD Wholesale Sales M/M Apr -2.30% 0.30% 0.20% 0.00%
    14:00 USD UoM Consumer Sentiment Jun P 53.5 52.2
    14:00 USD UoM Inflation Expectations Jun P 6.60%

     



    Source link

  • Markets Slide as Israel Strikes Iran, Safe Havens Climb

    Markets Slide as Israel Strikes Iran, Safe Havens Climb


    Asia-Pacific equities slumped today after Israel launched a military strike on Iran, targeting nuclear facilities and escalating geopolitical tensions in the region. The strike, which came without US support, was followed by a sharp vow of retaliation from Tehran. The immediate reaction saw oil prices spike nearly 9%, as traders rushed to price in potential supply disruptions across the Middle East. The risk-off mood gripped markets across asset classes, dragging equities lower and boosting safe havens.

    Gold, Swiss Franc, and Yen all climbed as investors sought shelter from the rising uncertainty. Meanwhile, Dollar also found some renewed strength as it recovered, after broader weakness earlier in the week triggered by softer-than-expected inflation data and rising odds of a September Fed rate cut.

    On the other hand, Kiwi led the declines, pressured by both heightened risk aversion and a sharp contraction in local manufacturing activity. Kiwi was followed closely by Aussie and Sterling. Loonie managed to hold mid-pack, underpinned partially by the surge in oil prices. Euro also traded with relative calm, despite the Middle East tensions, as ECB’s message this week has helped anchor expectations that easing cycle may be drawing to a close.

    Technically, NZD/USD’s upside momentum has been rather week with the choppy rise from 0.5845. Firm break of 0.6005 support should confirm short term topping. It would be a bit early to conclude the that rally from 0.5484 has completed. But even as correction, fall from 0.6079 would extend to 0.5845 cluster support (38.2% retracement of 0.5484 to 0.6079 at 0.5852).

    In Asia, at the time of writing, Nikkei is down -1.15%. Hong Kong HSI is down -0.98%. China Shanghai SSE is down -0.83%. Singapore Strait Times is down -0.45%. Japan 10-year JGB yield is down -0.05 at 1.41. Overnight, DOW rose 0.24%. S&P 500 rose 0.38%. NASDAQ rose 0.24%. 10-year yield fell -0.055 to 4.357.

    Looking ahead, Eurozone industrial production and trade balance are the main features in European session. Later in the day, Canada will release manufacturing sales and wholesale sales. US will publish U of Michigan consumer sentiment.

    NZ BNZ manufacturing fall to 47.5, slumps back into contraction

    New Zealand’s manufacturing sector slipped sharply back into contraction in May, with the BusinessNZ Performance of Manufacturing Index plunging from 53.3 to 47.5. The reading not only marks a decisive reversal from April’s expansion but also sits well below the historical average of 52.5.

    Key components of the index showed broad-based weakness: production dropped from 53.0 to 48.7, employment tumbled from 54.6 to 45.7, and new orders fell sharply from 50.8 to 45.3—all signaling deteriorating activity across the sector.

    The sharp decline was echoed in business sentiment, with 64.5% of survey respondents offering negative comments—up from 58% in April. The commentary reflects a growing sense of pessimism as manufacturers grapple with falling demand, weak forward orders, and subdued consumer spending. Rising input costs, ongoing economic uncertainty, and stalled investment plans are compounding pressures.

    BNZ’s Senior Economist Doug Steel said that “the New Zealand economy can claw its way forward over the course of 2025, but the PMI is yet another indicator that suggests an increased risk that the bounce in GDP reported for Q4, 2024 and Q1, 2025 could come to a grinding halt”.

    WTI oil soars on Israel-Iran escalation, but resistance looms near 78

    Crude oil prices surged sharply following news that Israel had launched direct airstrikes against Iran, targeting its nuclear and ballistic missile infrastructure. WTI crude is now trading more than 30% above its April low of 55.20, as geopolitical tensions in the Middle East reignite supply risk concerns.

    Israeli Prime Minister Benjamin Netanyahu confirmed that the military had struck Iran’s Natanz enrichment site, leading nuclear scientists, and the core of its missile program, vowing to continue operations “for as many days as it takes to remove this threat.”

    The military action was carried out without coordination with Washington. US Secretary of State Marco Rubio emphasized that Israel acted unilaterally and that the US was not involved in the strikes.

    Technically, despite the sharp rally in WTI oil, strong resistance is expected between 74.65 and 78.08 to limit upside 161.8% projection of 55.63 to 64.60 from 60.14. at 74.65 and 200% projection at 78.08), on overbought condition. Break of 69.11 resistance turned support would indicate that the current buying wave has likely peaked.

    Still, the path forward depends heavily on how geopolitical events unfold. Should the conflict escalate further or draw in regional actors, a break above the resistance zone could open the door to a test of 81.01, a level that marks the potential start of a broader bullish reversal in the longer-term oil trend.

    USD/CHF Daily Outlook

    Daily Pivots: (S1) 0.8067; (P) 0.8138; (R1) 0.8174; More….

    Intraday bias in USD/CHF remains on the downside, with immediate focus now on 0.8038 low. Strong support could be seen there to bring rebound, and above 0.816 support turned resistance will turn intraday bias neutral first. However, firm break of 0.8038 will resume larger down trend. Next target will be 61.8% projection of 0.9200 to 0.8038 from 0.8475 at 0.7757.

    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 0.8696) holds. Sustained break of 0.8079 will target 100% projection at 0.7382.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    22:30 NZD Business NZ PMI May 47.5 53.9 53.3
    04:30 JPY Tertiary Industry Index M/M Apr 0.30% 0.20% -0.30% -1.00%
    04:30 JPY Industrial Production M/M Apr -1.10% -0.90% -0.90%
    06:00 EUR Germany CPI M/M May F 0.10% 0.10%
    06:00 EUR Germany CPI Y/Y May F 2.10% 2.10%
    08:30 GBP Consumer Inflation Expectations 3.40%
    09:00 EUR Eurozone Industrial Production M/M Apr -1.60% 2.60%
    09:00 EUR Eurozone Trade Balance (EUR) Apr 22.5B 27.9B
    12:30 CAD Manufacturing Sales M/M Apr -2.00% -1.40%
    12:30 CAD Capacity Utilization Q1 79.80% 79.80%
    12:30 CAD Wholesale Sales M/M Apr 0.30% 0.20%
    14:00 USD UoM Consumer Sentiment Jun P 53.5 52.2
    14:00 USD UoM Inflation Expectations Jun P 6.60%

     



    Source link

  • New Zealand Terms Of Trade Climbs 1.9% In Q1

    New Zealand Terms Of Trade Climbs 1.9% In Q1


    New Zealand’s terms of trade was up 1.9 percent on quarter in the first quarter of 2025, Statistics New Zealand said on Tuesday.

    That was well shy of forecasts for an increase of 3.6 percent and down from 3.1 percent in the three months prior.

    Export prices were up 7.1 percent on quarter, beating expectations for 3.7 percent and up from 3.2 percent in the three months prior.

    Import prices rose 5.1 percent, accelerating from 0.1 percent in the previous quarter.

    Export volume was up 4.6 percent on quarter, up from 1.3 percent previously.

    For comments and feedback contact: editorial@rttnews.com

    Economic News

    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.





    Source link

  • Trade Rhetoric Sours Sentiment Again as US-China Tensions Resurface

    Trade Rhetoric Sours Sentiment Again as US-China Tensions Resurface


    Market sentiment took another bearish turn today following renewed rhetoric from US President Donald Trump, who accused China of having “totally violated” its preliminary trade agreement with the U.S. The comments, delivered via social media, were echoed by Trade Representative Jamieson Greer in a CNBC interview, where he expressed concern over China’s delayed compliance. Greer emphasized that while the US had fulfilled its commitments under the temporary trade deal, China was “slow rolling” its response—raising fears that tensions between the two economic powers may be re-escalating.

    These remarks followed comments from Treasury Secretary Scott Bessent just a day earlier, who admitted that US-China trade talks were “a bit stalled,” though he hinted at possible high-level engagement in the coming weeks. However, the combined messaging from senior officials now points to growing frustration in Washington, increasing the risk of a renewed tariff cycle. That’s something the markets are highly sensitive to, especially with ongoing legal uncertainty surrounding the court-blocked reciprocal tariffs and their pending appeal.

    On the macro front, the US April core PCE price index ticked down to 2.5% year-on-year, reaffirming that disinflation is progressing, albeit slowly. With inflation trending lower but global uncertainty mounting, Fed is widely expected to hold rates steady in the near term. Fed funds futures currently price in a 95% chance of a hold at the June FOMC meeting and a 73% chance of another hold in July. The soft inflation reading does little to shift the central bank’s cautious stance, especially as trade risks remain firmly in focus.

    In the currency markets, Dollar is heading into the final house of the trading week as the strongest performer, followed by Swiss Franc and Euro. On the weaker end, Aussie struggles at the bottom, trailed by Yen and Loonie. Kiwi and Sterling are holding in the middle. However, with sentiment remaining fragile and trade headlines still in play, positioning could shift quickly before the weekly close.

    In Europe, at the time of writing, FTSE is up 0.55%. DAX is up 0.72%. CAC is up 0.09%. UK 10-year yield is up 0.21 at 4.672. Germany 10-year yield is up 0.019 at 2.529. Earlier in Asia, Nikkei fell -1.22%. Hong Kong HSI fell -1.20%. China Shanghai SSE fell -0.47%. Singapore Strait Times fell -0.57%. Japan 10-year JGB yield fell -0.015 to 1.505.

    US core PCE inflation cools to 2.5%, income surges

    US headline PCE price index rose 0.1% mom in April, in line with expectations, while annual inflation slipped from 2.3% yoy to 2.1% yoy, below the consensus of 2.2%.

    Core PCE, Fed’s preferred inflation gauge, also rose 0.1% mom and slowed from 2.6% yoy to 2.5% yoy, matching expectations. The data supports the view that disinflation remains intact, though the pace of moderation remains modest.

    At the same time, personal income data surprised to the upside, jumping 0.8% mom or USD 210.1B, well above the expected 0.3% mom. Personal spending rose a more modest 0.2% mom, matching forecasts.

    Canada GDP expands 0.1% mom in March, another 0.1% mom in April

    Canada’s GDP grew by 0.1% mom in March, in line with market expectations. Strength in goods-producing industries continued to support overall output. The sector expanded by 0.2%, marking its second lead contribution in the past three months.

    Services-producing industries also edged higher by 0.1%. In total, 9 out of 20 sectors posted growth.

    Looking ahead, preliminary data from Statistics Canada suggests another 0.1% increase in real GDP for April.

    ECB’s Panetta signals diminished room for further rate cuts

    Italian ECB Governing Council member Fabio Panetta said today that while the central bank has made meaningful progress in easing monetary policy, bringing the deposit rate down from 4% to 2.25%, “the room for further rate cuts has naturally diminished”.

    “However, the economic outlook remains weak, and trade tensions could lead to a deterioration,” he added. “It will be essential to maintain a pragmatic and flexible approach, considering liquidity conditions and the signals coming from financial and credit markets.”

    Panetta also highlighted the high-stakes nature of ongoing trade talks between the EU and the US, warning that even tensions are likely to have a “significant impact” on the region’s economy.

    BoE’s Taylor: Global headwinds justify lower monetary policy path

    BoE MPC member Alan Taylor reinforced his dovish position in an interview with the Financial Times, highlighting growing downside risks to the UK economy from global developments.

    Taylor, who alongside Swati Dhingra voted for a larger 50bps rate cut in May, argued that monetary policy should be on a “lower policy path” given the accumulating headwinds.

    He specifically pointed to impact of Trump’s tariffs on imports would “be building up over the rest of this year in terms of trade diversion and drag on growth”.

    While UK inflation unexpectedly jumped to 3.5% in April, Taylor downplayed the significance of the rise, attributing it to “one-time tax and administered price changes.”

    Swiss KOF rises to 98.5, but growth outlook remains subdued

    Switzerland’s KOF Economic Barometer edged up to 98.5 in May from 97.1, marking a modest improvement in economic sentiment. While the uptick is a positive signal, the barometer remains below its long-term average, suggesting that the broader outlook for the Swiss economy “remains subdued”.

    According to the KOF, the manufacturing sector showed notable strength, contributing to the overall improvement. However, indicators tied to foreign demand and private consumption remain under pressure, highlighting the ongoing drag from weak external conditions and cautious domestic spending.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    USD/CHF Mid-Day Outlook

    Daily Pivots: (S1) 0.8182; (P) 0.8265; (R1) 0.8312; More….

    Range trading continues in USD/CHF and intraday bias stays neutral. On the downside, break of 0.8187 will resume the fall from 0.8475 to retest 0.8038 low. On the upside, above 0.8346 will bring stronger rise to 0.8475. Firm break there will extend the corrective pattern from 0.8038 with another rising leg.

    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 0.8713) holds. Sustained break of 0.8079 will target 100% projection at 0.7382.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    22:45 NZD Building Permits M/M Apr -15.60% 9.60% 10.70%
    23:30 JPY Tokyo CPI Y/Y May 3.40% 3.50%
    23:30 JPY Tokyo CPI Core Y/Y May 3.60% 3.50% 3.40%
    23:30 JPY Tokyo CPI Core-Core Y/Y May 2.10% 2%
    23:30 JPY Unemployment Rate Apr 2.50% 2.50% 2.50%
    23:50 JPY Industrial Production M/M Apr P -0.90% -1.40% 0.20%
    23:50 JPY Retail Trade Y/Y Apr 3.30% 2.90% 3.10%
    01:30 AUD Retail Sales M/M Apr -0.10% 0.30% 0.30%
    01:30 AUD Private Sector Credit M/M Apr 0.70% 0.50% 0.50%
    01:30 AUD Building Permits M/M Apr -5.70% 3.10% -8.80% -7.10%
    05:00 JPY Housing Starts Y/Y Apr -26.60% -18.30% 39.10%
    06:00 EUR Germany Retail Sales M/M Apr -1.10% 0.30% -0.20%
    07:00 CHF KOF Economic Barometer May 98.5 98.3 97.1
    08:00 EUR Eurozone M3 Money Supply Y/Y Apr 3.90% 3.70% 3.60%
    12:00 EUR Germany CPI M/M May P 0.10% 0.10% 0.40%
    12:00 EUR Germany CPI Y/Y May P 2.10% 2.10% 2.10%
    12:30 CAD GDP M/M Mar 0.10% 0.20% -0.20%
    12:30 USD Personal Income M/M Apr 0.80% 0.30% 0.50%
    12:30 USD Personal Spending M/M Apr 0.20% 0.20% 0.70%
    12:30 USD PCE Price Index M/M Apr 0.10% 0.10% 0%
    12:30 USD PCE Price Index Y/Y Apr 2.10% 2.20% 2.30%
    12:30 USD Core PCE Price Index M/M Apr 0.10% 0.10% 0%
    12:30 USD Core PCE Price Index Y/Y Apr 2.50% 2.50% 2.60%
    12:30 USD Goods Trade Balance (USD) Apr P -87.6B -141.8B -162.0B -163.2B
    12:30 USD Wholesale Inventories Apr P 0% 0.40% 0.50%
    13:45 USD Chicago PMI May 45.1 44.6
    14:00 USD UoM Consumer Sentiment May F 50.8 50.8
    14:00 USD UoM 1-year Inflation Expectations May F 7.30% 7.30%

     



    Source link

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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    EUR/AUD Daily Outlook

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

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

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

    Economic Indicators Update

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

     



    Source link

  • Dollar Reverses as Markets Doubt Lasting Impact of US Tariff Ruling

    Dollar Reverses as Markets Doubt Lasting Impact of US Tariff Ruling


    Dollar initially surged after the US Court of International Trade ruled against President Donald Trump’s sweeping reciprocal tariff orders. Market participants initially interpreted the ruling as a potential turning point in the US trade policy, fueling a rally in the greenback and risk assets.

    However, the greenback’s rally proved short-lived. As the US session opened, the greenback reversed course and turned broadly lower. Traders began to reassess the practical implications of the ruling, with many suspecting that the Trump administration could still find legal or procedural workarounds to reinstate the tariffs.

    In that context, the ruling may have increased legal complexity but done little to reduce the overarching geopolitical uncertainty. Traders are clearly skeptical that the legal setback will lead to a meaningful shift in trade tensions.

    Indeed, skepticism is evident across financial markets. DOW futures, which had gained more than 500 points earlier in the day, gave back almost all of those gains. NASDAQ remained resilient, supported by tech sector optimism, but broader risk appetite appeared to fade. Gold, meanwhile, rebounded above the 3300 level as safe-haven demand returned, signaling that markets are still hedging against unresolved geopolitical and policy risks.

    In currency markets, the shift in sentiment was clear. Dollar is now the weakest performer of the day, followed by Sterling and then Yen. Aussie emerged as the top gainer, while Euro and Kiwi also firmed. Swiss Franc and Canadian dollar are trading in the middle of the pack.

    Technically, intraday bias in Gold is turned neutral first with current recovery. On the upside, break of 3365.92 resistance will revive the case that correction from 3499.79 has completed with three waves down to 3120.34, and bring retest of 349.79 high. Nevertheless, below 3245.23 will extend the corrective pattern with another falling leg.

    In Europe, at the time of writing, FTSE is flat. DAX is up 0.23%. CAC is up 0.63%. UK 10-year yield is down -0.006 at 4.726. GErmany 10-year yield is down -0.005 at 2.551. Earlier in Asia, Nikkei rose 1.88%. Hong Kong HSI rose 1.35%. China Shanghai SSE rose 0.70%. Singapore Strait times rose 0.13%. Japan 10-year JGB yield rose 0.003 to 1.520.

    US initial jobless claims rise to 240k vs exp 230k

    US initial jobless claims rose 14k to 240k in the week ending May 24, above expectation of 230k. Four-week moving average of initial claims fell -250k to 231k.

    Continuing claims rose 26k to 1919k in the week ending May 17, highest since November 13, 2021. Four-week moving average of continuing claims rose 3k to 1890k, highest since November 27, 2021.

    RBNZ’s Hawkesby: OCR in neutral zone, July cut not a done deal

    RBNZ Governor Christian Hawkesby told Bloomberg TV today that another rate cut at the July meeting is “not a done deal” and “not something that’s programmed.”

    With the OCR at 3.25% after this week’s reduction, it’s now sitting within the estimated neutral range of 2.5% to 3.5%. Hawkesby emphasized the central bank has entered a phase of “considered steps,” guided closely by incoming data rather than a preset easing path.

    He acknowledged rising uncertainty, noting that near-term growth headwinds have intensified and both demand and inflation pressures are weaker than they were back in February. He also highlighted the uncertainty surrounding global trade policy, particularly tariff developments, which could play out in various ways.

    NZ ANZ business confidence falls to 36.6, supporting case for further RBNZ easing

    New Zealand’s ANZ Business Confidence index dropped sharply in May, falling from 49.3 to 36.6. Own Activity Outlook, a key indicator of firms’ expectations for their own performance, declined to 34.8 from 47.7.

    Profit expectations also plunged to 11.1, indicating mounting pressure on margins. Although cost and wage expectations eased slightly, they remain elevated, while inflation expectations edged up from 2.65% to 2.71%.

    According to ANZ, the survey paints a mixed picture: the economy is in recovery mode, but businesses continue to face tough operating conditions, particularly in passing on cost increases. The data reinforces the view that RBNZ can afford to support growth through further rate cuts, barring any major inflation or data surprises.

    ANZ expects the OCR to eventually fall to 2.5%, as global headwinds and domestic fragilities persist.

    GBP/USD Mid-Day Outlook

    Daily Pivots: (S1) 1.3440; (P) 1.3481; (R1) 1.3512; More…

    Intraday bias in GBP/USD remains neutral for the moment. With 1.3389 support intact, further rally is expected. On the upside, firm break of 1.3592 will resume larger rally for 100% projection of 1.2706 to 1.3442 from 1.3138 at 1.3874. However, decisive break of 1.3389 will confirm short term topping, and turn bias back to the downside for 1.3138 support instead.

    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 1.2870) holds, even in case of deep pullback.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    01:00 NZD ANZ Business Confidence May 36.6 49.3
    01:30 AUD Private Capital Expenditure Q1 -0.10% 0.50% -0.20% 0.20%
    05:00 JPY Consumer Confidence May 32.8 31.8 31.2
    12:30 CAD Current Account (CAD) Q1 -2.1B -3.6B -5.0B -3.6B
    12:30 USD Initial Jobless Claims (May 23) 240K 230K 227K 226K
    12:30 USD GDP Annualized Q1 P -0.20% -0.30% -0.30%
    12:30 USD GDP Price Index Q1 P 3.70% 3.70% 3.70%
    14:00 USD Pending Home Sales M/M Apr -1.00% 6.10%
    14:30 USD Natural Gas Storage 98B 120B
    15:00 USD Crude Oil Inventories 0.3M 1.3M

     



    Source link

  • Dollar Surges as US Court Strikes Down Trump’s Reciprocal Tariffs; Risk Appetite Rebounds

    Dollar Surges as US Court Strikes Down Trump’s Reciprocal Tariffs; Risk Appetite Rebounds


    Dollar’s rebound gather extra momentum today, after the US Court of International Trade struck down President Donald Trump’s sweeping reciprocal tariffs, giving markets a fresh catalyst. The court ruled that the reciprocal tariffs imposed in April across multiple countries under claims of correcting trade imbalances exceeded presidential authority under the International Emergency Economic Powers Act. The decision marks a significant legal blow to Trump’s aggressive trade agenda.

    In a strongly worded decision, the three-judge panel concluded that the “Worldwide and Retaliatory Tariff Orders exceed any authority granted to the President by IEEPA to regulate importation by means of tariffs.” The ruling also invalidated separate tariffs targeting Canada, Mexico, and China under the pretext of combating drug trafficking, stating those measures lacked a direct link to the threats cited. However, tariffs on specific items like steel and aluminum remain unaffected, as they were justified under different statutes not challenged in this case.

    The Trump administration has ten days to comply with the ruling, though it has already filed an appeal to the US. Court of Appeals for the Federal Circuit. While the immediate legal outcome remains uncertain, markets responded decisively to the court’s move.

    The decision sparked a broad risk-on reaction in financial markets, with DOW futures jumping over 500 points and Asian equities advancing, led by gains in Japan. Gold, which had been buoyed by safe-haven flows in recent sessions, fell below the 3250 level as investor sentiment improved. Nevertheless, 10-year Treasury yield remained steady around 4.5%, suggesting that bond markets are taking a more measured view, likely awaiting further clarity from the appeal process and ongoing trade negotiations.

    Dollar dominated currency markets, emerging as the clear outperformer of the day. It was followed by the Aussie and Loonie, both benefiting from the upbeat mood. At the bottom end, Yen is staying at the bottom, while Swiss Franc and Euro also softened. Kiwi and Sterling are positing in the middle.

    Technically, Gold’s break of 3279.22 support suggests that rebound from 3120.34 has already completed at 3365.92. Corrective pattern from 3499.79 should have started another falling leg. Deeper decline should be seen to 55 D EMA (now at 3190.95) first. Strong rebound from there will keep the pattern from 3499.79 a sideway one. However, sustained break of the 55 D EMA will open up deeper fall through 3120.34 to 100% projection of 3449.79 to 3120.34 from 3365.92 at 2980.47, which is slightly below 3000 psychological level.

    In Asia, at the time of writing, Nikkei is up 1.79%. Hong Kong HSI is up 1.07%. China Shanghai SSE is up 0.72%. Singapore Strait Times is down -0.30%. Japan 10-year JGB yield is up 0.003 at 1.521. Overnight, DOW fell -0.58%. S&P 500 fell -0.56%. NASDAQ fell -0.51%. 10-year yield rose 0.043 to 4.477.

    Looking ahead, the European calendar is empty with Switzerland, France and Germany on holiday. Later in the day, US will release GDP revision, jobless claims and pending home sales.

    RBNZ’s Hawkesby: OCR in neutral zone, July cut not a done deal

    RBNZ Governor Christian Hawkesby told Bloomberg TV today that another rate cut at the July meeting is “not a done deal” and “not something that’s programmed.”

    With the OCR at 3.25% after this week’s reduction, it’s now sitting within the estimated neutral range of 2.5% to 3.5%. Hawkesby emphasized the central bank has entered a phase of “considered steps,” guided closely by incoming data rather than a preset easing path.

    He acknowledged rising uncertainty, noting that near-term growth headwinds have intensified and both demand and inflation pressures are weaker than they were back in February. He also highlighted the uncertainty surrounding global trade policy, particularly tariff developments, which could play out in various ways.

    NZ ANZ business confidence falls to 36.6, supporting case for further RBNZ easing

    New Zealand’s ANZ Business Confidence index dropped sharply in May, falling from 49.3 to 36.6. Own Activity Outlook, a key indicator of firms’ expectations for their own performance, declined to 34.8 from 47.7.

    Profit expectations also plunged to 11.1, indicating mounting pressure on margins. Although cost and wage expectations eased slightly, they remain elevated, while inflation expectations edged up from 2.65% to 2.71%.

    According to ANZ, the survey paints a mixed picture: the economy is in recovery mode, but businesses continue to face tough operating conditions, particularly in passing on cost increases. The data reinforces the view that RBNZ can afford to support growth through further rate cuts, barring any major inflation or data surprises.

    ANZ expects the OCR to eventually fall to 2.5%, as global headwinds and domestic fragilities persist.

    FOMC minutes reveal deepening concerns over persistent inflation and trade-led slowdown

    The FOMC minutes from the May 6–7 meeting highlighted growing anxiety among policymakers about the dual threat of persistent inflation and deteriorating growth prospects, largely stemming from US trade policies.

    Nearly all participants flagged the risk that inflation could be “more persistent than expected” as the economy adjusts to elevated import tariffs. This situation, they warned, could force the Fed into “difficult tradeoffs” if inflation stays stubborn while growth and employment begin to falter.

    The Committee agreed that uncertainty surrounding the economic outlook had “increased further”, justifying a cautious stance on monetary policy, “until the net economic effects of the array of changes to government policies become clearer.”

    Fed staff revised their GDP projections lower for 2025 and 2026, citing a larger-than-anticipated drag from recent tariff announcements. Beyond the short-term impact, officials also warned of longer-term structural effects, with trade restrictions likely to slow productivity growth and reduce the economy’s potential “over the next few years.”

    The labor market outlook has also darkened, with staff forecasting the unemployment rate to rise above its “natural rate” by year-end and remain elevated through 2027.

    Inflation forecast was revised higher, with tariffs seen boosting prices notably in 2025, before gradually easing. Inflation is still expected to return to 2% by 2027, but the path there is now more complicated.

    EUR/USD Daily Outlook

    Daily Pivots: (S1) 1.1268; (P) 1.1307; (R1) 1.1329; More…

    EUR/USD’s break of 1.1255 support suggests that rebound 1.1064 has completed at 1.1417. Corrective pattern from 1.1572 is now extending with another falling leg. Intraday bias is back on the downside for 1.1064 first. Break there will target 100% projection of 1.1572 to 1.1064 from 1.1417 at 1.0909. For now, risk will stay on the downside as long as 1.1417 resistance holds, in case of recovery.

    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 remain the favored case as long as 55 W EMA (now at 1.0858) holds.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    01:00 NZD ANZ Business Confidence May 36.6 49.3
    01:30 AUD Private Capital Expenditure Q1 -0.10% 0.50% -0.20% 0.20%
    05:00 JPY Consumer Confidence May 32.8 31.8 31.2
    12:30 CAD Current Account (CAD) Q1 -3.6B -5.0B
    12:30 USD Initial Jobless Claims (May 23) 230K 227K
    12:30 USD GDP Annualized Q1 P -0.30% -0.30%
    12:30 USD GDP Price Index Q1 P 3.70% 3.70%
    14:00 USD Pending Home Sales M/M Apr -1.00% 6.10%
    14:30 USD Natural Gas Storage 98B 120B
    15:00 USD Crude Oil Inventories 0.3M 1.3M

     



    Source link

  • Dollar Recovery Slows Ahead of FOMC Minutes as Market Seeks Clarity

    Dollar Recovery Slows Ahead of FOMC Minutes as Market Seeks Clarity


    Dollar’s near-term rebound is still intact as markets head into US session. But appears to be fading as traders await fresh catalysts. While the greenback has benefited from stabilizing sentiment, there’s a lack of conviction behind the move, particularly with no data releases of note today. Markets are now turning their attention to the upcoming FOMC minutes, though expectations for a clear policy signal remain low.

    The minutes from the May 6–7 FOMC meeting are expected to show a divided Fed grappling with increased volatility and an unpredictable policy backdrop, largely stemming from trade tensions. A key point of debate within the Fed may have been how to respond if elevated tariffs return and remain in place. While some officials may view tariff-driven inflation as transitory and argue for policy support to counteract the drag on growth, others may be more concerned about a shift in inflation expectations and the risk of persistent price pressures. Despite those differences, there is likely consensus around two core ideas: that tariffs are inherently stagflationary, and that it’s too early to commit to rate adjustments amid current uncertainty.

    As a result, today’s release is unlikely to shift the market narrative in a meaningful way. Trading may remain subdued unless there’s an unexpected shift in tone or language around inflation risks or rate sensitivity. With Fed still firmly in a no-hurry, data-dependent mode, the market may continue to drift until the next major inflation print or employment report.

    Looking across the broader currency markets, Dollar remains the week’s strongest performer so far. Kiwi follows as second, receiving a boost after RBNZ delivered a 25bps rate cut with a surprising dissent. Euro also finds modest support, ranking third on the performance board. In contrast, Yen remains the weakest major, weighed down by falling super-long JGB yields. Aussie and Swiss Franc also trail, while Sterling and Loonie remain in the middle.

    Technically, Ethereum might be ready to complete the near-term triangle consolidation pattern from 2737.57. Firm break of this resistance will resume the rally from 1382.55. Next target is 61.8% projection of 1382.55 to 2737.57 from 2507.39 at 3344.79. However, break of 2507.39 support will extend the corrective pattern with another falling leg instead.

    In Europe, at the time of writing, FTSE is down -0.06%. DAX is down -0.45%. CAC is down -0.13%. UK 10-year yield is up 0.012 at 4.683. Germany 10-year yield is down -0.001 at 2.541. Earlier in Asia, Nikkei closed flat. Hong Kong HSI fell -0.53%. China Shanghai SSE fell -0.02%. Singapore Strait Times rose 0.41%. Japan 10-year JGB yield rose 0.052 to 1.518.

    ECB survey shows short-term inflation expectations climb as growth outlook worsens

    ECB’s latest Consumer Expectations Survey for April showed a modest but notable uptick in short-term inflation expectations.

    Median expectations for inflation over the next 12 months rose to 3.1%, the highest since February 2024. However, medium- and long-term inflation expectations remained steady, with the three-year outlook unchanged at 2.5% and the five-year projection holding at 2.1% for the fifth straight month.

    Alongside the rise in short-term inflation forecasts, the survey revealed an increase in uncertainty about inflation over the coming year, matching levels last seen in June 2024.

    More concerning, however, is the deepening pessimism around growth and employment. Expectations for economic growth over the next 12 months dropped sharply to -1.9% from -1.2% in March. Expected unemployment ticked up slightly from 10.4% to 10.5%.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    USD/CHF Mid-Day Outlook

    Daily Pivots: (S1) 0.8214; (P) 0.8247; (R1) 0.8306; More….

    Range trading continues in USD/CHF and intraday bias stays neutral. Another fall is in favor as long as 0.8305 minor resistance holds. Below 0.8187 will target a retest on 0.8038 low first. Firm break there will resume larger down trend. Nevertheless, sustained break of 0.8305 will argue that pullback from 0.8475 has completed, and turn bias back to the upside to extend the pattern from 0.8038 with another rising leg.

    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 0.8713) holds. Sustained break of 0.8079 will target 100% projection at 0.7382.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    01:30 AUD Monthly CPI Y/Y Apr 2.40% 2.30% 2.40%
    02:00 NZD RBNZ Interest Rate Decision 3.25% 3.25% 3.50%
    03:00 NZD RBNZ Press Conference
    06:45 EUR France Consumer Spending M/M Apr 0.30% 0.80% -1%
    06:45 EUR France GDP Q/Q Q1 F 0.10% 0.10% 0.10%
    07:55 EUR Germany Unemployment Change Apr 34K 10K 4K
    07:55 EUR Germany Unemployment Rate Apr 6.30% 6.30% 6.30%
    08:00 CHF UBS Economic Expectations May -22 -51.6
    18:00 USD FOMC Minutes

     



    Source link

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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    Fed’s Williams stresses need for vigilance on inflation expectations

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

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

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

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

    USD/JPY Daily Outlook

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

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

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

    Economic Indicators Update

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

     



    Source link

  • Dollar Drops as Tariff Confusion Reignites and Trade Talks Drag On

    Dollar Drops as Tariff Confusion Reignites and Trade Talks Drag On


    Dollar extended its slide as the new week opened in Asia, with investors once again thrown off balance by US President Donald Trump’s unpredictable tariff messaging. The latest development sees Trump agreeing to delay the planned 50% tariff hike on the European Union to July 9, following a direct request from European Commission President Ursula von der Leyen. While that initially offered a sense of relief, markets remain unsettled by Trump’s abrupt shifts in tone, having only days ago vowed there would be “no deal” before June and called for an immediate 50% levy.

    Von der Leyen’s message on social media highlighted the EU’s readiness to move the discussions forward “swiftly and decisively”, But with Trump’s prior threats still fresh in investors’ minds, confidence in any stable outcome remains low. The tariff truce extension does little to erase concerns over the longer-term outlook for transatlantic trade, especially with the US’s broader reciprocal tariff regime still in place at a baseline of 10%.

    At the same time, Japan is pushing ahead with its own talks with Washington. Prime Minister Shigeru Ishiba indicated on Sunday that Tokyo aims to reach a deal by the G7 summit next month. There appears to be some traction in the bilateral dialogue, including discussions on non-tariff measures and shipbuilding cooperation. Notably, the US has expressed interest in using Japanese shipyards to repair warships, while Japan has floated the potential for collaboration on Arctic icebreakers, an area where it claims a technological edge.

    However, Japan’s chief negotiator Ryosei Akazawa struck a cautious tone upon returning from his third round of discussions in Washington. He reiterated that any agreement would be contingent on all elements falling into place as a package, and that “nothing is agreed until everything is agreed.” The scheduling of the next round, including a meeting with US Treasury Secretary Scott Bessent, is still being finalized.

    With US and UK markets closed for holiday and an empty data calendar to start the week, focus is squarely on trade developments and sentiment-driven flows. Later in the week, attention will turn to RBNZ, which is widely expected to cut interest rates by 25bps. FOMC minutes, US durable goods, consumer confidence, and PCE inflation data will offer critical insight too. In addition, key releases from Australia (monthly CPI and retail sales), Canada (Q1 GDP), and Japan (Tokyo CPI) will round out the week. But given the pace of political developments on trade, economic figures may take a back seat unless they show sharp surprises.

    In the currency markets, Dollar is at the bottom of the board, followed by Yen and Swiss Franc. Kiwi is leading gains, followed by Aussie and Euro. Sterling and Loonie are more mixed, hovering around the middle.

    Technically, with today’s rally, immediate focus is now on 0.6028 resistance in NZD/USD. Decisive break there will resume the rise from 0.5484 and target 61.8% projection of 0.5484 to 0.6028 from 0.5845 at 0.6181. Nevertheless, the real test for NZD/USD’s medium term outlook is on 38.2% retracement of 0.7463 (2021 high) to 0.5484 at 0.6240.

    In Asia, at the time of writing, Nikkei is up 0.83%. Hong Kong HSI is down -0.98%. China Shanghai SSE is down -0.18%. Singapore Strait Times is down -0.43%. Japan 10-year JGB yield is down -0.007 at 1.542.

    Fed Kashkari: Uncertainty to delay policy at least until September

    Minneapolis Fed President Neel Kashkari warned today that major shifts in US trade policies are clouding the outlook for monetary policy, making it difficult for the Fed to move on interest rates before September.

    While “anything is possible,” Kashkari said in an interview with Bloomberg TV, he’s unsure whether the picture will be “clear enough” by then. Much hinges, he added, on whether trade negotiations between the US and its partners yield concrete deals in the coming months, which could “provide a lot of the clarity we are looking for.”

    The uncertainty, Kashkari explained, is weighing on economic activity. He emphasized the stagflationary nature of the tariff shock, noting that its impact will depend on both the scale and duration of the levies.

    On financial markets, Kashkari acknowledged that rising US Treasury yields might reflect a broader reassessment by global investors about the risks of holding American assets. He suggested that the current bond market reaction could signal a new global paradigm.

    RBNZ set to ease again, FOMC minutes and PCE inflation watched

    RBNZ is widely expected to lower the Official Cash Rate by 25bps to 3.25% this week, continuing its cautious policy easing cycle. Q1 CPI in New Zealand surprised to the upside and may warrant a slight upward revision in near-term inflation forecasts. Nevertheless, the outlook for growth has become increasingly clouded by external trade risks. As such, the RBNZ would probably adopt a data-dependent easing bias beyond this meeting, weighing the need for further cuts against incoming global and domestic developments.

    Markets will be particularly attentive to any forward guidance on July from RBNZ. A hawkish tilt, such as hinting at an openness to pause depending on how trade and inflation evolve—could dampen expectations for a follow-up cut. Nonetheless, the baseline remains tilted toward continued easing unless global risks recede or domestic data markedly improve.

    In the US, the release of the FOMC minutes from the May meeting will draw scrutiny, though Fed is unlikely to deviate from its current stance. Policymakers have made clear they are in no rush to resume easing, preferring to wait for clearer signs from inflation and trade.

    With the 90-day trade truce now at the halfway mark and tensions reemerging—especially with Trump’s threats toward the EU, uncertainty still dominates the outlook. More clarity may arrive with Fed’s next meeting on June 17–18, when updated economic projections will be published.

    Investors will also focus on key US data including durable goods orders, consumer confidence, and the core PCE price index.

    Elsewhere, Australia’s monthly CPI and retail sales will shed light on the pace of disinflation and consumption ahead of the RBA’s July decision. Canada’s GDP, Japan’s Tokyo CPI, retail sales, and industrial output will also be important inputs for their respective central banks.

    Here are some highlights for the week:

    • Tuesday: Japan corporate service price; Swiss trade balance; Germany Gfk consumer sentiment; US durable goods orders, consumer confidence.
    • Wednesday: Australia CPI; RBNZ rate decision; Germany import prices, unemployment; France consumer spending; Swiss UBS economic expectations; FOMC minutes.
    • Thursday: New Zealand ANZ business confidence; US GDP revision, pending home sales.
    • Friday: New Zealand building permits; Japan Tokyo CPI, industrial production, retail sales; Australia retail sales; Germany retail sales, CPI flash; Swiss KOF economic barometer; Eurozone M3 money supply; Canada GDP; US trade balance, personal income and spending, PCE inflation, Chicago PMI.

    GBP/USD Daily Outlook

    Daily Pivots: (S1) 1.3451; (P) 1.3496; (R1) 1.3587; More…

    Intraday bias in GBP/USD stays on the upside at this point. Firm break of 61.8% projection of 1.2706 to 1.3442 from 1.3138 at 1.3593 will target 100% projection at 1.3874. On the downside, below 1.3468 minor support will turn intraday bias neutral first. But retreat should be contained well above 1.3138 support to bring another rally.

    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 1.2870) holds, even in case of deep pullback.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    05:00 JPY Leading Economic Index Mar F 108.1 107.7 107.7
    06:30 CHF Employment Level Q1 5.534M

     



    Source link

  • Markets Rattled as Trump Threatens 50% Tariffs on EU, Dollar Tumbles

    Markets Rattled as Trump Threatens 50% Tariffs on EU, Dollar Tumbles


    Global financial markets are thrown back into turmoil today after US President Donald Trump reignited trade tensions by announcing he would recommend a sweeping 50% tariff on EU imports starting June 1. In a pointed social media post, Trump accused the EU of stonewalling negotiations, declaring that discussions were “going nowhere.” The announcement came on the heels of another threat, this time directed at Apple, with Trump warning of at least a 25% tariff if the company doesn’t relocate iPhone production to the US.

    The market reaction was swift and severe. DOW futures plunged over 500 points, and European equities were battered as traders rushed to reprice geopolitical risk. The shock move revives fears of a new phase in the trade war, one with potentially deeper and more systemic consequences than the US-China dispute, especially given Europe’s central role in global supply chains and transatlantic investment flows.

    Currency markets mirrored the chaos. While Euro was understandably under pressure from the tariff news, Dollar was hit even harder, staying at the bottom of the performance board for the day. Traders appear to be weighing the long-term implications of such a dramatic trade escalation on US economy.

    Safe haven demand surged, with Yen leading gains. Kiwi and Swiss Franc are following. Sterling held up relatively well thanks to robust retail sales data. Aussie remained relatively steady, though vulnerable to shifts in global risk sentiment.

    In Europe, at the time of writing, FTSE is down -0.95%. DAX is down 2.11%. CAC is down -2.33%. UK 10-year yield is down -0.044 at 4.712. Germany 10-year yield is down -0.079 at 2.567. Earlier in Asia, Nikkei rose 0.47%. Hong Kong HSI rose 0.24%. China Shanghai SSE fell -0.94%. Singapore Strait Times rose 0.06%. Japan 10-year JGB yield fell -0.013 to 1.549.

    Canada retail sales rise 0.8% mom on autos, underlying momentum weakens

    Canada’s retail sales rose by 0.8% mom in March, surpassing expectations of a 0.6% gain. Motor vehicle and parts dealers drove the advance with a strong 4.8% mom rebound. The first quarter posted a solid 1.2% gain in total retail activity, extending the streak of quarterly increases to four.

    However, the underlying trend was less encouraging. Retail sales excluding autos plunged -0.7% mom, far worse than the expected -0.1% mom decline.

    StatCan’s advance estimate points to a modest 0.5% rebound in April.

    ECB’s Lane sees wages easing, cautions on persistent global shocks

    ECB Chief Economist Philip Lane expressed confidence that services inflation will continue to moderate, citing subdued outcomes in recent wage agreements.

    Speaking at a lecture, Lane noted that the current wage settlements for 2025 are already “quite low,” with those for 2026 appearing even more restrained. That suggested easing cost pressures in the services sector, a key driver of core inflation.

    However, Lane tempered optimism by pointing to the persistent volatility in the global economic environment. He highlighted large recent swings in exchange rates and energy prices, attributing them to structural shifts in the global trading system.

    ECB’s Rehn and Stournaras back June rate cut

    ECB Governing Council members Olli Rehn and Yannis Stournaras signaled support for a rate cut in June, provided that incoming data confirms the current trend of stabilizing inflation and moderate growth. Rehn stressed the importance of maintaining a data-dependent approach amid a backdrop of “pervasive uncertainty” stemming from geopolitical tensions and global trade conflicts.

    Speaking in an interview with Kathimerini, Rehn noted that “if incoming data and macroeconomic analysis confirm the current outlook for stabilizing inflation and somewhat subdued growth, the appropriate response in June would be to continue monetary easing and lower interest rates.”

    However, he cautioned against making any assumptions beyond June. “let’s stay on the path of data-driven decision-making at every meeting, especially as we find ourselves under the clouds of pervasive uncertainty due to geopolitics and trade wars,” he emphasized.

    Stournaras echoed the view of a June cut, but suggested the ECB may pause thereafter to reassess. “I believe we will reduce interest rates one more time in June and then I see a pause,” he said.

    UK retail sales beat expectations with 1.2% mom growth, strongest annual gain since 2022

    UK retail sales volumes jumped by 1.2% mom in April, significantly above the expected 0.3% mom gain. This marks the fourth consecutive monthly increase, with volumes now at their highest level since July 2022. Food store sales led the rise with a sharp 3.9% rebound, attributed largely to favorable weather conditions, offsetting declines seen in February and March.

    On a broader basis, sales volumes grew 1.8% over the three months to April compared to the prior three-month period, the strongest gain since July 2021. Year-on-year, volumes rose 2.6%, the largest increase since March 2022.

    Sticky inflation persist as Japan’s core CPI climbs to 3.5%

    Japan’s inflation pressures remained elevated in April, with the core CPI (excluding fresh food) rising from 3.2% yoy to 3.5% yoy, beating expectations of 3.4% yoy and marking the highest level since January 2023. This keeps core inflation above the BoJ’s 2% target for over three years.

    Core-core CPI, which excludes both food and energy, also ticked up from 2.9% yoy to 3.0% yoy, suggesting broader underlying price momentum. Headline CPI held steady at 3.6% yoy.

    There were notable upward drivers in inflation. Energy prices surged 9.3% yoy, up from March’s 6.6% yoy. Food prices (excluding fresh items) jumped 7.0% yoy, up from 6.2% yoy. In particular, rice prices soared by 98.4% yoy, a seventh consecutive record high, reflecting persistent supply shortages.

    However, services inflation, closely watched by BoJ as a wage-sensitive component, edged slightly lower to 1.3% from 1.4%, tempering some of the hawkish signals.

    NZ retail sales rise 0.8% qoq in Q1, but ex-auto growth modest

    New Zealand retail sales volumes rose a stronger-than-expected 0.8% qoq in Q1 to NZD 25B, offering a positive surprise relative to market expectations of flat growth.

    According to Stats NZ, 10 of the 15 major retail industries saw increased activity, led by a 3.1% jump in motor vehicle and parts retailing and a 3.7% rise in pharmaceutical and other store-based sales. Clothing and accessories also saw a healthy 3.2% gain.

    Despite the upbeat headline, underlying momentum appears less robust when excluding the volatile auto sector. Core retail sales rose just 0.4% qoq, sharply missing expectations of a 1.5% qoq rise.

    Economic indicators spokesperson Michelle Feyen noted that growth was “modest” and broad-based.

    EUR/USD Mid-Day Outlook

    Daily Pivots: (S1) 1.1242; (P) 1.1294; (R1) 1.1331; More…

    Intraday bias in EUR/USD is back on the upside with breach of 1.1362 temporary top. As noted before, correction from 1.1572 could have completed at 1.1064 already. Further rise should be seen to retest 1.1572 first. Firm break there will resume larger up trend. Next near term target will be 61.8% projection of 1.0176 to 1.1572 from 1.1064 at 1.1927. However, below 1.1255 minor support will dampen this view and turn intraday bias neutral again.

    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 1.0818) holds.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    22:45 NZD Retail Sales Q/Q Q1 0.80% 0.00% 0.90% 1.00%
    22:45 NZD Retail Sales ex Autos Q/Q Q1 0.40% 1.50% 1.40%
    23:01 GBP GfK Consumer Confidence May -20 -22 -23
    23:30 JPY National CPI Y/Y Apr 3.60% 3.60%
    23:30 JPY National CPI Core Y/Y Apr 3.50% 3.40% 3.20%
    23:30 JPY National CPI Core-Core Y/Y Apr 3.00% 2.90%
    06:00 EUR Germany GDP Q/Q Q1 F 0.40% 0.20% 0.20%
    06:00 GBP Retail Sales M/M Apr 1.20% 0.30% 0.40% 0.10%
    12:30 CAD Retail Sales M/M Mar 0.80% 0.60% -0.40%
    12:30 CAD Retail Sales ex Autos M/M Mar -0.70% -0.10% 0.50%
    14:00 USD New Home Sales M/M Apr 696K 724K

     



    Source link

  • Focus Turns to Fragile Trade Progress as Dollar Lags in Cautious Markets

    Focus Turns to Fragile Trade Progress as Dollar Lags in Cautious Markets


    Dollar is once again under pressure in a relatively calm Asian session, as broader financial markets appear to have stabilized following the earlier bout of volatility driven by US deficit and debt concerns. Wall Street closed the day nearly flat with little direction, while US 10-year Treasury yield held above the 4.5% level after recent volatility. In Asia, risk appetite is returning modestly, with regional equities trading slightly higher.

    The spotlight, however, has shifted back to the slow-moving trade negotiations between the US and several of its major partners. Japan is intensifying its engagement with the US on tariff talks, with top negotiator Ryosei Akazawa said to make a fourth visit to Washington on May 30, just one week after this weekend’s third round. Akazawa is seeking a direct meeting with US Treasury Secretary Scott Bessent, who won’t attend the upcoming session. Prime Minister Shigeru Ishiba also held a 45-minute phone call with US President Donald Trump at the latter’s request, though Ishiba said Trump made no concessions on Japan’s demand for complete tariff elimination.

    On the European front, the Financial Times reported that US Trade Representative Jamieson Greer plans to deliver a strong message to European Trade Commissioner Maros Sefcovic. Washington views Brussels’ recent “explanatory note” as insufficient and continues to push for unilateral tariff reductions on US goods. Without meaningful concessions, the US is prepared to impose additional 20% reciprocal tariffs on EU exports.

    Meanwhile, US-China communication channels remain open but unclear. A call between Chinese Vice Foreign Minister Ma Zhaoxu and US Deputy Secretary of State Christopher Landau yielded “substantial progress” in Beijing’s phrasing, though neither side confirmed whether tariff issues were addressed. Earlier, Vice Premier He Lifeng emphasized China’s willingness to open its markets further to US firms, a potentially strategic signal of compromise from Beijing amid slow progress elsewhere.

    Currency markets continue to reflect a defensive stance. Yen remains the top performer for the week, followed by Euro and Swiss Franc. Dollar lags as the weakest currency, alongside Aussie and Kiwi. Sterling and the Canadian Dollar are holding in mid-pack.

    Technically, WTI crude oil reversed quickly after a brief spike to 64.60 earlier in the week. Overall outlook is that price actions from 55.20 low are merely a corrective pattern. Firm break of 60.54 support will suggest that the consolidation has completed with three waves to 64.60. Retest of 55.20/55.64 support zone should then be seen next.

    In Asia, at the time of writing, Nikkei is up 0.58%. Hong Kong HSI is up 0.77%. China Shanghai SSE is up 0.03%. Singapore Strait Times is down -0.20%. Japan 10-year JGB yield is down -0.007 at 1.555. Overnight, DOW fell -0.00%. S&P 500 fell -0.04%. NASDAQ rose 0.28%. 10-year yield fell -0.043 to 4.553.

    Looking ahead, retail sales data from the UK and Canada are the main focuses of the day.

    Sticky inflation persist as Japan’s core CPI climbs to 3.5%

    Japan’s inflation pressures remained elevated in April, with the core CPI (excluding fresh food) rising from 3.2% yoy to 3.5% yoy, beating expectations of 3.4% yoy and marking the highest level since January 2023. This keeps core inflation above the BoJ’s 2% target for over three years.

    Core-core CPI, which excludes both food and energy, also ticked up from 2.9% yoy to 3.0% yoy, suggesting broader underlying price momentum. Headline CPI held steady at 3.6% yoy.

    There were notable upward drivers in inflation. Energy prices surged 9.3% yoy, up from March’s 6.6% yoy. Food prices (excluding fresh items) jumped 7.0% yoy, up from 6.2% yoy. In particular, rice prices soared by 98.4% yoy, a seventh consecutive record high, reflecting persistent supply shortages.

    However, services inflation, closely watched by BoJ as a wage-sensitive component, edged slightly lower to 1.3% from 1.4%, tempering some of the hawkish signals.

    NZ retail sales rise 0.8% qoq in Q1, but ex-auto growth modest

    New Zealand retail sales volumes rose a stronger-than-expected 0.8% qoq in Q1 to NZD 25B, offering a positive surprise relative to market expectations of flat growth.

    According to Stats NZ, 10 of the 15 major retail industries saw increased activity, led by a 3.1% jump in motor vehicle and parts retailing and a 3.7% rise in pharmaceutical and other store-based sales. Clothing and accessories also saw a healthy 3.2% gain.

    Despite the upbeat headline, underlying momentum appears less robust when excluding the volatile auto sector. Core retail sales rose just 0.4% qoq, sharply missing expectations of a 1.5% qoq rise.

    Economic indicators spokesperson Michelle Feyen noted that growth was “modest” and broad-based.

    USD/CAD Daily Outlook

    Daily Pivots: (S1) 1.3840; (P) 1.3864; (R1) 1.3883; More…

    Intraday bias in USD/CAD remains mildly on the downside at this point. Deeper decline should be seen for retesting 1.3479 low, or further to 1.3727 key fibonacci level. Nevertheless, break of 1.3888 minor resistance will turn bias back to the upside, to extend the corrective pattern from 1.3749 with another rising leg.

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

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    22:45 NZD Retail Sales Q/Q Q1 0.80% 0.00% 0.90% 1.00%
    22:45 NZD Retail Sales ex Autos Q/Q Q1 0.40% 1.50% 1.40%
    23:01 GBP GfK Consumer Confidence May -20 -22 -23
    23:30 JPY National CPI Y/Y Apr 3.60% 3.60%
    23:30 JPY National CPI Core Y/Y Apr 3.50% 3.40% 3.20%
    23:30 JPY National CPI Core-Core Y/Y Apr 3.00% 2.90%
    06:00 EUR Germany GDP Q/Q Q1 F 0.20% 0.20%
    06:00 GBP Retail Sales M/M Apr 0.30% 0.40%
    12:30 CAD Retail Sales M/M Mar 0.60% -0.40%
    12:30 CAD Retail Sales ex Autos M/M Mar -0.10% 0.50%
    14:00 USD New Home Sales M/M Apr 696K 724K

     



    Source link

  • New Zealand Terms Of Trade Climbs 1.9% In Q1

    New Zealand Retail Sales Rise 0.8% In Q1


    The total volume of retail sales in New Zealand was up a seasonally adjusted 0.8 percent on quarter in the first quarter of 2025, Statistics New Zealand said on Friday.

    That beat forecasts for a flat reading following the 0.9 percent gain in the three months prior.

    The total value of seasonally adjusted retail sales was NZ$31 billion, up 1.5 percent.

    By industry, the largest movements were: motor vehicle and parts retailing – up 3.1 percent; pharmaceutical and other store-based retailing – up 3.7 percent; hardware, building, and garden supplies – down 2.1 percent; clothing, footwear, and personal accessories – up 3.2 percent; and liquor retailing – down 6.5 percent.

    For comments and feedback contact: editorial@rttnews.com

    Economic News

    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.





    Source link

  • Euro and Pound Rally on UK-EU Pact, Dollar Wobbles

    Euro and Pound Rally on UK-EU Pact, Dollar Wobbles


    Euro and Sterling surged today after the UK and EU unveiled a sweeping new agreement resetting their defence and trade relationship, the most substantial since Brexit in 2020. The comprehensive deal spans key sectors including security, energy, travel, trade, and fisheries. UK Prime Minister Keir Starmer hosted European Commission President Ursula von der Leyen in London for the high-stakes summit, highlighting the UK’s shift toward pragmatic diplomacy while respecting key post-Brexit red lines.

    The UK Labour government was quick to clarify that this reset does not mark a reversal of Brexit. Officials emphasized that the agreement avoids returning to the EU single market, customs union, or freedom of movement. Still, the new deal is being hailed as a boost to corporate confidence and may pave the way for fresh investment flows into the UK, especially following other trade breakthroughs this month with the US and India.

    While optimism lifted the Euro and Pound, US assets are under renewed pressure following last week’s credit downgrade by Moody’s. Dollar weakness was notable, with the greenback falling to the bottom of the major currency pack. Treasury yields, however, surged as bond markets reeled from the implications of a swelling fiscal deficit. 10-year yield broke through the key 4.5% level, while 30-year yield topped 5% for the first time in months.

    Part of the angst stems from fresh momentum behind President Donald Trump’s multitrillion-dollar domestic policy package. Passed by the House Budget Committee on Sunday, the bill includes major increases in immigration and defense spending, along with an extension of the 2017 tax cuts. It’s now headed for floor debate later this week. Markets are interpreting this as a structural shift toward higher deficits, particularly as tariff revenue is unlikely to fully compensate for lost tax income.

    In the currency markets, Euro leads the day’s gains, followed by Sterling and Aussie. Dollar is the weakest performer, trailed by Loonie and Swiss Franc. The Japanese Yen and New Zealand Dollar are trading more mixed.

    Technically, GBP/USD is now in focus as it approaches key resistance level at 1.3433 (2024 high) again. Decisive break of 1.3433 will confirm resumption of whole up trend from 1.0351 (2022 low). Next medium term target is 61.8% projection of 1.0351 to 1.3433 from 1.2099 at 1.4004.

    In Europe, at the time of writing, FTSE is down 0.44%. DAX is down -0.09%. CAD is down -0.74%. UK 10-year yield is up 0.059 at 4.706. Germany 10-year yield is up 0.057 at 2.645. Earlier in Asia, Nikkei fell -0.68%. Hong Kong HSI fell -0.05%. China Shanghai SSE closed flat. Singapore Strait Times fell -0.56%. Japan 10-year JGB yield rose 0.033 to 1.488.

    Fed’s Bostic leans toward one rut in 2025 as inflation expectations turn concerning

    Atlanta Fed President Raphael Bostic said on CNBC today that he currently favors just one interest rate cut this year, citing persistent inflation pressures and growing concern over shifting inflation expectations.

    “I worry a lot about the inflation side,” Bostic said, noting that recent data shows expectations are beginning to drift upward again “in a troublesome way”, which “will make our job harder.”

    Eurozone CPI finalized at 2.2% in April, core at 2.7%

    Eurozone headline CPI was finalized at 2.2% yoy in April. CPI core, which excludes energy, food, alcohol, and tobacco, accelerated, to 2.7%, up from 2.4% previously.

    Services remained the primary driver of inflation, contributing 1.80 percentage points to the overall figure, followed by food, alcohol and tobacco at 0.57 pp. Energy continued to exert a dampening effect, subtracting -0.35 pp.

    At the EU level, annual inflation was slightly higher at 2.4% yoy. Inflation disparities remained wide across the bloc, with France posting the lowest annual rate at 0.9% and Romania the highest at 4.9%.

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

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

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

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

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

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

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

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

    NZ BNZ services slips to 48.5, sector remains under pressure

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

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

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

    EUR/USD Mid-Day Outlook

    Daily Pivots: (S1) 1.1123; (P) 1.1171; (R1) 1.1212; More…

    Immediate focus is now on 1.1292 resistance in EUR/USD as rebound from 1.1064 resumes. Decisive break there will indicate that correction from 1.1572 has already completed after defending 38.2% retracement of 1.0176 to 1.1572 at 1.1039. Intraday bias will be turned back to the upside for retesting 1.1572 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 1.0818) holds.

    Economic Indicators Update

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

     



    Source link

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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    NZ BNZ services slips to 48.5, sector remains under pressure

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    Here are some highlights for the week:

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

    AUD/USD Daily Report

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

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

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

    Economic Indicators Update

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

     



    Source link

  • Markets Stuck in Ranges as Data Fail to Inspire

    Markets Stuck in Ranges as Data Fail to Inspire


    Market activity remains subdued ahead of the weekend, with major currency pairs and crosses locked within yesterday’s tight ranges. Earlier in the day, New Zealand Dollar received a brief lift from rise in inflation expectations, but the move lacked conviction and quickly faded. Similarly, Japan’s weaker-than-expected Q1 GDP figures failed to trigger much reaction, as traders largely shrugged off domestic data and remained directionless.

    Broader risk sentiment is offering little help, with global equity markets also confined to narrow ranges. Investors are awaiting fresh cues, with some attention turning to the upcoming US University of Michigan Consumer Sentiment survey. While a bounce in sentiment is possible following the 90-day reciprocal tariff truce, lingering policy uncertainty may cap any gains. Of particular interest will be the inflation expectations component, as a notable uptick could reinforce concerns that tariffs are beginning to feed into price pressures.

    For the week, Aussie is leading the pack, followed by Dollar and Sterling. On the weaker side, Swiss Franc is underperforming, trailed by Euro and Kiwi. Yen and Canadian Dollar are trading more neutrally.

    In Europe, at the time of writing, FTSE is up 0.40%. DAX is up 0.45%. CAC is up 0.37%. UK 10-year yield is down -0.038 at 4.623. Germany 10-year yield is down -0.047 at 2.575. Earlier in Asia, Nikkei closed flat. Hong Kong HSI fell -0.46%. China Shanghai SSE fell -0.40%. Singapore Strait Times rose 0.15%. Japan 10-year JGB yield fell -0.024 at 1.455.

    Fed’s Bostic sees only one rate cut in 2025, as uncertainty unlikely to resolve quickly

    Atlanta Fed President Raphael Bostic reiterated his expectation for just one interest rate cut this year, citing persistent uncertainty surrounding global trade policy “is unlikely to resolve itself quickly.”

    Speaking on Bloomberg’s Odd Lots podcast, Bostic pointed to the 90-day delay of reciprocal tariffs and the tentative nature of the recent US-China de-escalation, warning that the final outcomes of trade negotiations remain unclear.

    Bostic emphasized that tariffs are expected to exert upward pressure on inflation, a view supported by the Atlanta Fed’s own analysis and echoed by many economists.

    As a result, monetary policy may need to lean against those inflationary forces, limiting how far the Fed can ease. “Our policy is going to have to anticipate — and to some extent — potentially push against those inflationary forces,” he said.

    EU exports jump 15.% yoy in March on strong US shipments

    Eurozone trade data showed a strong performance in March, with exports rising 13.7% yoy to EUR 279.8B and imports up 8.8% yoy to EUR 243.0B, resulting in a solid trade surplus of EUR 36.8B. Intra-eurozone trade also rose 1.7% yoy to EUR 226.0B, indicating modest growth in internal demand.

    For the broader European Union, the trade picture was similarly positive. Exports jumped 15.2% yoy to EUR 254.8B, while imports increased by 10.4% yoy to EUR 219.5B, yielding a EUR 35.3B surplus.

    The standout development came from transatlantic trade: EU exports to the United States surged 59.5% yoy to EUR 71.4B, far outpacing the 15.8% yoy rise in imports from the U.S.

    Meanwhile, trade with the UK also showed moderate growth, with exports rising 4.8% yoy and imports increasing 5.4% yoy. In contrast, trade with China as a weak spot. EU exports to China fell sharply by -10.1% yoy to EUR 17.9B, while imports surged 15.8% yoy to EUR 48.6B.

    ECB’s Kazaks: Interest rates near terminal level of easing cycle

    Latvian ECB Governing Council member Martins Kazaks indicated market pricing of a 25bps cut at the June 5 meeting is “relatively appropriate”.

    Nevertheless, speaking to CNBC, Kazaks added that inflation developments are “by and large within the baseline scenario”. Thus, ECB is “relatively close to the terminal rate” of its easing cycle.

    Kazaks’ comments argue that ECB may enter a phase of pause after the June rate cut.

    Meanwhile, French Governing Council member Francois Villeroy de Galhau, in an interview with a regional French newspapers, acknowledged the risk of a trade war but dismissed the notion that central banks are currently engaged in a currency war.

    Villeroy defined a currency war as using interest rates competitively to gain economic advantage. Instead, he said recent currency movements are more reflective of “revisions to economic forecasts.”

    BoJ’s Nakamura urges caution on rate hikes as economy faces mounting downward pressure

    BoJ board member Toyoaki Nakamura, known for his dovish stance, warned that Japan’s economy is under “mounting downward pressure” and cautioned against “rushing” to interest rate hikes.

    Speaking today, Nakamura highlighted the risks of tightening policy while growth slows, noting that higher rates could “curb consumption and investment with a lag”.

    Nakamura also pointed to growing uncertainty stemming from US tariff policy, which he said is already causing Japanese firms to delay or scale back capital spending plans.

    He warned that escalating trade tensions could spark a “vicious cycle of lower demand and prices,” undermining both growth and inflation.

    Japan’s GDP contracts -0.2% qoq in Q1, export drag offsets capex gains

    Japan’s economy shrank by -0.2% qoq in Q1, marking its first contraction in a year and falling short of the -0.1% qoq consensus. On an annualized basis, GDP contracted by -0.7%, a sharp disappointment compared to expectations for -0.2%.

    The weakness was largely driven by external demand, which subtracted -0.8 percentage points from growth as exports declined -0.6% qoq while imports jumped 2.9% qoq.

    Domestically, the picture was mixed. Private consumption, comprising more than half of Japan’s output, was flat on the quarter. However, capital expenditure provided some support, rising by a solid 1.4% qoq.

    Meanwhile, inflation pressures showed no sign of easing, with the GDP deflator accelerating from 2.9% yoy to 3.3% yoy, above expectations of 3.2% yoy.

    RBNZ inflation expectations rise to 2.41%, further easing seen ahead

    RBNZ’s latest Survey of Expectations for May revealed a notable uptick in inflation forecasts across all time horizons.

    One-year-ahead inflation expectations climbed from 2.15% to 2.41%, while two-year expectations rose from 2.06% to 2.29%. Even long-term projections edged higher, with five- and ten-year-ahead expectations increasing to 2.18% and 2.15% respectively.

    Despite the upward revisions in inflation outlook, expectations for monetary policy point clearly toward easing.

    With the Official Cash Rate currently at 3.50%, most respondents anticipate a 25 bps cut by the end of Q2. Looking further ahead, the one-year-ahead OCR expectation also declined from 3.23% to 2.91%.

    NZ BNZ manufacturing rises to 53.9, recovery gains ground

    New Zealand’s BusinessNZ Performance of Manufacturing Index edged up from 53.2 to 53.9 in April. The gain was driven by improvements in employment and new orders, up to 55.0 and 51.4 respectively, with employment reaching its highest level since July 2021. However, production eased slightly to 53.8.

    BNZ Senior Economist Doug Steel noted that while the sector isn’t booming, the recovery is clear, with the PMI rebounding sharply from a low of 41.4 last June.

    Still, he cautioned, “there remain questions around how sustainable it is given uncertainty stemming from offshore”.

    GBP/USD Mid-Day Outlook

    Daily Pivots: (S1) 1.3263; (P) 1.3292; (R1) 1.3331; More…

    Intraday bias in GBP/USD remains neutral as range trading continues. On the upside, decisive break of 1.3433/42 key resistance zone will confirm larger up trend resumption. Nevertheless, below 1.3138 will resume the correction from 1.3442. But downside should be contained by 38.2% retracement of 1.2099 to 1.3442 at 1.2929 to bring rebound.

    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 decisive break of 1.3433 at a later stage.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    22:30 NZD Business NZ PMI Apr 53.9 53.2
    23:50 JPY GDP Q/Q Q1 P -0.20% -0.10% 0.70%
    23:50 JPY GDP Deflator Y/Y Q1 P 3.30% 3.20% 2.90%
    03:00 NZD RBNZ Inflation Expectations Q2 2.29% 2.06%
    04:30 JPY Industrial Production M/M Mar F 0.20% -1.10% -1.10%
    09:00 EUR Eurozone Trade Balance (EUR) Mar 27.9B 17.5B 21.0B 22.7B
    12:30 USD Housing Starts Apr 1.36M 1.37M 1.32M 1.34M
    12:30 USD Building Permits Apr 1.41M 1.45M 1.48M
    12:30 USD Import Price Index M/M Apr 0.10% -0.40% -0.10% -0.40%
    14:00 USD UoM Consumer Sentiment May P 53 52.2
    14:00 USD UoM Inflation Expectations May P 6.50%

     



    Source link

  • Weak Data Overlooked as Yen Rises on Risk-Off Mood

    Weak Data Overlooked as Yen Rises on Risk-Off Mood


    Mild risk-off mood is helping Yen to extend its near-term rebound, despite fresh signs of economic weakness at home. Japan’s economy was already showing signs of strain even before the impact of US tariffs, with Q1 GDP contracting more sharply than expected. BoJ is left in an increasingly precarious position, wedged between deteriorating growth and persistent inflationary pressures.

    A recent Reuters poll taken between May 7 and 13 revealed a significant shift in market expectations, with 67% of economists now projecting that BoJ will hold its policy rate at 0.50% through the third quarter. That’s up sharply from just 36% a month ago, highlighting how tariff-related risks have changed expectations for near-term tightening.

    On the trade front, Japan is preparing a third round of negotiations with the US, as it seeks to secure exemptions from tariffs on automobiles and auto parts. In return, Tokyo is reportedly considering a set of concessions, including increased imports of US corn and soybeans, regulatory changes to auto inspection standards, and cooperation in shipbuilding technology.

    Chief negotiator Ryosei Akazawa is expected to travel to Washington as early as next week, though the timeline hinges on progress in working-level talks. Meanwhile, Finance Minister Katsunobu Kato will travel to Canada for G7 meetings, where he may hold bilateral discussions with US Treasury Secretary Scott Bessent on foreign exchange matters.

    Overall for the week so far, Yen is currently the top performer, followed by Sterling and then Dollar. Kiwi is the weakest, trailed by Euro and Swiss Franc. Loonie and Aussie sit in the middle of the pack. The overall tone in the currency markets remains mixed.

    Technically, Gold has bounced from key cluster support around 3150, including 55 D EMA (now at 3151.09) and 38.2% retracement of 2584.24 to 3499.79 at 3150.04. It’s possible that correction from 3499.79 has completed already. Firm of 3265.74 will reinforce this bullish case, and suggest that larger up trend is ready to resume. If realized, that should be accompanied by another round of selloff in Dollar. However, sustained break of 3150 will dampen this view and bring deeper fall to 61.8% retracement at 2933.98.

    In Asia, at the time of writing, Nikkei is down -0.06%. Hong Kong HSI is down -0.40%. China Shanghai SSE is down -0.34%. Singapore Strait Times is down -0.20%. Japan 10-year JGB yield is down -0.016 at 1.463. Overnight, DOW rose 0.65%. S&P 500 rose 0.41%. NASDAQ fell -0.18%. 10-year yield fell -0.073 to 4.455.

    Looking ahead, Eurozone trade balance in the main feature in European session. Later in the day, US will release housing starts and building permits, and import prices. But attention will be on U of Michigan consumer sentiment and inflation expectations.

    Japan’s GDP contracts -0.2% qoq in Q1, export drag offsets capex gains

    Japan’s economy shrank by -0.2% qoq in Q1, marking its first contraction in a year and falling short of the -0.1% qoq consensus. On an annualized basis, GDP contracted by -0.7%, a sharp disappointment compared to expectations for -0.2%.

    The weakness was largely driven by external demand, which subtracted -0.8 percentage points from growth as exports declined -0.6% qoq while imports jumped 2.9% qoq.

    Domestically, the picture was mixed. Private consumption, comprising more than half of Japan’s output, was flat on the quarter. However, capital expenditure provided some support, rising by a solid 1.4% qoq.

    Meanwhile, inflation pressures showed no sign of easing, with the GDP deflator accelerating from 2.9% yoy to 3.3% yoy, above expectations of 3.2% yoy.

    RBNZ inflation expectations rise to 2.41%, further easing seen ahead

    RBNZ’s latest Survey of Expectations for May revealed a notable uptick in inflation forecasts across all time horizons.

    One-year-ahead inflation expectations climbed from 2.15% to 2.41%, while two-year expectations rose from 2.06% to 2.29%. Even long-term projections edged higher, with five- and ten-year-ahead expectations increasing to 2.18% and 2.15% respectively.

    Despite the upward revisions in inflation outlook, expectations for monetary policy point clearly toward easing.

    With the Official Cash Rate currently at 3.50%, most respondents anticipate a 25 bps cut by the end of Q2. Looking further ahead, the one-year-ahead OCR expectation also declined from 3.23% to 2.91%.

    NZ BNZ manufacturing rises to 53.9, recovery gains ground

    New Zealand’s BusinessNZ Performance of Manufacturing Index edged up from 53.2 to 53.9 in April. The gain was driven by improvements in employment and new orders, up to 55.0 and 51.4 respectively, with employment reaching its highest level since July 2021. However, production eased slightly to 53.8.

    BNZ Senior Economist Doug Steel noted that while the sector isn’t booming, the recovery is clear, with the PMI rebounding sharply from a low of 41.4 last June.

    Still, he cautioned, “there remain questions around how sustainable it is given uncertainty stemming from offshore”.

    Fed’s Barr: Solid economy faces threats from tariff-driven supply disruptions

    Fed Governor Michael Barr highlighted solid growth, low unemployment, and continued progress on disinflation in the US economy. However, he flagged growing concern over rising trade-related uncertainty, which has begun to weigh on consumer and business sentiment.

    In a speech overnight, Barr specifically pointed to the vulnerability of small businesses, which are more exposed to “disruptions to supply chains and distribution networks”.

    These firms are integral to broader production networks, and failures in this segment could trigger cascading effects across the economy.

    Drawing a parallel to the pandemic, Barr noted that “disruptions can have large and lasting effects on prices, as well as output,” leading to lower growth and higher inflation ahead.

    USD/JPY Daily Outlook

    Daily Pivots: (S1) 145.13; (P) 145.97; (R1) 146.53; More…

    Intraday bias in USD/JPY remains neutral and more consolidations could be seen below 148.64. . Further rally is expected as long as 144.02 resistance turned support holds. As noted before, fall from 158.86 could have completed 139.87 already. Above 148.64 will target 61.8% retracement of 158.86 to 139.87 at 151.60 next. However, firm break of 144.02 will bring retest of 139.87 low instead.

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

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    22:30 NZD Business NZ PMI Apr 53.9 53.2
    23:50 JPY GDP Q/Q Q1 P -0.20% -0.10% 0.70%
    23:50 JPY GDP Deflator Y/Y Q1 P 3.30% 3.20% 2.90%
    03:00 NZD RBNZ Inflation Expectations Q2 2.29% 2.06%
    04:30 JPY Industrial Production M/M Mar F 0.20% -1.10% -1.10%
    09:00 EUR Eurozone Trade Balance (EUR) Mar 17.5B 21.0B
    12:30 USD Housing Starts Apr 1.37M 1.32M
    12:30 USD Building Permits Apr 1.45M 1.48M
    12:30 USD Import Price Index M/M Apr -0.40% -0.10%
    14:00 USD UoM Consumer Sentiment May P 53 52.2
    14:00 USD UoM Inflation Expectations May P 6.50%

     



    Source link