Tag: New Zealand

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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    BoJ minutes: Caught between global uncertainty and domestic price pressures

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

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

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

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

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

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

    USD/JPY Mid-Day Outlook

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

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

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

    Economic Indicators Update

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

     



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  • Sterling in Focus as BoE Decision and US-UK Trade Deal Speculation Loom

    Sterling in Focus as BoE Decision and US-UK Trade Deal Speculation Loom


    Trading in the forex markets remains subdued. Fed’s policy announcement overnight triggered minimal market reaction, as it delivered a widely expected hold at 4.25–4.50%. While Fed acknowledged that risks of both higher unemployment and higher inflation have increased, Chair Jerome Powell made it clear that rate cuts are not imminent.

    “It’s not a situation where we can be preemptive,” Powell emphasized, reinforcing Fed’s data-dependent stance amid ongoing uncertainty from US tariff policies and their impacts.

    As attention shifts away from Fed, focus turns squarely to the UK, where the BoE is expected to cut rates by 25 bps. Beyond the cut itself, traders will be parsing the vote split and updated economic projections for signals on the pace of future easing.

    Adding a geopolitical dimension to the day’s event risk, there are growing market whispers that a US-UK trade deal will be announced. US President Donald Trump hinted in social media at a “MAJOR TRADE DEAL” to be announced today. While no country was named, sources cited by The Guardian said the deal involves the UK.

    If formalized, it would be the first bilateral agreement by the current US administration since its sweeping tariff actions last month. A deal with Britain is seen as relatively straightforward, especially compared to more contentious and prolonged negotiations expected with the EU and China. For markets, such a development could inject fresh direction into an otherwise stagnant environment.

    In terms of weekly performance, Yen continues to lead, followed by the Pound and Swiss Franc. On the other end, the Loonie is the weakest, followed by Aussie and Dollar. Euro and Kiwi sit in the middle. However, it should be emphasized that the overall mood remains indecisive, with major pairs and crosses largely trapped within last week’s ranges.

    In Asia, at the time of writing, Nikkei is up 0.53%. Hong Kong HSI is up 0.62%. China Shanghai SSE is up 0.21%. Singapore Strait Times is down -0.26%. Japan 10-year JGB yield is up 0.023 at 1.324. Overnight, DOW rose 0.70%. S&P 500 rose 0.43%. NASDAQ rose 0.27%. 10-year yield fell -0.033 to 4.275.

    Looking ahead, BoE rate decision is the main focus in European session. Later in the day, US will release jobless claims and non-farm productivity.

    BoE to cut, watch vote split and forecasts for dovish signals

    BoE is widely expected to deliver a 25 bps rate cut today, bringing the Bank Rate down to 4.25%. Governor Andrew Bailey and fellow policymakers have consistently emphasized a cautious approach to cutting rates, and that tone is expected to persist amid lingering uncertainties.

    Most economists surveyed by Reuters anticipated BoE will stick to a quarterly pace of easing, suggesting Bank Rate ends the year at 3.75%. However, market participants are slightly more dovish. Traders are now fully pricing in three more cuts by the end of 2025, projecting a rate of 3.50% at year-end.

    There might be some hints on how dovish BoE is leaning to, from today’s vote split and updated economic projections. In particular, focus will fall on whether known dove Swati Dhingra would push for a larger 50bps reduction, and whether there are material downgrades to both growth and inflation forecasts.

    From a market perspective, EUR/GBP will be closely watched for signals on investor sentiment following the decision.

    EUR/GBP is currently testing support at 55 D EMA (now at 0.8460). Strong rebound from current level would keep rally from 0.8239 alive. A break above 0.8539 resistance should confirm that fall from 0.8737, while deep, has completed as a correction. Retest of 0.8737 should be seen next.

    On the flip side, sustained break below the 55 D EMA would raise the risk of near-term bearish reversal, and open the path back toward the 0.8221/0.8239 support zone.

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

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

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

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

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

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

    BoJ minutes: Caught between global uncertainty and domestic price pressures

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

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

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

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

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

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

    GBP/USD Daily Outlook

    Daily Pivots: (S1) 1.3254; (P) 1.3318; (R1) 1.3357; More…

    Range trading continues in GBP/USD and intraday bias remains neutral at this point. On the downside, firm break of 1.3232 support will indicate short term topping and rejection by 1.3433 key resistance. Intraday bias will be back on the downside for deeper pullback to 55 D EMA (now at 1.3051) and possibly below. On the upside, decisive break of 1.3433 key resistance will confirm larger up trend resumption.

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

     



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  • Calm in Currency Markets Ahead of Fed’s Fourth Straight Hold

    Calm in Currency Markets Ahead of Fed’s Fourth Straight Hold


    The forex markets are treading water ahead of today’s FOMC decision. While the announcement typically acts as a volatility trigger, the lack of suspense surrounding this meeting could mean muted price action even after Chair Jerome Powell’s press conference. Markets are pricing in a near-certainty, 99% probability, that Fed will hold the policy rate steady at 4.25–4.50% for a fourth straight meeting, leaving little room for surprise. Adding to the quiet is the absence of updated economic projections and dot plot guidance, which are only due at the June meeting.

    Last week’s stronger-than-expected non-farm payrolls cooled expectations for near-term easing, with the chance of a June rate cut falling to around 30%. Traders will be closely watching Powell’s tone for any nuanced shift, particularly regarding the timing of the next rate cut. However, officials are likely to maintain their cautious, data-dependent posture given persistent economic uncertainty, especially around the evolving US tariff policies.

    Indeed, Powell is expected to reiterate that the Fed is not in a hurry to adjust rates. The ongoing tariff truce and upcoming negotiations—such as this weekend’s Geneva meeting between U.S. and Chinese trade officials—introduce substantial geopolitical risks that could influence inflation, growth, and financial conditions. With so many moving parts, Fed is unlikely to make any forward commitments. For now, the market still leans toward three rate cuts by year-end, which would bring the target range down to 3.50–3.75%, but policymakers are not ready to validate that path.

    In terms of price action so far this week, the Dollar has underperformed, joined by Loonie and Swiss Franc near the bottom of the board. Yen has led gains, followed by Kiwi and Sterling. Euro and Aussie are positioned in the middle. But with ranges tightly held, these relative standings could shift quickly depending on today’s Fed tone and incoming trade headlines.

    Technically, USD/CAD has clearly lost must momentum, as seen in D MACD, as it approaches 38.2% retracement of 1.2005 (2021 low) to 1.4791 at 1.3727. Break of 1.3903 resistance should indicate short term bottoming, and bring stronger rebound back to 55 D EMA (now at 1.4057). However, firm break of 1.3727 could then bring deeper fall to 1.3418 support before USD/CAD tries to bottom again.

    In Europe, at the time of writing, FTSE is down -0.53%. DAX is down -0.24%. CAC is down -0.68%. UK 10-year yield is down -0.049 at 4.471. Germany 10-year yield is down -0.04 at 2.503. Earlier in Asia, Nikkei fell -0.14%. Hong Kong HSI rose 0.13%. China Shanghai SSE rose 0.80%. Singapore Strait Times rose 0.13%. Japan 10-year JGB yield rose 0.038 to 1.300.

    Eurozone retail sales fall -0.1% mom in March

    Eurozone retail sales slipped by -0.1% mom in March, in line with expectations. The breakdown shows marginal declines across key categories, with food, drinks, and tobacco sales down -0.1%, and non-food products (excluding fuel) also falling -0.1%. Only automotive fuel recorded a modest rise, up 0.4%.

    Across the broader EU, retail trade also declined -0.1% mom. Notable contractions were seen in Slovenia (-2.0%), Estonia (-1.3%), and Slovakia (-0.9%). Malta led the gainers with a 2.0% increase, followed by Belgium, Croatia (both +1.4%), and Bulgaria (+1.1%).

    Japan’s PMI composite finalized at 51.2, input inflation jumps to 2-year high

    Japan’s private sector returned to expansion in April, as the final PMI Composite rose to 51.2 from March’s 48.9. The improvement was driven entirely by the services sector, with its PMI climbing to 52.4, while manufacturing remained in contraction.

    According to S&P Global’s Annabel Fiddes, stronger services activity helped offset the drag from factories, where new orders fell sharply in response to the global tariff environment.

    While services firms reported stronger demand, confidence among both services and manufacturing sectors deteriorated. Businesses expressed concern about the broader global outlook and the negative implications of recent US tariff moves on growth potential.

    Adding to the pressure, input price inflation accelerated to a two-year high, prompting firms to raise selling prices to protect margins.

    NZ employment grow 0.1% in Q1, wages growth cool

    New Zealand’s employment grew just 0.1% qoq as expected, while the unemployment rate held steady at 5.1%, better than forecast of 5.3%.

    However, the quality of employment deteriorated, with a notable shift from full-time to part-time roles. Over the year, full-time employment dropped by -45k while part-time roles increased by 25k.

    Participation rate edged down to 70.8% and the employment rate slipped to 67.2%, both suggesting a gradual loss in labor market momentum.

    Wage growth also moderated, with the labour cost index rising 2.9% annually, down from 3.3% in the previous quarter.

    PBoC unleashes broad-based monetary easing including rate and RRR cuts

    China’s central bank has announced a sweeping set of monetary policy measures to support its economy, starting with a 10bps cut in the seven-day reverse repo rate to 1.40%, effective May 8. In a more aggressive move, the PBoC will also slash the reserve requirement ratio by 50bps, releasing approximately CNY 1T into the banking system.

    The new package is structured into three categories: quantitative, price-based, and structural tools. The quantitative arm focuses on long-term liquidity via the RRR cut. The price-based measures involve lowering benchmark and structural policy rates. The structural component aims to channel credit into strategic areas such as technological innovation, consumption, and inclusive finance.

    USD/CHF Mid-Day Outlook

    Daily Pivots: (S1) 0.8201; (P) 0.8233; (R1) 0.8254; More….

    USD/CHF is still bounded in right range below 0.8333 and intraday bias remains neutral for the moment. On the upside, above 0.8333 will resume the rebound from 0.8038. However, upside should be limited by 38.2% retracement of 0.9200 to 0.8038 at 0.8482. On the downside, below 0.8196 minor support will bring retest of 0.8038. Firm break there will resume larger down trend.

    In the bigger picture, long term down trend from 1.0342 (2017 high) is still in progress and met 61.8% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.8079 already. In any case, outlook will stay bearish as long as 55 W EMA (now at 0.8763) 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 Employment Change Q1 0.10% 0.10% -0.10% -0.20%
    22:45 NZD Unemployment Rate Q1 5.10% 5.30% 5.10%
    22:45 NZD Labour Cost Index Q/Q Q1 0.40% 0.50% 0.60%
    00:30 JPY Services PMI Apr F 52.4 52.2 50
    06:00 EUR Germany Factory Orders M/M Mar 3.60% 1.10% 0.00%
    07:00 CHF Foreign Currency Reserves (CHF) Apr 703B 726B
    08:30 GBP Construction PMI Apr 46.6 46 46.4
    09:00 EUR Eurozone Retail Sales M/M Mar -0.10% -0.10% 0.30% 0.20%
    14:30 USD Crude Oil Inventories -1.7M -2.7M
    18:00 USD Fed Interest Rate Decision 4.50% 4.50%
    18:30 USD FOMC Press Conference

     



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  • Thaw in US-China Tensions With Geneva Talk Scheduled, But Markets Stay Guarded Before FOMC

    Thaw in US-China Tensions With Geneva Talk Scheduled, But Markets Stay Guarded Before FOMC


    Positive developments out of Asia offered some encouragement to global investors today, though market responses remained muted. China unveiled a wide-ranging stimulus package, cutting both its seven-day reverse repo rate and the reserve requirement ratio to inject liquidity to stabilize the economy. In parallel, officials from the US and China announced plans to hold a key meeting in Geneva this Saturday, in what could mark the first serious effort to thaw trade relations since US President Donald Trump’s latest round of steep tariffs.

    Despite these encouraging headlines, equity markets across Asia posted only modest gains. Currency markets showed slightly more reaction, with Kiwi outperforming after Q1 unemployment rate came in steady. Aussie and Loonie also posted small gains. Dollar is holding firmer ahead of Fed’s decision later today. Meanwhile, Yen softened, paring gains from earlier in the week. Euro is staying on the softer side. Political risk in Europe remains elevated even after Germany’s new chancellor Friedrich Merz finally secured parliamentary backing. Swiss Franc is positioning in the middle along Sterling.

    On the trade front, US Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer are set to meet China’s top economic planner He Lifeng in Switzerland, with both sides signalling willingness to engage. Bessent stated that current tariff levels, reaching as high as 145% on Chinese imports, amount to “an embargo.” He reiterated that the US seeks “fair trade, not decoupling.” China’s official statement echoed this sentiment, saying the re-engagement decision balances “global expectations,” “China’s interests,” and the needs of “US industry and consumers.”

    Canadian Prime Minister Mark Carney met with Trump overnight in what he termed a “constructive” first step toward reshaping North American trade relations. Meanwhile, the UK and India announced a new agreement that will see most goods traded become tariff-free within a decade, marking a notable milestone for the Starmer government.

    Technically, immediate focus in NZD/USD is on 0.6028 resistance. Firm break there will resume rise from 0.5484. Next target is 61.8% projection of 0.5484 to 0.6028 from 0.5892 at 0.6228. Rejection by 0.6028 will extend the consolidation pattern from there with another falling leg. But downside should be contained by 38.2% retracement of 0.5484 to 0.6028 at 0.5820 in this case.

    In Asia, at the time of writing, Nikkei is up 0.06%. Hong Kong HSI is up 0.49%. China Shanghai SSE is up 0.64%. Singapore Strait Times is up 0.07%. Japan 10-year JGB yield is up 0.016 at 1.278. Overnight, DOW fell -0.95%. S&P 500 fell -0.77%. NASDAQ fell -0.87%. 10-year yield fell -0.035 to 4.308.

    Looking ahead,Germany factory orders, France trade balance, Swiss foreign curreny reserves, UK PMI construction and Eurozone retail sales will be released in European session. Later in the day, main focus in on FOMC rate decision and press conference.

    Fed to holds fire as markets look to July for next cut

    Fed is widely expected to leave its benchmark interest rate unchanged at 4.25–4.50% today. With no update to its economic projections or dot plot this time, attention will turn squarely to the post-meeting statement and Chair Jerome Powell’s press conference.

    The prevailing message is likely to be one of patience, as policymakers face mounting uncertainties tied to the unresolved tariff war and its eventual economic impact.

    Central to Fed’s wait-and-see approach is the need for clarity on two fronts: whether US President Donald Trump’s reciprocal tariffs are fully enacted, and how inflation expectations evolve in response. These factors, especially in light of ongoing geopolitical and trade risks, argue against any near-term policy moves.

    As such, June is seen as too soon for a shift, with the expected to remain on hold until more definitive clarity emerge, probably not until the tariff ceasefire expires in early July.

    Market pricing reflects this outlook top. Fed funds futures assign just a 32% chance of a cut in June, but expectations firm up thereafter, with roughly 75% probability of three 25 bps cuts by year-end, bringing rates down to 3.50–3.75%.

    Japan’s PMI composite finalized at 51.2, input inflation jumps to 2-year high

    Japan’s private sector returned to expansion in April, as the final PMI Composite rose to 51.2 from March’s 48.9. The improvement was driven entirely by the services sector, with its PMI climbing to 52.4, while manufacturing remained in contraction.

    According to S&P Global’s Annabel Fiddes, stronger services activity helped offset the drag from factories, where new orders fell sharply in response to the global tariff environment.

    While services firms reported stronger demand, confidence among both services and manufacturing sectors deteriorated. Businesses expressed concern about the broader global outlook and the negative implications of recent US tariff moves on growth potential.

    Adding to the pressure, input price inflation accelerated to a two-year high, prompting firms to raise selling prices to protect margins.

    NZ employment grow 0.1% in Q1, wages growth cool

    New Zealand’s employment grew just 0.1% qoq as expected, while the unemployment rate held steady at 5.1%, better than forecast of 5.3%.

    However, the quality of employment deteriorated, with a notable shift from full-time to part-time roles. Over the year, full-time employment dropped by -45k while part-time roles increased by 25k.

    Participation rate edged down to 70.8% and the employment rate slipped to 67.2%, both suggesting a gradual loss in labor market momentum.

    Wage growth also moderated, with the labour cost index rising 2.9% annually, down from 3.3% in the previous quarter.

    PBoC unleashes broad-based monetary easing including rate and RRR cuts

    China’s central bank has announced a sweeping set of monetary policy measures to support its economy, starting with a 10bps cut in the seven-day reverse repo rate to 1.40%, effective May 8. In a more aggressive move, the PBoC will also slash the reserve requirement ratio by 50bps, releasing approximately CNY 1T into the banking system.

    The new package is structured into three categories: quantitative, price-based, and structural tools. The quantitative arm focuses on long-term liquidity via the RRR cut. The price-based measures involve lowering benchmark and structural policy rates. The structural component aims to channel credit into strategic areas such as technological innovation, consumption, and inclusive finance.

    EUR/USD Daily Outlook

    Daily Pivots: (S1) 1.1306; (P) 1.1344; (R1) 1.1407; More…

    Intraday bias in EUR/USD remains neutral for the moment as range trading continues above 1.1265. On the downside, below 1.1265 will resume the corrective fall from 1.1572 short term top. But downside should be contained by 38.2% retracement of 1.0176 to 1.1572 at 1.1039. On the upside, break of 1.1424 will suggest that the correction has completed and bring retest of 1.1572 high.

    In the bigger picture, rise from 0.9534 long term bottom could be correcting the multi-decade downtrend or the start of a long term up trend. In either case, further rise should be seen to 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916. This will now remain the favored case as long as 55 W EMA (now at 1.0808) holds.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    22:45 NZD Employment Change Q1 0.10% 0.10% -0.10% -0.20%
    22:45 NZD Unemployment Rate Q1 5.10% 5.30% 5.10%
    22:45 NZD Labour Cost Index Q/Q Q1 0.40% 0.50% 0.60%
    00:30 JPY Services PMI Apr F 52.4 52.2 50
    06:00 EUR Germany Factory Orders M/M Mar 1.10% 0.00%
    07:00 CHF Foreign Currency Reserves (CHF) Apr 726B
    08:30 GBP Construction PMI Apr 46 46.4
    09:00 EUR Eurozone Retail Sales M/M Mar -0.10% 0.30%
    14:30 USD Crude Oil Inventories -1.7M -2.7M
    18:00 USD Fed Interest Rate Decision 4.50% 4.50%
    18:30 USD FOMC Press Conference

     



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

    Risk Sentiment Sours on US GDP Contraction, Recession Fears Mount


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    12 out of 20 industrial sectors posting declines.

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

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

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

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

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

    Swiss KOF falls to 97.1, outlook considerably subdued

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

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

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

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

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

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

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

    NZ ANZ business confidence falls to 49.3, inflation expectations steady

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    EUR/USD Mid-Day Outlook

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

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

    In the bigger picture, rise from 0.9534 long term bottom could be correcting the multi-decade downtrend or the start of a long term up trend. In either case, further rise should be seen to 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916. This will now remain the favored case as long as 55 W EMA (now at 1.0792) holds.

    Economic Indicators Update

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

     



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

    Markets Ignores Trade News Ahead of Data Barrage; Aussie Outperforms


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

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

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

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

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

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

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

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

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

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

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

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

    NZ ANZ business confidence falls to 49.3, inflation expectations steady

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    GBP/JPY Daily Outlook

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

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

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

    Economic Indicators Update

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

     



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  • Fragile Calm Returns to Markets as Focus Shifts to Fed Remarks

    Fragile Calm Returns to Markets as Focus Shifts to Fed Remarks


    Global markets saw a modest pause in volatility today as risk sentiment stabilized following yesterday’s US selloff. US futures are pointing to a mild recovery, helping to calm nerves in early trading. Meanwhile, US 10-year Treasury yield dipped slightly but remains elevated around 4.4%, reflecting persistent investor caution. Gold also retreated marginally after coming within striking distance of the 3500 mark earlier in the session, as the appetite for safe havens eased slightly.

    Despite today’s calm, market sentiment remains on a knife edge. The political backdrop in the US continues to cast a long shadow over financial markets, with fears about Fed’s independence following recent attacks by US President Donald Trump. Any further comments from US officials questioning Fed’s autonomy could quickly reignite volatility. For now, the market is watching closely for signals from a lineup of Fed speakers scheduled for the US session, who are expected to reinforce the central bank’s institutional independence and data-driven approach.

    On the trade front, optimism remains scarce. The ongoing 90-day truce on US reciprocal tariffs has so far yielded little tangible progress, with talks reportedly stalling even among close allies like Japan. Uncertainty over what happens when the truce expires continues to weigh on global confidence, limiting the potential for any sustained rebound in risk assets.

    In the currency markets, Loonie is underperforming for the week so far, followed by Dollar and Aussie. Yen leads on the stronger side, followed by Kiwi and Euro. Sterling and the Swiss Franc are positioning themselves in the middle of the pack.

    Looking ahead, attention will quickly shift to tomorrow’s global flash PMI releases, which will provide a crucial read on business activity, prices and sentiment across major economies. These surveys will be particularly important in gauging the fallout from recent tariff shocks and in setting the tone for monetary policy discussions in the weeks ahead.

    Technically, CAD/JPY’s fall from 111.55 is now trying to resume through 101.36 support. The key level to watch is 61.8% projection of 110.45 to 101.36 from 105.85 at 100.23. There is prospect of a bounce from there to complete the five wave sequence from 111.55. However, firm break there should bring downside acceleration to 100% projection at 96.76 next.

    In Europe, at the time of writing, FTSE is up 0.27%. DAX is down -0.46%. CAC is down -0.31%. UK 10-year yield is up 0.012 at 4.582. Germany 10-year yield is down -0.014 at 2.459. Earlier in Asia, Nikkei fell -0.17%. Hong Kong HSI rose 0.78%. China Shanghai SSE rose 0.25%. Singapore Strait Times rose 0.96%. Japan 10-year JGB yield rose 0.022 to 1.311.

    ECB Survey: Inflation expectations tick higher, growth outlook softens

    ECB’s latest Survey of Professional Forecasters for Q2 showed a modest upward revision to inflation expectations, signaling persistent price pressures across the Eurozone.

    Headline HICP inflation is now expected to average 2.2% in 2025, before easing to 2.0% in both 2026 and 2027. These figures reflect a 0.1% upward revision for 2025 and 2026. Figures for 2027 was left unchanged.

    Core inflation, which excludes energy and food, was also revised slightly higher across all horizons, now projected at 2.3% (prior 2.2%) in 2025 and 2.1% (prior 2.0%) for both 2026 and 2027.

    Long-term expectations for headline inflation remain anchored at 2.0%, with core inflation expectations edging up from 1.9% to 2.0%.

    On the growth front, the outlook was revised slightly lower for the near term. Real GDP is expected to expand by 0.9% in 2025 and 1.2% in 2026—both down -0.1% from the prior survey—before picking up to 1.4% in 2027. Longer-term growth expectations remain unchanged at 1.3%.

    ECB’s Kazimir sees rate near neutral, emphasize flexibility and agility

    Slovak ECB Governing Council member Peter Kazimir said in a blog post today that Eurozone inflation is approaching the 2% target and expressed confidence that it will be reached “within the next few months.”

    Following the recent rate cut, Kazimir suggested that ECB’s deposit rate at 2.25% is no longer restrictive and could now be considered close to neutral.

    Meanwhile, Kazimir cautioned that the economic backdrop remains highly volatile, with uncertainty continuing to dominate the outlook.

    “We are operating in a fast-shifting environment,” he said, pointing to escalating global trade tensions linked to US tariff policies as a key source of instability. He warned that this unpredictability “introduced significant ambiguity into the system, eroding confidence.”

    Looking ahead to the June meeting, Kazimir emphasized that any decision will depend on incoming data, revised economic forecasts, and a comprehensive risk assessment. His comments reinforce the central bank’s commitment to “flexibility and agility.”

    BoE’s Greene: US tariffs more of a disinflationary risk for the UK

    BoE Monetary Policy Committee member Megan Greene stated today that the US tariffs pose “more of a disinflationary risk than an inflationary risk” for the UK.

    However, she emphasized that domestic factors also remain a concern, particularly the UK’s limited supply capacity, which continues to drive underlying inflationary pressures.

    Greene highlighted that this supply-side constraint is a key reason behind her cautious stance on interest rate cuts.

    Addressing questions on central bank independence amid political scrutiny of the Fed, Greene emphasized the importance of maintaining institutional credibility.

    “Credibility is the currency of central banks,” she said, adding that independence is a critical component of that credibility.

    New Zealand posts surprise NZD 970m trade surplus as exports surge 19%

    New Zealand recorded stronger-than-expected trade surplus of NZD 970m in March, far exceeding forecasts of NZD 80m. The surprise was driven by a robust 19% yoy increase in goods exports, which rose by NZD 1.2B to NZD 7.6B. Imports also grew, up 12% yoy to NZD 6.6B.

    Export performance was particularly strong across key trading partners. Shipments to China rose by NZD 371m (23% yoy), while exports to the US and the EU grew by 22% yoy and 51% yoy respectively. Exports to Japan also increased 11% yoy, although shipments to Australia dipped slightly, down -0.47% yoy.

    On the import side, the largest increases came from the US, with a 48% yoy jump worth NZD 243m. This was followed by China and the EU, which posted 14% yoy and 19% yoy gains respectively. Imports from South Korea bucked the trend, falling -12% yoy.

    EUR/USD Mid-Day Outlook

    Daily Pivots: (S1) 1.1414; (P) 1.1494; (R1) 1.1592; More…

    Further rally is expected in EUR/USD as long as 1.1357 support holds. Current rise from 1.0176 should target 161.8% projection of 1.0358 to 1.0953 from 1.0731 at 1.1694 next. Nevertheless, considering bearish divergence condition in 4H MACD, break of 1.1357 should indicate short term topping. Intraday bias will be turned back 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 55 W EMA (now at 1.0776) holds.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    22:45 NZD Trade Balance (NZD) Mar 970M 80M 510M 392M
    12:30 CAD Industrial Product Price M/M Mar 0.50% 0.30% 0.40%
    12:30 CAD Raw Material Price Index M/M Mar -1.00% 0.00% 0.30%
    14:00 EUR Eurozone Consumer Confidence Apr P -15 -15

     



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  • Dollar Rout Deepens; Gold Charges Toward 3500, or Even 4000?

    Dollar Rout Deepens; Gold Charges Toward 3500, or Even 4000?


    The broad selloff in US assets resumed overnight as market confidence took another blow from escalating political pressure on Fed. Major US stock indexes ended the session deep in the red, while 10-year Treasury yields surged back above 4.4%. The Dollar Index also plunged to a fresh three-year low, continuing its dramatic collapse.

    The key catalyst: another public attack by US President Donald Trump, who took to Truth Social to call Fed Chair Jerome Powell a “major loser” and demanded that interest rates be cut “NOW” to avoid a economic slowdown. Trump’s renewed rhetoric has intensified concerns about Fed’s independence at a time of high uncertainty due to his own tariff policies.

    The central bank has so far resisted political pressure, and more Fed officials are set to speak today. Markets expect them to defend the institution’s autonomy and reaffirm their data-dependent approach. Given the current policy fog, particularly surrounding Trump’s shifting trade stance, officials are likely to emphasize the need for further clarity before making any policy adjustments.

    Meanwhile, the 90-day truce on Trump’s “reciprocal tariffs” continues with little meaningful progress in negotiations. Even talks with Japan, one of America’s closest allies, remain stalled. Japanese Prime Minister Shigeru Ishiba stated on Monday that substance matters more than speed in any trade agreement. Additionally, Ishiba vowing not to concede on core issues such as car safety standards and agricultural access. Finance Minister Katsunobu Kato is expected to travel to Washington later this week for discussions with US Treasury Secretary Scott Bessent, with currency issues on the agenda.

    Tensions with China continue to escalate. The Chinese Ministry of Commerce issued a sharp warning that Beijing will retaliate against any countries that cooperate with the US in ways that undermine China’s interests. China’s message reinforces the view that global trade friction is far from resolved, despite temporary pauses.

    Against this backdrop, Gold continues to surge as investors flee to safety. The precious metal’s record-breaking rally shows no signs of slowing, with momentum firmly in upside acceleration.

    Technically, further rise is expected as long as 3283.69 support holds. Next target is 100% projection of 1810.26 to 2789.92 from 2584.24 at 3563.90. Firm break there will pave the way to 138.2% projection at 3938.13, which is close to 4000 psychological level.

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

    In Asia, at the time of writing, Nikkei is down -0.07%. Hong Kong HSI is up 0.20%. China Shanghai SSE is up 0.38%. Singapore Strait Times is up 0.90%. Japan 10-year JGB yield is up 0.023 at 1.312. Overnight, DOW fell -2.48%. S&P 500 fell -2.36%. NASDAQ fell -2.55%. 10-year yield rose 0.072 to 4.405.

    Dollar Index crashes to 3-year low; 95 support holds long-term fate

    Dollar Index broke through an important support overnight as recent decline accelerated, and hit the lowest level in three years. The selloff reflects a deepening flight out of US assets, as confidence continues to erode. A major driver of the decline has been US President Donald Trump’s ongoing public attacks on Fed, which have increasingly undermined perceptions of central bank independence and rattled investor trust in US policy credibility.

    Technically, the break of 99.57 (2023 low) confirms resumption of the downtrend from 114.77 (2022 high). Near term outlook will now stay bearish as long as 100.27 resistance holds. Next target is 100% projection of 114.77 to 99.57 from 110.17 at 94.97.

    This support zone around 95 psychological level is especially significant, as it aligns with the long term rising channel support that dates back to 2011.

    Decisive break of 95 ahead could firstly trigger further medium term downside acceleration. More importantly, that could also mark the end of the broader uptrend that began from 2008 low at 70.69.

    Such a structural breakdown would open the door for sustained weakness with medium-term downside targets around the 89.20–90.00 range, with risk of entering a new secular downtrend in the years ahead.

    New Zealand posts surprise NZD 970m trade surplus as exports surge 19%

    New Zealand recorded stronger-than-expected trade surplus of NZD 970m in March, far exceeding forecasts of NZD 80m. The surprise was driven by a robust 19% yoy increase in goods exports, which rose by NZD 1.2B to NZD 7.6B. Imports also grew, up 12% yoy to NZD 6.6B.

    Export performance was particularly strong across key trading partners. Shipments to China rose by NZD 371m (23% yoy), while exports to the US and the EU grew by 22% yoy and 51% yoy respectively. Exports to Japan also increased 11% yoy, although shipments to Australia dipped slightly, down -0.47% yoy.

    On the import side, the largest increases came from the US, with a 48% yoy jump worth NZD 243m. This was followed by China and the EU, which posted 14% yoy and 19% yoy gains respectively. Imports from South Korea bucked the trend, falling -12% yoy.

    USD/JPY Daily Outlook

    Daily Pivots: (S1) 140.18; (P) 141.16; (R1) 141.85; More…

    Intraday bias in USD/JPY remains on the downside for the moment. Current fall from 158.86 is in progress for 139.57 support. Strong support could seen from 139.26 fibonacci level to bring rebound. On the upside, above 141.60 minor resistance will turn intraday bias neutral first. However, decisive break of 139.26 will carry larger bearish implications, and target 138.2% projection of 158.86 to 146.52 from 151.20 at 134.14.

    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
    22:45 NZD Trade Balance (NZD) Mar 970M 80M 510M 392M
    12:30 CAD Industrial Product Price M/M Mar 0.30% 0.40%
    12:30 CAD Raw Material Price Index M/M Mar 0.00% 0.30%
    14:00 EUR Eurozone Consumer Confidence Apr P -15 -15

     



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  • No Reaction to ECB Cut as Markets Drift in Pre-Holiday Lull

    No Reaction to ECB Cut as Markets Drift in Pre-Holiday Lull


    Trading in the forex markets remain calm, with little reaction to ECB’s widely anticipated 25bps rate cut. The move to lower its deposit rate to 2.25% was fully priced in. The central bank acknowledged that Eurozone growth prospects have deteriorated due to escalating global trade tensions, but this has long been embedded in market expectations. The absence of any forward guidance or new policy direction helped reinforce the market’s muted tone.

    Indeed, the primary focus for investors remains the intensifying US trade war and its ripple effects on global economic sentiment. As markets break for the Easter weekend, investors are bracing for trade policy to return to center stage next week. The lack of clarity surrounding tariff policy and broader US trade strategy is increasingly weighing on corporate confidence. U.S. firms, in particular, are becoming more hesitant to invest or expand amid the shifting policy environment.

    A Reuters poll conducted between April 14–17 illustrates the rising unease. The probability of a US recession within the next 12 months surged to 45%, up sharply from 25% in March and marking the highest reading since December 2023. All 45 economists who responded to a related question said that tariffs have negatively affected business sentiment, with nearly half describing the impact as “very negative.”

    At the same time, economists are scaling up their inflation forecasts. Expectations for headline CPI, core CPI, PCE, and core PCE have all been revised higher, with all measures now projected to remain above Fed’s 2% target through at least 2027. A majority of economists—62 out of 101 surveyed—expect the Fed to hold its benchmark interest rate steady at 4.25%-4.50% until at least July.

    In terms of currency performance, Kiwi continues to lead the pack this week while Aussie and Sterling follow. At the other end, Swiss Franc is the weakest, trailed by the Euro and Loonie. Dollar and Yen are trading in the middle of the pack.

    In Europe at the time of writing, FTSE is down -0.38%. DAX is down -0.44%. CAC is down -0.74%. UK 10-year yield is down -0.03 at 4.579. Germany 10-year yield is down -0.03 at 2.482. Earlier in Asia, Nikkei rose 1.35%. Hong Kong HSI rose 1.61%. China Shanghai SSE rose 0.13%. Singapore Strait Times rose 1.58%. Japan 10-year JGB yield rose 0.015 to 1.312.

    US initial jobless claims fall to 215k, vs exp 224k

    US initial jobless claims fell -9k to 215k in the week ending April 12, below expectation of 224k. Four-week moving average of initial claims fell -2.5k to 221k.

    Continuing claims rose 41k to 1885k in the week ending April 5. Four-week moving average of continuing claims rose 1k to 1867k.

    ECB cuts rates to 2.25%, drops “restrictive” language amid mounting uncertainty

    ECB cut its deposit rate by 25 bps points to 2.25% as widely expected, but the more notable shift came in the tone of its accompanying statement. ECB completely removed the reference to its policy stance being “restrictive,” a phrase that had previously signaled a bias toward further monetary easing.

    This change suggests policymakers believe the easing campaign has brought rates closer to neutral territory. The central bank emphasized that it will maintain a data-dependent, meeting-by-meeting approach and is “not pre-committing to a particular rate path” given the exceptional levels of uncertainty.

    ECB noted that disinflation process remains “well on track,” with both headline and core inflation continuing to decline in line with forecasts. Importantly, services inflation—previously a key sticking point—has also “eased markedly” in recent months.

    However, the central bank also highlighted growing downside risks to the economic outlook. ECB acknowledged that rising global trade tensions have begun to weigh on business and household confidence. The resulting volatility in financial markets is already tightening financing conditions and could further dampen activity in the Eurozone.

    BoJ’s Nakagawa and Ueda highlight US tariff risk, urge vigilance

    BoJ board member Junko Nakagawa cited US trade policy as one of the most significant risks to Japan’s economic outlook. In a speech, she noted that higher US tariffs could directly damage Japanese corporate activity, pressuring exports, production, sales, capital expenditure, and profitability.

    Nakagawa also noted the potential for broader spillover effects, including weakened business and consumer sentiment and volatility in commodity prices and financial markets.

    Echoing these concerns, BoJ Governor Kazuo Ueda told the parliament that uncertainty surrounding US policy, especially tariffs, has “heightened sharply” in recent weeks. Ueda stressed that the central bank will assess trade-related developments at each policy meeting without any pre-conception.

    While reaffirming BoJ’s intention to raise interest rates if economic and price conditions align with projections, Ueda emphasized, “we must be vigilant to the fact uncertainty surrounding each country’s trade policy is heightening.”

    Japan’s exports grow 3.9% yoy in March, imports up 2.0% yoy

    Japan’s exports rose 3.9% yoy in March to JPY 9.85T, below the expected 4.5% yoy gain. Shipments to the US rose 3.1% yoy overall, boosted by strong gains in electronic parts (+35.8%), pharmaceuticals (+29.7%), and autos (+4.1%). However, this was offset by weakness in China, where exports fell -4.8% yoy.

    On the import side, inbound shipments rose 2.0% yoy to JPY 9.30T , also falling short of the forecast 3.1% yoy. That resulted in trade surplus of JPY 544B.

    In seasonally adjusted term, exports dropped -3.8% mom to JPY 9.31 trillion, while imports ticked up 0.6% mom, bringing the adjusted trade balance into a JPY -234B deficit.

    Australia jobs rise 32.2k in March, misses expectations

    Australia added 32.2k jobs in March, falling short of expectations for a 41.2k increase. The composition of gains was relatively balanced with 15k full-time and 17.2k part-time positions added.

    Unemployment rate ticked up slightly to 4.1% from 4.0%, coming in better than the expected 4.2%. The modest rise in the jobless rate was largely due to a higher participation rate, which increased from 66.7 to 66.8%.

    A potential sign of underlying weakness came from a -0.3% mom decline in total monthly hours worked, the second consecutive monthly drop. But that could be attributed partly to weather disruptions linked to ex-Tropical Cyclone Alfred.

    NZ CPI surprises to the upside at 2.5% in Q1, domestic pressures driving

    New Zealand’s consumer prices rose more than expected in the first quarter, with CPI climbing 0.9% qoq and accelerating from 2.2% yoy to 2.5% yoy, above forecasts of 0.7% qoq and 2.3% yoy.

    Nevertheless, this still marks the third consecutive quarter that annual inflation has stayed within RBNZ’s 1–3% target band.

    Tradeable inflation, reflecting imported price dynamics, rose 0.8% qoq and just 0.3% yoy, indicating limited external pricing pressure. In contrast, non-tradeable inflation, a proxy for domestic conditions, surged 1.1% qoq and 4.0% yoy.

    The strength in non-tradeables points to robust local demand and ongoing cost pressures within the domestic economy.

    EUR/USD Mid-Day Outlook

    Daily Pivots: (S1) 1.1314; (P) 1.1363; (R1) 1.1449; More…

    EUR/USD is still bounded in consolidation below 1.1472 and intraday bias remains neutral. Deeper retreat cannot be ruled out. But downside should be contained by 1.1145 resistance turned support to bring another rally. On the upside, break of 1.1472 will target 161.8% projection of 1.0358 to 1.0953 from 1.0731 at 1.1694.

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

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    22:45 NZD CPI Q/Q Q1 0.90% 0.70% 0.50%
    22:45 NZD CPI Y/Y Q1 2.50% 2.30% 2.20%
    23:50 JPY Trade Balance (JPY) Mar -0.23T -0.25T 0.18T 0.19T
    01:30 AUD Employment Change Mar 32.2K 41.2K -52.8K -57.5K
    01:30 AUD Unemployment Rate Mar 4.10% 4.20% 4.10% 4.00%
    06:00 CHF Trade Balance (CHF) Mar 6.35B 5.22B 4.80B 4.74B
    06:00 EUR Germany PPI M/M Mar -0.70% -0.10% -0.20%
    06:00 EUR Germany PPI Y/Y Mar -0.20% 0.40% 0.70%
    12:15 EUR ECB Main Refinancing Rate 2.40% 2.40% 2.65%
    12:15 EUR ECB Deposit Rate 2.25% 2.25% 2.50%
    12:30 USD Initial Jobless Claims (Apr 11) 215K 224K 223K
    12:30 USD Building Permits Mar 1.48M 1.45M 1.46M
    12:30 USD Housing Starts Mar 1.32M 1.42M 1.50M
    12:30 USD Philadelphia Fed Manufacturing Apr -26.4 6.8 12.5
    12:45 EUR ECB Press Conference
    14:30 USD Natural Gas Storage 24B 57B

     



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  • Muted Markets Await ECB Cut, While US-Japan Trade Talks Show Tentative Progress

    Muted Markets Await ECB Cut, While US-Japan Trade Talks Show Tentative Progress


    The forex markets held steady in tight ranges during Asian session, with investors treading cautiously ahead of the Easter long weekend. Market mood has been mildly lifted by signs of progress in US-Japan trade negotiations. In a surprise move, US President Donald Trump joined preliminary talks and later declared “Big Progress!” via social media, injecting some optimism into an otherwise quiet session.

    While Trump’s gesture lifted sentiment briefly, Japanese Economy Minister Ryosei Akazawa remained measured, describing the meeting as a first step with a second round planned for later this month. He also confirmed that exchange rates were not part of the discussions, indicating Tokyo’s desire to keep talks focused on trade and investment.

    Markets will now turn their attention to the ECB’s policy decision later today, where a 25bps cut in deposit rate to 2.25% is widely anticipated. The focus will be on ECB’s guidance and choice of language. In its last meeting, the Governing Council avoided declaring whether policy was still restrictive, and instead said it had become “meaningfully less restrictive”. This strategy is expected to continue, particularly as internal divisions within the ECB remain over forward guidance amid elevated uncertainty.

    While some may hope for clearer signals on the future rate path, ECB is unlikely to oblige. According to the minutes of the previous meeting, several members stressed the need to avoid committing to even any directional bias on future moves. That caution is likely to persist, especially as external risks, including US trade actions and global demand uncertainty, still loom large. As a result, markets should expect a rate cut accompanied by continued strategic ambiguity.

    Currency performance this week so far see Kiwi leads after stronger-than-expected CPI figures. Sterling follows as second despite mixed UK employment and inflation miss. Aussie is also holding firm even after weak job data. On the other side, Loonie is the weakest, with the BoC hold overnight failing to inspire confidence. Swiss Franc and Dollar are also underperforming, while Euro and Yen are trading in the middle.

    Technically, it looks like EUR/USD’s consolidation from 1.1472 is going to extend with another downleg. A dovish ECB outlook today could fuel some selloff. But downside should be contained by 1.1145 resistance turned support to bring rebound. Break of 1.1472 resistance is expected, to resume the larger up trend, after current consolidation completes.

    In Asia, at the time of writing, Nikkei is up 1.01%. Hong Kong HSI is up 1.38%. China Shanghai SSE is down -0.03%. Singapore Strait Times is up 0.93%. Japan 10-year JGB yield is up 0.02 at 1.318. Overnight, DOW fell -1.73%. S&P 500 fell -2.24%. NASDAQ fell -3.07%. 10-year yield fell -0.044 to 4.279.

    Fed’s Powell warns of dual-mandate tensions ahead

    In a speech overnight, Fed Chair Jerome Powell pointed to substantial changes underway, by US administration, in trade, immigration, fiscal policy, and regulation—all of which are still “evolving” and difficult to assess in terms of economic impact.

    In particular, Powell acknowledged that the scale of tariff increases already announced is “significantly larger than anticipated,” and warned that the resulting economic effects will likely include “higher inflation and slower growth.”

    Powell noted a clear rise in near-term inflation expectations, with both market-based breakevens and survey indicators moving up in response to the new tariff regime. While long-term expectations remain largely anchored, he cautioned that the inflationary impulse from tariffs could prove “more persistent” than initially thought. In the near term, tariffs are highly likely to generate “at least a temporary rise in inflation” .

    Importantly, Powell acknowledged that Fed could face a scenario where its “dual-mandate goals are in tension.” In such a case, policymakers would need to carefully weigh how far the economy is from each objective, and over what time horizons those gaps might close.

    BoJ’s Nakagawa and Ueda highlight US tariff risk, urge vigilance

    BoJ board member Junko Nakagawa cited US trade policy as one of the most significant risks to Japan’s economic outlook. In a speech, she noted that higher US tariffs could directly damage Japanese corporate activity, pressuring exports, production, sales, capital expenditure, and profitability.

    Nakagawa also noted the potential for broader spillover effects, including weakened business and consumer sentiment and volatility in commodity prices and financial markets.

    Echoing these concerns, BoJ Governor Kazuo Ueda told the parliament that uncertainty surrounding US policy, especially tariffs, has “heightened sharply” in recent weeks. Ueda stressed that the central bank will assess trade-related developments at each policy meeting without any pre-conception.

    While reaffirming BoJ’s intention to raise interest rates if economic and price conditions align with projections, Ueda emphasized, “we must be vigilant to the fact uncertainty surrounding each country’s trade policy is heightening.”

    Japan’s exports grow 3.9% yoy in March, imports up 2.0% yoy

    Japan’s exports rose 3.9% yoy in March to JPY 9.85T, below the expected 4.5% yoy gain. Shipments to the US rose 3.1% yoy overall, boosted by strong gains in electronic parts (+35.8%), pharmaceuticals (+29.7%), and autos (+4.1%). However, this was offset by weakness in China, where exports fell -4.8% yoy.

    On the import side, inbound shipments rose 2.0% yoy to JPY 9.30T , also falling short of the forecast 3.1% yoy. That resulted in trade surplus of JPY 544B.

    In seasonally adjusted term, exports dropped -3.8% mom to JPY 9.31 trillion, while imports ticked up 0.6% mom, bringing the adjusted trade balance into a JPY -234B deficit.

    Australia jobs rise 32.2k in March, misses expectations

    Australia added 32.2k jobs in March, falling short of expectations for a 41.2k increase. The composition of gains was relatively balanced with 15k full-time and 17.2k part-time positions added.

    Unemployment rate ticked up slightly to 4.1% from 4.0%, coming in better than the expected 4.2%. The modest rise in the jobless rate was largely due to a higher participation rate, which increased from 66.7 to 66.8%.

    A potential sign of underlying weakness came from a -0.3% mom decline in total monthly hours worked, the second consecutive monthly drop. But that could be attributed partly to weather disruptions linked to ex-Tropical Cyclone Alfred.

    NZ CPI surprises to the upside at 2.5% in Q1, domestic pressures driving

    New Zealand’s consumer prices rose more than expected in the first quarter, with CPI climbing 0.9% qoq and accelerating from 2.2% yoy to 2.5% yoy, above forecasts of 0.7% qoq and 2.3% yoy.

    Nevertheless, this still marks the third consecutive quarter that annual inflation has stayed within RBNZ’s 1–3% target band.

    Tradeable inflation, reflecting imported price dynamics, rose 0.8% qoq and just 0.3% yoy, indicating limited external pricing pressure. In contrast, non-tradeable inflation, a proxy for domestic conditions, surged 1.1% qoq and 4.0% yoy.

    The strength in non-tradeables points to robust local demand and ongoing cost pressures within the domestic economy.

    Looking ahead

    ECB rate decision is the main focus in European session. Later in the day, US will release jobless claims, Philly Fed survey, housing starts and building permits.

    USD/CAD Daily Outlook

    Daily Pivots: (S1) 1.3817; (P) 1.3896; (R1) 1.3936; More…

    USD/CAD is still bounded in consolidations above 1.3827 and intraday bias remains neutral. While stronger recovery cannot be ruled out, outlook will stay bearish as long as 1.4150 support turned resistance holds. On the downside, break of 1.3827 will resume the fall from 1.4791 to 100% projection of 1.4791 to 1.4150 from 1.4414 at 1.3773.

    In the bigger picture, the break of 1.3976 resistance turned support (2022 high) and 55 W EMA (now at 1.3983) indicates that a medium term top is already in place at 1.4791. Fall from there would either be a correction to rise from 1.2005, or trend reversal. In either case, firm break of 38.2% retracement of 1.2005 (2021 low) to 1.4791 at 1.3727 will pave the way back to 61.8% retracement at 1.3069.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    22:45 NZD CPI Q/Q Q1 0.90% 0.70% 0.50%
    22:45 NZD CPI Y/Y Q1 2.50% 2.30% 2.20%
    23:50 JPY Trade Balance (JPY) Mar -0.23T -0.25T 0.18T 0.19T
    01:30 AUD Employment Change Mar 32.2K 41.2K -52.8K -57.5K
    01:30 AUD Unemployment Rate Mar 4.10% 4.20% 4.10% 4.00%
    06:00 CHF Trade Balance (CHF) Mar 5.22B 4.80B
    06:00 EUR Germany PPI M/M Mar -0.10% -0.20%
    06:00 EUR Germany PPI Y/Y Mar 0.40% 0.70%
    12:15 EUR ECB Main Refinancing Rate 2.40% 2.65%
    12:15 EUR ECB Deposit Rate 2.25% 2.50%
    12:30 USD Building Permits Mar 1.45M 1.46M
    12:30 USD Housing Starts Mar 1.42M 1.50M
    12:30 USD Initial Jobless Claims (Apr 11) 224K 223K
    12:30 USD Philadelphia Fed Manufacturing Apr 6.8 12.5
    12:45 EUR ECB Press Conference
    14:30 USD Natural Gas Storage 24B 57B

     



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  • New Zealand Food Inflation Highest Since Early 2024

    New Zealand Food Inflation Highest Since Early 2024


    New Zealand food inflation accelerated to a 14-month high in March, Stats NZ said on Tuesday.

    Food prices grew 3.5 percent on a yearly basis in March, faster than the 2.4 percent increase in February. The rate was the strongest since January 2024.

    Prices for the grocery food group and the meat, poultry, and fish group contributed the most to the annual inflation. However, partly offsetting the increase in food prices was lower prices for the fruit and vegetables group.

    On a monthly basis, food prices moved up 0.5 percent, in contrast to the 0.5 percent fall in February.

    For comments and feedback contact: editorial@rttnews.com

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





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

    Global Markets Rebound in Quiet Trade, Aussie Awaits RBA Insight


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

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

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

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

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

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

    OPEC trims 2025 oil demand outlook, WTI recovers mildly

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    USD/CHF Mid-Day Outlook

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

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

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

    Economic Indicators Update

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

     



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  • Markets Catch Breath After Tariff Chaos; Focus Turns to BoC, ECB and Economic Data

    Markets Catch Breath After Tariff Chaos; Focus Turns to BoC, ECB and Economic Data


    Financial markets opened the week on a relatively steady footing in Asia, offering investors a brief respite after last week’s extreme volatility driven by US tariff chaos. Major stock indexes are trading higher, though gains appear more a product of technical consolidation than renewed optimism.

    In currency markets, most major pairs and crosses are contained within Friday’s range. The exception is some Kiwi pairs, which have moved with a bit more momentum. For now, it appears that volatility has pulled back from the extremes seen over the past two weeks, giving investors a brief window of breathing space.

    Nevertheless, confusion around U.S. tariff policy continues to muddy the waters. Reports emerged over the weekend that key Chinese exports such as smartphones and computers would not be subject to the full 145% tariff hike. Instead, they would face a 20% rate. However, U.S. President Donald Trump quickly reignited uncertainty by stating he would announce a separate tariff on semiconductors next week, alongside a new national security probe targeting the chip sector. This piecemeal, ad hoc rollout is making it difficult for markets to price in risk or clarity.

    On the diplomatic front, Chinese President Xi Jinping’s visit to Vietnam signals a strategic push to shore up regional supply chains as China faces growing trade isolation from the US. Xi’s trip, which also includes stops in Cambodia and Malaysia, highlights Beijing’s urgency in hedging against further decoupling with the US. Meanwhile, Vietnam is caught in the middle — a beneficiary of supply chain shifts, but also under scrutiny from Washington, facing a potential 46% US tariff if it fails to enforce tighter rules of origin.

    Looking ahead, the spotlight will shift BoC and ECB rate decisions, both facing the delicate balancing act of responding to weakening growth and potential inflationary shocks from tariffs. Meanwhile, a heavy slate of data—including US retail sales, Germany’s ZEW survey, UK employment and CPI, New Zealand’s inflation report, and China’s Q1 GDP—will provide further clues on the economic fallout of the trade conflict.

    Technically, EUR/CAD’s late break of 1.5856 resistance last week indicates medium term up trend resumption. Near term outlook will now stay bullish as long as 1.5402 support holds. Next target is 61.8% projection of 1.4740 to 1.5856 from 1.5402 at 1.6092. That would be close to 1.6151 key long term resistance (2018 high).

    In Asia, at the time of writing, Nikkei is up 1.91%. Hong Kong HSI is up 2.43%. China Shanghai SSE is up 0.70%. Singapore Strait Times is up 1.54%. Japan 10-year JGB yield is down -0.012 at 1.334.

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

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

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

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

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

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

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

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

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

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

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

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

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

    Fed’s Kashkari: Markets searching for “new normal” amid trade policy uncertainty

    Minneapolis Fed President Neel Kashkari acknowledged over the weekend that global investors are grappling with deep uncertainty surrounding the direction of US trade and fiscal policy. Speaking on CBS’s Face the Nation, Kashkari said the bond market’s recent volatility reflects an effort to “determine what is the new normal in America,” particularly regarding long-term Treasury yields.

    He emphasized that Fed has “zero ability” to influence that end point, which he said is shaped entirely by trade negotiations and fiscal decisions coming out of Washington.

    Kashkari underlined that tariffs are inherently inflationary, but the key question is whether their effect on prices will be temporary or more sustained. “Tariffs push up prices and push down economic activity,” he noted, describing it as a difficult scenario in which Fed’s tools are limited. The central bank’s role, he added, is “to make sure that it’s only a one time adjustment in prices and nothing longer term than that.”

    He also made clear that monetary policy alone cannot undo the economic drag from a trade war. As the market digests new rounds of tariffs, retaliation, and policy reversals, Kashkari said, “we’re going to have to watch and see.”

    “We can just keep inflation from getting out of hand,” he added.

    Tariff Shockwaves Test BoC and ECB Resolve

    Markets head into the holiday-shortened week with anticipation as a string of key central bank decisions including BoC and ECB, as well as critical economic data are featured.

    BoC meeting is shaping up to be one of the most uncertain in the past two years. Markets are split, with investors pricing in roughly a 60% chance that BoC will pause its easing cycle this week. After cutting rates again in March, the central bank emphasized that it would “proceed carefully with any further changes” due the growing complexity in the economic outlook.

    The key dilemma for BoC is whether they prioritize tackling inflation risks from tariff pass-through or opt for a preemptive cut to support growth. If the BoC tilts toward the latter, it could deliver a pre-emptive 25 bps rate cut to continue its path toward a less restrictive 2.50% rate.

    The decisive factor could be the March CPI data, released a day ahead of the policy announcement. If the report confirms that February’s surprise spike in both headline and core inflation was indeed transitory, BoC would have sufficient cover to proceed with another rate cut. Otherwise, a hold is the more cautious move.

    ECB is also in the spotlight. According to a Reuters poll, 61 of 71 economists expect a 25bps cut to the deposit rate, bringing it down to 2.25%. A further cut to 2.00% is widely anticipated for June. While ECB policymakers have largely avoided clear forward guidance amid the rapidly shifting trade environment, the general tone suggests a growing focus on downside risks to growth rather than inflation persistence.

    In Australia, minutes of RBA’s April meeting are expected to reiterate the central bank’s cautious tone and reluctance to commit to further easing just yet. However, labor market data later in the week could test RBA’s resolve. A weaker-than-expected jobs report would likely increase market bets that RBA will restart rate cuts in May. Ultimately though, Q1 CPI data due on April 30 remains the definitive piece of the policy puzzle.

    On the data front, U.S. retail sales will be a critical gauge of how much the tariff-induced uncertainty has dampened actual household spending. Meanwhile, Germany’s ZEW economic sentiment index should offer a timely look at how sharply European business confidence has been hit by the escalating trade war. Other key releases include UK employment figures and CPI data, New Zealand’s CPI, and China’s Q1 GDP.

    Here are some highlights for the week:

    • Monday: New Zealand BNZ services; China trade balance; Swiss PPI; Canada wholesale sales.
    • Tuesday: RBA minutes; UK employment; German ZEW economic sentiment; Eurozone industrial production; Canada CPI, manufacturing sales; US Empire state manufacturing, import prices.
    • Wednesday: Japan machine orders; China GDP, industrial production, retail sales, fixed asset investment; UK CPI; Eurozone CPI final; US retail sales, industrial production, NAHB housing index; BoC rate decision.
    • Thursday: New Zealand CPI; Australia employment; Japan trade balance; Swiss France balance; ECB rate decision; US jobless claims, Philly Fed survey, building permits and housing starts.
    • Friday: Japan CPI.

    USD/JPY Daily Outlook

    Daily Pivots: (S1) 142.16; (P) 143.44; (R1) 144.81; More…

    Intraday bias in USD/JPY remains on the downside for the moment. Current fall from 158.86 is in progress to 139.57 support. On the upside, above 144.18 minor resistance will turn intraday bias neutral first. But outlook will stay bearish as long as 151.20 resistance holds, in case of recovery.

    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 PSI Mar 49.1 49.1 49
    03:00 CNY Trade Balance (USD) Mar 102.6B 74.3B 170.5B
    04:30 JPY Industrial Production M/M Feb F 2.30% 2.50% 2.50%
    06:30 CHF Producer and Import Prices M/M Mar 0.20% 0.30%
    06:30 CHF Producer and Import Prices Y/Y Mar -0.10%
    12:30 CAD Wholesale Sales M/M Feb 0.40% 1.20%

     



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  • Dollar Selloff Extends Into Week’s End, Trade Talks With EU and JP Offset China Escalations

    Dollar Selloff Extends Into Week’s End, Trade Talks With EU and JP Offset China Escalations


    Financial markets showed signs of stabilization since European session, despite another round of retaliatory tariff hikes from China. While the latest move saw China raise levies on US goods to 125% from 84%, the response was widely anticipated and thus well absorbed by investors. Both President Donald Trump and President Xi Jinping have maintained uncompromising stances, so markets had largely priced in another step in the tit-for-tat trade war. The absence of any conciliatory tone keeps tensions high, but the predictability of the escalation appears to have dulled the market impact.

    Also, China’s latest move may have reached a symbolic peak. In a strongly worded statement, China’s finance ministry noted that at current tariff levels, “there is no longer a market for US goods imported into China,” implying that further retaliation may be economically futile. “If the U.S. government continues to increase tariffs on China, Beijing will ignore,” it added.

    Some of the bearish sentiment from the US-China standoff is being offset by more constructive developments on other trade fronts. Negotiations between the US and both the European Union and Japan appear to be gaining traction. EU trade commissioner Maroš Šefčovič is scheduled to visit Washington on April 14 to meet US officials and continue discussions on tariff matters. Meanwhile, Japan’s newly formed task force, led by Economy Minister Ryosei Akazawa, is preparing for key meetings on April 17 with US Treasury and trade representatives.

    Despite the stabilization in broader risk sentiment, Dollar continues to bleed, extending a week-long selloff and positioning itself as the worst performer among major currencies. Sterling is tracking as the second weakest despite a strong UK GDP report. Loonie follows closely behind, pressured by declining oil prices and general risk aversion.

    Swiss Franc stands out as the week’s clear winner, underpinned by its status as the undisputed safe-haven, while Kiwi and Euro are also among the strongest performers. Aussie and Yen are positioning in the middle.

    Eyes are now on the University of Michigan consumer sentiment report. Any significant surprises in that data could prompt a final reshuffling of currency rankings before markets settle for the weekend.

    In Europe, at the time of writing, FTSE is up 0.50%. DAX is down -1.26%. CAC is down -0.45%. UK 10-year yield is up 0.048 at 4.699. Germany 10-year yield is down -0.067 at 2.516. Earlier in Asia, Nikkei fell -2.96%. Hong Kong HSI rose 1.13%. China Shanghai SSE rose 0.45%. Singapore Strait Times fell -1.83%. Japan 10-year JGB yield fell -0.031 to 1.346.

    US PPI unexpectedly falls -0.3% mom in March

    US producer prices posted a surprise decline in March, with the headline PPI for final demand falling -0.4% mom, well below expectations of a 0.2% mom rise.

    The drop was driven largely by a -0.9% mom decline in final demand goods, while final demand services also slipped -0.2% mom.

    On an annual basis, PPI slowed to 2.7% year-on-year from 3.2%, also below forecasts.

    PPI excludes food, energy, and trade services, rose just 0.1% mom on the month, with the year-on-year rate at 3.4%.

    EU’s Dombrovskis: Existing tariffs enough to shave up to 1.4% off US GDP, hit EU by 0.2%

    EU Economy Commissioner Valdis Dombrovskis acknowledged the US decision to pause reciprocal tariffs above 10% for 90 days as a positive step that opens the door to negotiations. However, he cautioned that the existing 10% duties still in place on nearly all countries continue to weigh on the global economy. Additionally, the US has not lifted its 25% tariffs on steel, aluminum, cars, and car parts—measures that remain a significant source of transatlantic economic tension.

    Dombrovskis pointed to a model simulations indicating that the current US tariff structure could reduce US GDP by 0.8% to 1.4% through 2027. While the economic fallout for the EU is expected to be milder—around 0.2% of GDP—he warned that the damage could escalate dramatically if tariffs become entrenched or retaliatory actions intensify.

    Under such a worst-case scenario, Dombrovskis said US GDP could fall by as much as 3.3%, with the EU losing up to 0.6% and global GDP shrinking by 1.2%. The impact on global trade would be particularly severe, with an estimated contraction of 7.7% over the next three years.

    UK GDP rises 0.5% mom in Feb, broad-based growth

    The UK economy delivered a strong upside surprise in February, with GDP expanding by 0.5% mom, far exceeding market expectations of just 0.1% mom. All three major sectors contributed to the growth: services rose by 0.3% mom, production surged by 1.5% mom, and construction edged up 0.4% mom.

    On a three-month rolling basis, real GDP grew by 0.6% to February 2025 compared to the previous three months, driven largely by a 0.6% rise in services output and a 0.7% gain in production. Construction, however, was flat over the period.

    NZ BNZ manufacturing falls to 53.2, new orders signal trouble ahead

    New Zealand’s BusinessNZ Performance of Manufacturing Index slipped slightly from 54.1 to 53.2 in March, but remained firmly in expansion territory. Production climbed to 54.2, the highest level since December 2021. Employment also posted a robust 54.7, marking its strongest result since mid-2021. However, a decline in new orders, which dipped below the 50-neutral mark to 49.6, raises concerns about the durability of this rebound.

    BusinessNZ’s Catherine Beard acknowledged the resilience in activity and employment, but highlighted persistent challenges. Despite improving sentiment, nearly 58% of surveyed manufacturers cited negative conditions, pointing to weak demand, fewer new orders, and uncertainty across both domestic and export channels.

    BNZ Senior Economist Doug Steel noted that the PMI data supports the case for manufacturing GDP growth in early 2025. Still, he cautioned that risks to the outlook are clearly tilted to the downside, “given recent extreme volatility on global markets following rapidly evolving US-driven trade policy changes.”

    EUR/USD Mid-Day Outlook

    Daily Pivots: (S1) 1.1016; (P) 1.1129; (R1) 1.1315; More…

    EUR/USD’s rally is still in progress and intraday bias stays on the upside. Current rise form 1.0176 should target 161.8% projection of 1.0358 to 1.0953 from 1.0731 at 1.1694. On the downside, below 1.1245 minor support will turn intraday bias neutral and bring consolidations. But downside should be contained well above 1.0912 support to bring another rally.

    In the bigger picture, break of 1.1274 (2024 high) indicates resumption of whole up trend from 0.9534 (2022 low). Next target is 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916. Also, that will send EUR/USD through the multi-decade channel resistance will carries larger bullish implication. This will now be the favored case as long as 55 D EMA (now at 1.0745) holds.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    22:30 NZD Business NZ PMI Mar 53.2 53.9 54.1
    23:50 JPY Money Supply M2+CD Y/Y Mar 0.80% 1.20% 1.20%
    06:00 EUR Germany CPI M/M Mar F 0.30% 0.30% 0.30%
    06:00 EUR Germany CPI Y/Y Mar F 2.20% 2.20% 2.20%
    06:00 GBP GDP M/M Feb 0.50% 0.10% -0.10% 0%
    06:00 GBP Industrial Production M/M Feb 1.50% 0.10% -0.90% -0.50%
    06:00 GBP Industrial Production Y/Y Feb 0.10% -2.30% -1.50% -0.50%
    06:00 GBP Manufacturing Production M/M Feb 2.20% 0.20% -1.10% -1%
    06:00 GBP Manufacturing Production Y/Y Feb 0.30% -2.40% -1.50% -0.90%
    06:00 GBP Index of Services 3M/3M Feb 0.60% 0.50% 0.40%
    06:00 GBP Goods Trade Balance (GBP) Feb -20.8B -17.9B -17.8B
    12:30 USD PPI M/M Mar -0.40% 0.20% 0.00% 0.10%
    12:30 USD PPI Y/Y Mar 2.70% 3.30% 3.20%
    12:30 USD PPI Core M/M Mar -0.10% 0.30% -0.10%
    12:30 USD PPI Core Y/Y Mar 3.30% 3.60% 3.40% 3.50%
    14:00 USD UoM Consumer Sentiment Apr P 55 57
    14:00 USD UoM Inflation Expectations Apr P 5.00%

     



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  • Safe Havens Surge, Treasury Rout Deepens, US Assets Hit by Relentless Selloff

    Safe Havens Surge, Treasury Rout Deepens, US Assets Hit by Relentless Selloff


    The brief moment of optimism following the US tariff truce has quickly faded, as financial markets buckle again under renewed pressure. US stocks closed sharply lower overnight, wiping out a large portion of Wednesday’s historic rebound. The risk-off tone spilled into Asia, though unevenly—Japan saw steep losses, Singapore posted moderate declines, while Hong Kong and China held relatively steady. Overall, the ongoing huge volatility suggests that global markets are far from stabilizing.

    The trade war narrative has shifted into a far more dangerous phase. The US confirmed that tariffs on Chinese imports were immediately raised to 125% after China responded with an 84% rate of its own. That brings total US duties on Chinese goods to a staggering 145%. At these levels, the tariff figures themselves become much less relevant. The policy is signaling a structural decoupling of the world’s two largest economies.

    Yet, the most alarming development is unfolding in the US Treasury market as 10-year yield surged past 4.45% mark again in Asian trading. This sharp reversal from the temporary calm after the US paused some reciprocal tariffs for 90 days is stoking fears of deeper structural issues in bond markets. This trouble in Treasuries has drawn comparisons to the 2020 “dash-for-cash” and the 2022 UK gilt crisis.

    In the currency markets, the flight to safety is clear, just not into Dollar. Swiss Franc surged to its highest level against the greenback since 2015, while Euro and Yen also strengthened markedly. Altogether, markets appear to be undergoing a synchronized flush-out of US assets, with investors dumping stocks, Dollar, and even Treasuries.

    Technically, Gold defied gravity again and surged to new record high above 3200 market. For now, further rise is expected as long as 3103.02 support holds, or in short 3100 mark. Next target is 161.8% projection of 2293.45 to 2789.92 from 2584.24 at 3387.52.

    In Asia, at the time of writing, Nikkei is down -4.36%. Hong Kong HSI is up 0.76%. China Shanghai SSE is up 0.32%. Singapore Strait Times is down 1.94%. Japan 10-year JGB yield is up 0.024 at 4.46. Overnight, DOW fell -2.50%. S&P 500 fell -3.46%. NASDAQ fell -4.31%. 10-year yield fell -0.006 to 4.394.

    Fed’s Goolsbee: No playbook for tariff shock, rate path uncertain but likely lower

    Speaking overnight, Chicago Fed President Austan Goolsbee said that nothing is “off the table”, including rate hikes, cuts, or holds. The sheer scale of recent trade developments creates a stagflationary shock, and there is “not a generic playbook” for how a central bank should respond to.

    Also, Goolsbee noted a key challenge: the data being released now may not yet fully reflect the evolving reality on the ground. That’s why he believes Fed must closely monitor both hard data and soft indicators, especially as lag effects complicate interpretation.

    Despite the tariff-related uncertainty, Goolsbee still sees rates trending lower over the next one to two years. Nevertheless, he stressed that should long-run inflation expectations begin to drift, “any central bank almost has to address that… regardless of what the other conditions are.”

    Fed’s Collins: Tariff-driven price pressures may delay further policy normalization

    Boston Fed President Susan Collins said in a speech overnight that keep interest rate at current level is “appropriate for the time being” due to the “highly uncertain environment.”

    Collins acknowledged that “renewed price pressures” from tariffs could “delay further normalization of policy”.

    “Confidence is needed that the tariffs are not destabilizing inflation expectations,” she emphasized.

    She added that any “preemptive action” to support growth would require a “compelling” signal that economic activity is deteriorating more than expected.

    Although she expects inflation to gradually return to the 2% target, she acknowledged that core inflation may rise “well above” 3% in the near term due to higher import costs. In her view, the Fed must remain vigilant to ensure these pressures do not become entrenched.

    NZ BNZ manufacturing falls to 53.2, new orders signal trouble ahead

    New Zealand’s BusinessNZ Performance of Manufacturing Index slipped slightly from 54.1 to 53.2 in March, but remained firmly in expansion territory. Production climbed to 54.2, the highest level since December 2021. Employment also posted a robust 54.7, marking its strongest result since mid-2021. However, a decline in new orders, which dipped below the 50-neutral mark to 49.6, raises concerns about the durability of this rebound.

    BusinessNZ’s Catherine Beard acknowledged the resilience in activity and employment, but highlighted persistent challenges. Despite improving sentiment, nearly 58% of surveyed manufacturers cited negative conditions, pointing to weak demand, fewer new orders, and uncertainty across both domestic and export channels.

    BNZ Senior Economist Doug Steel noted that the PMI data supports the case for manufacturing GDP growth in early 2025. Still, he cautioned that risks to the outlook are clearly tilted to the downside, “given recent extreme volatility on global markets following rapidly evolving US-driven trade policy changes.”

    USD/CHF Daily Outlook

    Daily Pivots: (S1) 0.8120; (P) 0.8350; (R1) 0.8467; More…

    Intraday bias in USD/CHF remains on the downside as current selloff accelerates again. Break of 161.8% projection of 0.9196 to 0.8757 from 0.8854 at 0.8144 will target 200% projection at 0.7976 next. On the upside, above 0.8358 support turned resistance will turn intraday bias neutral and bring consolidations first, before staging another decline.

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

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    22:30 NZD Business NZ PMI Mar 53.2 53.9 54.1
    23:50 JPY Money Supply M2+CD Y/Y Mar 0.80% 1.20% 1.20%
    06:00 EUR Germany CPI M/M Mar F 0.30% 0.30%
    06:00 EUR Germany CPI Y/Y Mar F 2.20% 2.20%
    06:00 GBP GDP M/M Feb 0.10% -0.10%
    06:00 GBP Industrial Production M/M Feb 0.10% -0.90%
    06:00 GBP Industrial Production Y/Y Feb -2.30% -1.50%
    06:00 GBP Manufacturing Production M/M Feb 0.20% -1.10%
    06:00 GBP Manufacturing Production Y/Y Feb -2.40% -1.50%
    06:00 GBP Index of Services 3M/3M Feb 0.50% 0.40%
    06:00 GBP Goods Trade Balance (GBP) Feb -17.9B -17.8B
    12:30 USD PPI M/M Mar 0.20% 0.00%
    12:30 USD PPI Y/Y Mar 3.30% 3.20%
    12:30 USD PPI Core M/M Mar 0.30% -0.10%
    12:30 USD PPI Core Y/Y Mar 3.60% 3.40%
    14:00 USD UoM Consumer Sentiment Apr P 55 57
    14:00 USD UoM Inflation Expectations Apr P 5.00%

     



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  • From Trade War to Bond Shock: Global Markets Face Multi-Front Crisis

    From Trade War to Bond Shock: Global Markets Face Multi-Front Crisis


    The relentless selling pressure in global markets shows no sign of abating, with European stocks and US futures once again under fire today. China’s latest retaliatory move to hike tariffs on US goods from 34% to 84% has reignited investor fears, just as the US implemented its own increase to a staggering 104% on Chinese imports. The ongoing trade war escalation between the world’s two largest economies is now moving rapidly from trade tension to a global financial shock.

    China is clearly signaling it has no intention of backing down. Beyond higher tariffs, Beijing’s commerce ministry added multiple US entities to an export control list and labeled several more as “unreliable.” It also filed a pointed complaint with the WTO, accusing Washington’s “reckless move” of destabilizing global trade.

    An unusual element of this market meltdown is the rare simultaneous collapse of all major US assets: stocks, Dollar, and Treasuries. In particular, yields on the 10-year note have surged back above 4.4%, up from 3.9% just last week. This sharp move has sparked fears of forced liquidation, margin calls on leveraged positions, which could drastically tighten up liquidity in the markets.

    Market watchers have floated multiple theories as explanations for the sudden jump in yields. Some see it as a predictable consequence of the US push to reduce bilateral trade imbalances, which may curb or even reverse foreign demand for American debt. Besides, Treasuries could become a retaliatory tool in a geopolitical standoff. While each theory differs in detail, all point to an erosion of liquidity and confidence in a market once considered the bedrock of global finance.

    Technically, 10-year yield’s break above 4.387 resistance is alarming. It suggests that fall from 4.809 has completed as a three-wave corrective move at 3.886. Risk will now stay heavily on the upside as long as 55 D EMA (now at 4.321) holds. Further rally could be seen back to 4.809 resistance. Firm break there could pave the way back to 4.997 high.

    In the currency markets, Dollar is again the worst performer of the day. Sterling and Kiwi trail close behind, the latter pressured further by RBNZ’s rate cut and its dovish forward guidance. Yen and Swiss Franc are once again the preferred safe havens, with the Aussie showing surprising resilience—likely more a pause in its decline than a sign of strength. Euro and Loonie sit somewhere in the middle.

    At the time of writing, FTSE is down -3.57%. DAX is down -4.03%. CAC is down -4.07%. UK 10-year yield is up 0.199 at 4.818. Germany 10-year yield is down -0.005 at 2.622. Earlier in Asia, Nikkei fell -3.93%. Hong Kong HSI rose 0.68%. China Shanghai SSE rose 1.31%. Singapore Strait Times fell -2.18%. Japan 10-year JGB yield rose 0.003 to 1.282.

    ECB’s Villeroy: Trade uncertainty threatens financial stability, strengthens case for rate cut

    French ECB Governing Council member Francois Villeroy de Galhau warned today that mounting economic uncertainty from escalating trade tensions is posing risks to financial stability, particularly increasing credit risks for some financial institutions.

    While he emphasized the resilience of French banks, he noted that leveraged hedge funds could come under significant liquidity pressure.

    Writing in his annual letter to President Macron, Villeroy assured that both Bank of France and ECB are “fully mobilised” to safeguard financial stability and ensure adequate liquidity.

    Speaking to journalists, Villeroy said the recent US announcement of sweeping “reciprocal” tariffs only adds to the case for further monetary easing. “We still have room to cut rates,” he stated.

    ECB’s Knot: Trade war a stagflationary shock, inflation impact will rise over time

    Dutch ECB Governing Council member Klaas Knot warned today that the escalating trade war constitutes a “negative supply shock” and should be considered “stagflationary” in nature.

    Knot also cautioned that as time progresses, the economic impact is more likely to “more inflationary rather than deflationary”.

    ECB’s priority, he said, is to monitor how and when these tariffs start to meaningfully affect economic activity and corporate decision-making. However, next week’s policy meeting would be too soon to revise projections.

    Knot also noted that despite the growing market stress, financial market functioning has so far been “preserved”. He credited the hedge fund sector’s proactive deleveraging for this resilience, saying they were well-prepared for the turbulence and capable of meeting margin calls—unlike in past market episodes.

    BoJ’s Ueda: Rate hikes still on table, but trade uncertainty clouds outlook

    BoJ Governor Kazuo Ueda reaffirmed today that the central bank remains open to further rate hikes if Japan’s economic recovery continues as projected. He added that current trends in both the economy and inflation are “roughly in line” with BoJ’s forecasts.

    He added that the policy board will make decisions with a “without pre-conception” mindset, and assess whether the outlook materializes as expected.

    However, Ueda flagged growing concerns over trade developments globally, warning of “heightening uncertainty over developments in each country’s trade policy”.

    “We need to pay due attention to risks,” he warned.

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

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

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

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

    USD/JPY Mid-Day Outlook

    Daily Pivots: (S1) 145.46; (P) 146.79; (R1) 147.61; More…

    Intraday bias in USD/JPY is back on the downside with break of 144.54 support. Fall from 158.86 is resuming to 158.86 to 146.52 from 151.20 at 143.57. Break there will target 139.57 low. On the upside, break of 148.13 resistance is needed to indicate short term bottoming. Otherwise, risk will stay on the downside in case of recovery.

    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
    02:00 NZD RBNZ Interest Rate Decision 3.50% 3.50% 3.75%
    05:00 JPY Consumer Confidence Index Mar 34.1 34.9 35
    06:00 JPY Machine Tool Orders Y/Y Mar P 11.4% 3.50%
    14:00 USD Wholesale Inventories Feb F 0.30% 0.30%
    14:30 USD Crude Oil Inventories 2.2M 6.2M
    18:00 USD FOMC Minutes

     



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

    Reciprocal Tariffs Take Effect; China Hit with 104% Rate


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    EUR/AUD Daily Outlook

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

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

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

    Economic Indicators Update

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

     



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