Tag: NZD

  • Markets Slide as Israel Strikes Iran, Safe Havens Climb

    Markets Slide as Israel Strikes Iran, Safe Havens Climb


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

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

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

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

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

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

    NZ BNZ manufacturing fall to 47.5, slumps back into contraction

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

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

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

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

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

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

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

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

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

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

    USD/CHF Daily Outlook

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

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

    In the bigger picture, long term down trend from 1.0342 (2017 high) is still in progress and met 61.8% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.8079 already. In any case, outlook will stay bearish as long as 55 W EMA (now at 0.8696) holds. Sustained break of 0.8079 will target 100% projection at 0.7382.

    Economic Indicators Update

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

     



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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    Fed’s Williams stresses need for vigilance on inflation expectations

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

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

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

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

    USD/JPY Daily Outlook

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

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

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

    Economic Indicators Update

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

     



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

    Dollar Drops as Tariff Confusion Reignites and Trade Talks Drag On


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

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

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

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

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

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

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

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

    Fed Kashkari: Uncertainty to delay policy at least until September

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

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

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

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

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

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

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

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

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

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

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

    Here are some highlights for the week:

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

    GBP/USD Daily Outlook

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

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

    In the bigger picture, up trend from 1.3051 (2022 low) is in progress. Next medium term target is 61.8% projection of 1.0351 to 1.3433 from 1.2099 at 1.4004. Outlook will now stay bullish as long as 55 W EMA (now at 1.2870) holds, even in case of deep pullback.

    Economic Indicators Update

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

     



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  • Aussie Dips on RBA’s Dovish Tilt, But Risk Sentiment Provides Cushion

    Aussie Dips on RBA’s Dovish Tilt, But Risk Sentiment Provides Cushion


    Aussie softened modestly following the RBA’s widely expected 25bps rate cut to 3.85%. But selling was contained as broader market sentiment remained supportive.

    While the move itself was no surprise, the updated economic forecasts leaned dovish, notably with headline CPI now seen at just 3.0% by year-end, down from the previous 3.7% projection. This downward revision in inflation opens the door for RBA to maintain a steady path of policy easing.

    More importantly, should global trade tensions re-escalate or downside risks materialize, especially from US tariff policy uncertainty, there is ample room for the central bank to accelerate its rate cuts.

    Despite the RBA’s dovish bias, Aussie found some footing amid steady risk sentiment. US equities shrugged off the initial shock from Moody’s credit rating downgrade, with major indexes finishing higher. Meanwhile, US 10-year yields also retreated from their earlier spike, indicating that investor appetite for Treasuries remains intact for now. Across Asia, sentiment was further bolstered by China’s latest easing move, with the PBoC cutting its key LPRs for the first time in seven months.

    Meanwhile, on the trade front, Japan is maintaining a firm stance in negotiations with the US. Top trade official Ryosei Akazawa reaffirmed that Tokyo would not rush into a deal at the expense of national interests. Japan continues to push for full tariff elimination, including automobiles, car parts, and metals. Talks with the US are ongoing at the working level, but no date has been set for a third ministerial meeting.

    Technically, AUD/NZD’s dip and break of 55 4H EMA today suggests that a short term top was formed at 1.0920, on bearish divergence condition in 4H MACD. Deeper retreat is now in favor to 38.2% retracement of 1.0649 to 1.0920 at 1.0816 to contain downside, at least on first attempt. However, firm break of 1.0816 will suggest near term reversal, and bring deeper fall to 61.8% retracement at 1.0753 instead.

    In Asia, at the time of writing, Nikkei is up 0.25%. Hong Kong HSI is up 1.29%. China Shanghai SSE is up 0.38%. Singapore Strait Times is up 0.19%. Japan 10-year JGB yield is up 0.039 at 1.527. Overnight, DOW rose 0.32%. S&P 500 rose 0.09%. NASDAQ rose 0.02%. 10-year yield rose 0.034 to 4.475.

    Looking ahead, Germany PPI is a focus in European session. Later in the day, attention will be on Canada CPI.

    RBA cuts rates to 3.85%, lowers 2025 growth and inflation forecasts

    RBA delivered a widely expected 25 bps rate cut, lowering the cash rate to 3.85%. In its statement, RBA said the risks to inflation had become “more balanced,” with headline inflation now within the target range and upside pressures “appear to have diminished” amid deteriorating global economic conditions.

    Still, the central bank remains cautious, citing significant uncertainty around both demand and supply dynamics, as well as the evolving impact of global trade tensions and geopolitical developments.

    The Board acknowledged a “severe downside scenario” and emphasized that monetary policy is “well placed” to respond decisively if global shocks materially affect Australia’s outlook. RBA flagged the unpredictability of global tariff policies and noted that households and businesses may hold back on spending amid heightened uncertainty. These concerns have contributed to a weaker outlook across growth, employment, and inflation.

    In its revised forecasts, RBA downgraded GDP growth for 2025 to 1.9% (from 2.1%) and for 2026 to 2.2% (from 2.3%). End-2025 headline CPI was revised down to 3.0% from 3.7%, with end-2026 projection lifted from 2.8% to 2.9%. Trimmed mean forecasts for the end-2025 and end 2026 were both cut slightly from 2.7% to 2.6%.

    China cuts loan prime rates for first time in seven months

    China’s central bank lowered its key lending benchmarks for the first time since October, delivering a long-anticipated move to support the economy.

    PBoC lowered the one-year loan prime rate by 10 bps to 3.0%. The five-year LPR, a key reference for mortgages, was also trimmed by 10 bps to 3.5%.

    The October 2025 easing was more aggressive at 25 basis points, but today’s cuts still mark a meaningful step in the ongoing monetary support cycle.

    The move comes as part of a broader policy package unveiled by PBOC Governor Pan Gongsheng and top financial regulators ahead of high-level trade talks in Geneva that have since led to a temporary truce between China and the US on tariffs.

    SNB’s Schlegel: Inflation outlook unclear, negative rates remain on the table

    SNB Chair Martin Schlegel warned that the outlook for Swiss inflation remains highly uncertain and reiterated that the central bank could not rule out a return to negative interest rates.

    Speaking at an event overnight, Schlegel said while such rates were an extraordinary measure, they had previously achieved their intended effect when used between 2014 and 2022.

    “The uncertainty is currently enormous,” Schlegel said, citing volatility in both USD/CHF and EUR/CHF, adding that “investors are seeking a safe haven in stormy times,” which has put upward pressure on the Swiss franc.

    Separately, Schlegel addressed concerns about global asset shifts, emphasizing that US treasuries remain foundational to global markets despite rising uncertainty. “There’s no current or foreseeable alternative to U.S. treasuries,” he said, citing their liquidity and dominance.

    BoE’s Dhingra: Vote for bigger rate cut a signal of economic direction

    BoE MPC member Swati Dhingra explained her decision to vote for a larger 50bps rate cut at the May 8 meeting as a deliberate signal about the UK’s economic outlook.

    Speaking in an FT interview, Dhingra said she wanted to send a “more categorical statement about where I think the economy is headed,” noting that using such a larger move sparingly increases its impact on market expectations.

    Her vote, along with Alan Taylor’s, diverged from the majority who supported a more measured 25bps cut.

    AUD/USD Daily Report

    Daily Pivots: (S1) 0.6415; (P) 0.6440; (R1) 0.6482; More…

    AUD/USD dips mildly today but stays in range of 0.6356/6511. Intraday bias remains neutral and further rise is in favor. One the upside, break of 0.6511 will resume the rise from 0.5913 and target 61.8% retracement of 0.6941 to 0.5913 at 0.6548. However, firm break of 0.6356 will bring deeper pullback to 38.2% retracement of 0.5913 to 0.6511 at 0.6283 first.

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

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    01:15 CNY 1-Y Loan Prime Rate 3.00% 3.00% 3.10%
    04:30 CNY 5-Y Loan Prime Rate 3.50% 3.50% 3.60%
    04:30 AUD RBA Interest Rate Decision 3.85% 3.85% 4.10%
    06:00 EUR Germany PPI M/M Apr -0.30% -0.70%
    06:00 EUR Germany PPI Y/Y Apr -0.60% -0.20%
    08:00 EUR Eurozone Current Account (EUR) Mar 35.9B 34.3B
    12:30 CAD CPI M/M Apr -0.10% 0.30%
    12:30 CAD CPI Y/Y Apr 1.60% 2.30%
    12:30 CAD CPI Median Y/Y Apr 2.90% 2.90%
    12:30 CAD CPI Trimmed Y/Y Apr 2.80% 2.80%
    12:30 CAD CPI Common Y/Y Apr 2.30% 2.30%

     



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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    China reaffirms growth target, holds back on major stimulus

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

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

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

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

    GBP/USD Mid-Day Outlook

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

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

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

    Economic Indicators Update

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

     



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

    Global Risk Sentiment Brightens, But Caution Lingers Around US Assets


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

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

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

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

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

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

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

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

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

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

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

    European Strength Offers Hope, Caution Persists for US Indexes

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

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

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

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

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

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

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

    Dollar Struggles Despite Risk Stabilization, Policy Uncertainty Remains a Drag

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

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

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

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

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

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

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

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

    EUR/CHF Weekly Outlook

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

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

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



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

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


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

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

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

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

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

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

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

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

    German ZEW collapses to -14 as trade uncertainty rattles outlook

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

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

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

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

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

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

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

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

    UK payolled employment falls -78k, wage growth slows

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

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

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

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

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

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

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

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

    EUR/USD Mid-Day Outlook

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

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

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

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    01:30 AUD RBA Meeting Minutes
    06:00 GBP Claimant Count Change Mar 18.7K 30.3K 44.2K 16.5K
    06:00 GBP ILO Unemployment Rate (3M) Feb 4.40% 4.40% 4.40%
    06:00 GBP Average Earnings Including Bonus 3M/Y Feb 5.60% 5.70% 5.80% 5.60%
    06:00 GBP Average Earnings Excluding Bonus 3M/Y Feb 5.90% 6.00% 5.90% 5.80%
    09:00 EUR Germany ZEW Economic Sentiment Apr -14 10.6 51.6
    09:00 EUR Germany ZEW Current Situation Apr -81.2 -86 -87.6
    09:00 EUR Eurozone ZEW Economic Sentiment Apr -18.5 14.2 39.8
    09:00 EUR Eurozone Industrial Production M/M Feb 1.10% 0.10% 0.80%
    12:15 CAD Housing Starts Y/Y Mar 214K 238K 229K 221K
    12:30 CAD Manufacturing Sales M/M Feb 0.20% -0.20% 1.70% 1.60%
    12:30 CAD CPI M/M Mar 0.30% 0.70% 1.10%
    12:30 CAD CPI Y/Y Mar 2.30% 2.60% 2.60%
    12:30 CAD CPI Median Y/Y Mar 2.90% 2.90% 2.90%
    12:30 CAD CPI Trimmed Y/Y Mar 2.80% 2.90% 2.90%
    12:30 CAD CPI Common Y/Y Mar 2.30% 2.40% 2.50%
    12:30 USD Empire State Manufacturing Index Apr -8.1 -14.8 -20
    12:30 USD Import Price Index M/M Mar -0.10% 0.10% 0.40% 0.20%

     



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

    Reciprocal Tariffs Take Effect; China Hit with 104% Rate


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    EUR/AUD Daily Outlook

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

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

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

    Economic Indicators Update

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

     



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  • Markets Catch a Breath, But US-China Showdown Keep Rebound on Thin Ice

    Markets Catch a Breath, But US-China Showdown Keep Rebound on Thin Ice


    Global markets are having a precious moment of calm, with risk sentiment stabilizing across Asia and Europe, and US futures pointing to a higher open. The recent wave of aggressive selling appears to have peaked—at least temporarily—offering traders a breather from the huge volatility experienced since last week. However, this rebound should not be mistaken for a true reversal in sentiment. Markets remain highly sensitive, and downside risks persist should trade tensions escalate further.

    The immediate flashpoint lies in US-China relations. US President Donald Trump has warned that if China does not withdraw its 34% retaliatory tariffs by Wednesday, the US will impose an additional 50% tariff on Chinese goods. Should that happen, the effective tariff rate on Chinese imports would soar beyond 100%, marking a significant and historic escalation in global trade conflict.

    Meanwhile, Chinese authorities are making visible efforts to bolster domestic market confidence. Sovereign wealth fund Central Huijin Investment, often dubbed the “national team,” confirmed ETF purchases and pledged further action to support equity prices. This has been echoed by major state-owned enterprises and listed firms announcing share buybacks. In tandem, China’s financial regulator is preparing to lift caps on insurance fund investments in equities to provide further support to the capital markets.

    Beyond equity stabilization, currency markets are on alert. The Chinese Yuan is nearing record lows against Dollar, with market speculations over whether Beijing will allow it to depreciate as a countermeasure to tariffs. Should the PBoC relax its grip and let the Yuan slide further, it could trigger fresh turbulence in the regional markets that ripples globally.

    From a pure technical perspective, USD/CNH’s correction from 7.3964 should have completed at 7.2153 already. Firm break of 7.3964/3745 key resistance zone will quickly push USD/CNH to 61.8% projection of 6.9709 to 7.3694 from 7.2153 at 7.4616.

    In Europe, at the time of writing, FTSE is up 2.54%. DAX is up 2.57%. CAC is up 2.34%. UK 10-year yield is up 0.029 at 4.636. Germany 10-year yield is up 0.056 at 2.667. Earlier in Asia, Nikkei rose 6.03%. Hong Kong HSI rose 1.51%. China Shanghai SSE rose 1.58%. Singapore Strait Times fell -2.01%. Japan 10-year JGB yield rose 0.163 to 1.279.

    ECB’s de Guindos urges cool heads as Europe faces trade wake-up call

    ECB Vice-President Luis de Guindos struck a cautiously hopeful tone on Europe’s ability to manage rising global trade tensions, suggesting that markets tend to overreact in the short term but eventually recalibrate.

    Speaking at an event in Spain, de Guindos noted that despite the sharp volatility triggered by the US tariff escalation, market liquidity remains intact.

    Despite the pressure, de Guindos said he was “relatively optimistic” about Europe’s ability to weather the storm, calling the situation a “wake-up call” to pursue greater economic and military autonomy.

    De Guindos stressed the importance of negotiating with the U.S. “with a cool head”.

    Separately, Greek ECB Governing Council member Yannis Stournaras offered a more cautious view, warning that a renewed surge in inflation or rising inflation expectations could disrupt ECB’s path to monetary policy normalization.

    “Tariffs imposed on one country’s imports would affect other countries participating in the global chains, even if no countermeasures were imposed,” Stournaras added.

    Aussie Westpac consumer sentiment slumps post-tariff shock; RBA seen tilting toward May rate cut

    Australia’s Westpac Consumer Sentiment index plunged -6.0% in April, dropping from 95.9 to 90.1. The steep fall was notably skewed by the timing of the survey in relation to US announcement of reciprocal tariffs on April 2.

    Respondents surveyed before the announcement showed only a modest dip in sentiment to 93.9. Those surveyed after reported a sharp drop of nearly 10% to 86.6. .

    The sub-indices measuring sentiment towards the economy were particularly hard-hit, with the outlook for the next 12 months falling -5.7% to 90.5, and the 5-year outlook slipping back by -3.0%

    With RBA set to meet on May 19-20, Westpac believes the weakening external backdrop, coupled with softer inflation, will push RBA to deliver another 25 bps rate cut. RBA is likely to become “much more focused on downside risks to growth than lingering questions about inflation”.

    Australia NAB business confidence dips to -3 ahead of tariff impact

    Australia’s NAB Business Confidence index dipped slightly from -2 to -3 in March, remaining firmly in negative territory. Business Conditions, however, edged up from 3 to 4, a modest improvement that still leaves them slightly below average overall.

    Cost pressures remained broadly stable, with purchase costs rising 1.4% in quarterly equivalent terms and product price growth holding at 0.5%. Labour cost growth eased slightly.

    NAB Chief Economist Sally Auld noted that conditions continue to vary across industries, with the services sector faring best while manufacturing and retail remain under pressure.

    Importantly, this data predates the escalation of the global trade dispute, particularly the reciprocal tariff measures announced in early April. As Auld cautioned, these developments could “flow through to forward looking measures in the next survey.”

    RBNZ set to cut again, bearish momentum resumes in NZD/JPY

    RBNZ is widely expected to deliver another 25bps cut tomorrow, bringing the Official Cash Rate down to 3.50%. With the move largely priced in, traders will be focused on how the central bank interprets the rapidly evolving global environment.

    As the first major central bank to meet since the US launched the sweeping reciprocal tariffs, RBNZ’s tone and guidance will not only be key for New Zealand, but will also offer insights for the broader Asia-Pacific region.

    While there are speculative whispers about the possibility of a larger-than-expected rate cut to cushion the economy against the external shock, RBNZ will likely refrain from doing so just yet. The current level of uncertainty, both in terms of policy responses and economic impact, should see the central bank remain cautious, maintaining its easing bias without overcommitting.

    With another cut already projected in May, RBNZ is expected to stay on its path of gradual policy accommodation while waiting for more concrete data on trade disruption effects. The question of whether the RBNZ will eventually push OCR below 3.00% remains open. Much will depend on how the trade war unfolds, how consumer and business sentiment hold up, and the extent of the ripple effects across Asia’s open economies.

    Technically, NZD/JPY’s down trend from 99.01 (2024 high) resumed by breaking through 83.02 low last week. Whether this is a correction of the multi-year uptrend from the 2020 low of 59.49, or a full reversal, is yet to be determined.

    In either case, near term outlook will remain bearish as long as 87.35 resistance holds, in case of recovery. Next target is 100% projection of 92.45 to 83.14 from 87.35 at 78.04. Firm break there will target 138.2% projection at 74.48. This coincides with 61.8% retracement of 59.49 to 99.01 at 74.58.

    USD/CHF Mid-Day Outlook

    Daily Pivots: (S1) 0.8480; (P) 0.8577; (R1) 0.8704; More…

    Intraday bias in USD/CHF remains neutral for the moment, and more consolidations would be seen above 0.8450. Upside of recovery should be limited below 0.8757 support turned resistance. On the downside, below 0.8450 will resume the fall from 0.9196 and target 100% projection of 0.9196 to 0.8757 from 0.8854 at 0.8415.

    In the bigger picture, rejection by 0.9223 key resistance keep medium term outlook bearish. That is, larger fall from 1.0342 (2017 high) is not completed yet. Firm break of 0.8332 (2023 low) will confirm down trend resumption. Next target is 61.8% projection of 1.0146 (2022 high) to 0.8332 from 0.9196 at 0.8075.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    22:00 NZD NZIER Business Confidence Q1 19% 16%
    23:50 JPY Current Account (JPY) Feb 2.32T 2.74T 1.94T 1.95T
    00:30 AUD Westpac Consumer Sentiment Apr -6.00% 4.00%
    01:30 AUD NAB Business Confidence Mar -3 -1 -2
    01:30 AUD NAB Business Conditions Mar 4 4
    05:00 JPY Eco Watchers Survey: Current Mar 45.1 45.3 45.6
    06:45 EUR France Trade Balance (EUR) Feb -7.9B -6.2B -6.5B
    10:00 USD NFIB Business Optimism Index Mar 97.4 101.3 100.7
    14:00 CAD Ivey PMI Mar 53.2 55.3

     



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  • Market Turmoil Unleashed as Global Tariff Battlelines Drawn

    Market Turmoil Unleashed as Global Tariff Battlelines Drawn


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    Will 100 Be the Savior for Sliding Dollar Index?

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

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

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

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

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

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

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

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

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

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

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

    AUD/CAD and AUD/NZD in free fall

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

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

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

    USD/JPY Weekly Outlook

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

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

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



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  • Dollar Edges Lower Post-Retail Sales, But Cautious Traders Keep Selling Momentum Limited

    Dollar Edges Lower Post-Retail Sales, But Cautious Traders Keep Selling Momentum Limited


    Dollar edged lower in early U.S. trading following weaker-than-expected retail sales data. However, the downside pressure remained limited, as investors took comfort in the fact that February’s sales growth marked a return to expansion after contraction in January. The data helped ease fears of an extended downturn in consumer spending, with markets breathing a sigh of relief that demand has not fallen into a prolonged slump. Still, with Fed’s policy decision and updated economic projections looming midweek, traders remain cautious and hesitant to take aggressive positions.

    Beyond Fed, geopolitical developments are also on investors’ minds. U.S. President Donald Trump indicated he would speak with Russian President Vladimir Putin on Tuesday to discuss potential steps toward ending the war in Ukraine. This follows positive talks between US and Russian officials in Moscow, raising hopes that diplomatic efforts could progress. However, it remains uncertain whether concrete agreements will emerge, and markets will be closely monitoring any developments that could impact global risk sentiment.

    Meanwhile, Euro traders are also in wait-and-see mode, with focus squarely on Germany’s parliamentary vote on Chancellor-in-waiting Friedrich Merz’s proposed state borrowing program tomorrow. The budget committee approved the plans on Sunday, but the vote faces last-minute legal challenges from the far-right Alternative for Germany party, which has petitioned the constitutional court, arguing that there was insufficient time for expert scrutiny. If the challenge gains traction, it could delay or complicate the EUR500B infrastructure and defense spending program.

    Adding to concerns for Germany, the Munich-based Ifo Institute released a bleak economic forecast, predicting that the country’s economy will grow by just 0.2% this year, following two consecutive years of contraction. The report cited weak demand for industrial goods and increasing competitive pressures from global markets as key drags on growth.

    In the currency markets, New Zealand Dollar is currently the strongest performer, followed by Australian Dollar, both of which are benefiting from renewed optimism surrounding China’s “special action plan” to boost consumption. On the other end, Japanese Yen is the weakest, followed by Dollar and Euro. The British pound and Swiss Franc are currently in the middle of the pack.

    Technically, AUD/NZD’s decline from 1.1173 accelerates lower today. Immediate focus is now on 1.0940 cluster support (38.2% retracement of 1.0567 to 1.1177 at 1.0944). Strong rebound from there will keep the up trend from 1.0567 intact for another rally through 1.1177 at a later stage. However, sustained break of 1.0940/4 will complete a double top pattern (1.1177, 1.1173), and indicates bearish trend reversal. Deeper decline should then be seen to 61.8% retracement at 1.0800 next.

    In Europe, at the time of writing, FTSE is up 0.26%. DAX is up 0.26%. CAC is up 0.40%. UK 10-year yield is down -0.023 at 4.651. Germany 10-year yield is down -0.060 at 2.819. Earlier in Asia,Nikkei rose 0.93%. Hong Kong HSI rose 0.77%. China Shanghai SSE rose 0.19%. Singapore Strait Times rose 0.61%. Japan 10-year JGB yield fell -0.025 to 1.503.

    OECD trims global growth outlook amid trade tensions and policy uncertainty

    OECD forecasts a slight slowdown in global economic growth over the next two years, reflecting the effects of escalating trade tensions and heightened policy uncertainty. In its Interim Economic Outlook, OECD projects global growth will ease from 3.2% in 2024 to 3.1% in 2025, and further to 3.0% in 2026. These numbers represent a downgrade from its previous forecasts, which projected 3.3% growth for both this year and next.

    Among advanced economies, the US is expected to lose momentum, with growth forecast at 2.2% in 2025 before cooling to 1.6% in 2026—down from earlier estimates of 2.4% and 2.1%.

    Meanwhile, Eurozone is projected to increase from 1.0% growth this year to 1.2% in 2026. Although this marks an improvement relative to 2024’s mild performance, it still lags the OECD’s previous forecasts of 1.3% and 1.5%.

    The imposition of higher tariffs is expected to weigh particularly heavily on North American economies beyond the US. Canada’s growth rate is set to slow to 0.7% this year and next, well below the 2% previously estimated.

    Mexico would be hit hardest, with its economy forecast to contract by -1.3% in 2025 and a further -0.6% the following year—reversing prior expectations for moderate growth.

    By contrast, China appears relatively well-positioned to manage the fallout from higher tariffs. OECD anticipates that targeted government stimulus will support growth to 4.8% in 2025—slightly above the previous forecast of 4.7%—before moderating to 4.4% in 2026.

    OECD Secretary-General Mathias Cormann warned that signs of weakness are emerging in the global economy, primarily due to “heightened policy uncertainty.” He added that “increasing trade restrictions” will raise costs for both production and consumption.

    US retail sales rises 0.2% mom in Feb, ex-auto sales up 0.3% mom

    US retail sales grew 0.2% mom to USD 722.7B in February, well below expectation of 0.7% mom. Ex-auto sales rose 0.3% mom to USD 584.7B , below expectation of 0.5% mom.

    Ex-gasoline sales rose 0.3% mom. to USD 669.9B. Ex-auto& gasoline sales rose 0.5% mom to USD 627.2B.

    Total sales for December through February period was up 3.8% from the same period a year ago.

    ECB’s de Guindos: Trump’s tariffs complicate ECB’s monetary policy decisions

    ECB Vice President Luis de Guindos acknowledged that US President Donald Trump’s tariff policies have made the central bank’s monetary policy decisions more challenging, creating an environment of increased uncertainty.

    Speaking to Spanish radio Onda Cero, de Guindos noted that the “clarity regarding future decisions” has diminished in a situation “much more opaque than just six months ago.”

    He also pushed back ECB’s inflation target timeline, stating that inflation is now expected to reach the 2% goal in Q1 2026, later than the previous mid-2025 projection, due to the impact of higher energy prices.

    Despite these concerns, de Guindos remained cautiously optimistic that “everything is moving in the right direction.” While tariffs could lead to some short-term inflationary effects, he suggested that slower economic activity resulting from trade disruptions could ultimately offset these pressures over time.

    NZ BNZ services falls to 49.1, slips back into contraction

    New Zealand’s BusinessNZ Performance of Services Index fell back into contraction territory in February, dropping from 50.4 to 49.1. The index remains well below its long-term average of 53.0.

    Key components of the survey also showed deterioration, with Activity/Sales slipping from 53.8 to 49.2, New Orders/Business falling from 50.0 to 49.4, and Stocks/Inventories declining from 50.0 to 48.0. While Employment showed a slight improvement, rising from 47.4 to 48.9, it remains in contraction.

    Despite the sector’s renewed contraction, negative sentiment among businesses showed a modest improvement, with 57.8% of comments in February expressing pessimism, down from 61.9% in January. Most firms cited the challenging economic climate as their primary concern.

    BNZ’s Senior Economist Doug Steel said that “while one might have hoped that the PSI would move higher again, we know that economic turning points can be messy. The brief foray above 50 in January remains the only month in the last year the PSI hasn’t been in contraction”.

    China’s data shows resilient start in 2025, government unveils plan to boost consumption

    China’s economy got off to a stronger-than-expected start in the first two months of the year. Industrial production grew 5.9% yoy, beating market expectations of 5.3% yoy. Retail sales also exceeded forecasts, rising 4.0% yoy compared to an expected 3.8% yoy, reflecting improving consumer demand.

    Meanwhile, fixed asset investment increased by 4.1% yoy, surpassing projections of 3.2% yoy, but ongoing weaknesses in the real estate sector persisted, with property investment falling -9.8% yoy. Additionally, private investment remained flat, signaling that confidence among smaller businesses and private enterprises was subdued.

    China’s National Bureau of Statistics noted that existing and new policies aimed at stimulating growth have begun to take effect, leading to steady expansion in the industrial and services sectors, improved investment, and stable employment conditions. Officials highlighted “new quality productive forces” as key drivers of momentum.

    To further bolster domestic demand, China’s State Council unveiled a “special action plan” over the weekend, aiming to increase household incomes, introduce childcare subsidies, and reduce financial burdens to encourage consumption.

    While the plan was widely circulated across local governments, it lacked concrete details on financial support for implementation, leaving uncertainties about its immediate impact.

    GBP/USD Mid-Day Outlook

    Daily Pivots: (S1) 1.2910; (P) 1.2934; (R1) 1.2958; More…

    GBP/USD bounces slightly today and outlook is unchanged. Further rally is in favor with 1.2860 support intact. On the upside, sustained trading above 61.8% retracement of 1.3433 to 1.2099 at 1.2923 will pave the way back to 1.3433 high. However, break of 1.2860 will indicate short term topping, and turn bias back to the downside for deeper pullback.

    In the bigger picture, up trend from 1.3051 (2022 low) is not completed. Resumption is expected after corrective pattern from 1.3433 completes. Next target will be 1.4248 key resistance. This will now remain the favored case as long as 1.2099 support holds.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    21:30 NZD Business NZ PSI Feb 49.1 50.4
    00:01 GBP Rightmove House Price Index M/M Mar 1.10% 0.50%
    02:00 CNY Industrial Production Y/Y Feb 5.90% 5.30% 6.20%
    02:00 CNY Retail Sales Y/Y Feb 4.00% 3.80% 3.70%
    02:00 CNY Fixed Asset Investment YTD Y/Y Feb 4.10% 3.20% 3.20%
    12:15 CAD Housing Starts Y/Y Feb 229K 249K 240K 239K
    12:30 USD Empire State Manufacturing Index Mar -20 -1.9 5.7
    12:30 USD Retail Sales M/M Feb 0.20% 0.70% -0.90% -1.20%
    12:30 USD Retail Sales ex Autos M/M Feb 0.30% 0.50% -0.40% -0.60%
    14:00 USD NAHB Housing Market Index Mar 43 42

     



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  • Currency Markets Consolidate as Trader Start Repositioning for Tariff Battles in April

    Currency Markets Consolidate as Trader Start Repositioning for Tariff Battles in April


    The past week in the currency markets was marked more by consolidation than decisive moves, even as risk aversion deepened in US stock markets. Dollar’s selloff slowed and turned into a modest recovery, but there was no clear momentum for bullish trend reversal. Sentiment remained fragile, weighed down by constantly escalating trade tensions and the growing impact of tariffs on American consumer and business confidence. However, with stocks and Dollar both looking oversold, markets appear to have found a temporary reprieve, allowing for some short-term stabilization.

    That said, this pause does not indicate a shift in sentiment, but rather reflects a phase of profit-taking and repositioning. Traders seem to be adjusting their positions ahead of the critical tariff showdown in April, when reciprocal trade measures on key US trading partners are expected to take effect. As markets brace for the next wave of developments, uncertainty and indecisiveness have become dominant themes. This is evident in the fact that only three currency crosses closed outside their prior week’s ranges, highlighting a lack of conviction in directional moves.

    Among the currency performers, New Zealand Dollar overtook Euro at last hours as the week’s strongest, but its gains lacked clear momentum for a sustained uptrend. Australian Dollar, which came in third, and Kiwi appeared to be mostly digesting their recent losses, aided by a modest stabilization in risk sentiment.

    While these currencies showed some resilience, they have yet to break out of their broader downtrends, and further gains will likely depend on how global markets react to the next round of trade developments.

    Euro, despite slipping to second place, could soon regain momentum, especially as Germany’s major political parties reached a breakthrough on a historic debt deal.

    On the weaker side, Japanese Yen, Swiss Franc, and Dollar ranked as the bottom three performers. Meanwhile, Sterling and Canadian Dollar closed the week in the middle of the pack

    Stocks Sink for the Week Despite Friday’s Rebound, April Set to Be Crucial

    US stocks suffered significant losses last week, with DOW plummeting -3.1% for its worst weekly performance since March 2023. Both S&P 500 and NASDAQ also slipped more than -2% and notched their fourth consecutive week in the red. While a strong rebound on Friday briefly lifted spirits—becoming the best single day of 2025 for S&P 500 and NASDAQ—these gains were insufficient to salvage the broader downtrend that has gripped the market.

    Friday’s bounce appeared to be more of a technical rebound than a shift in fundamentals. With the major indices down 10% from their all-time highs, markets had reached oversold conditions, making them ripe for short traders to take profits. However, the broader narrative remains bearish, at least for the near term. .

    Tariff uncertainties will continue to cap upside momentum in stocks, at least through April. The critical turning point would come on April 2, when reciprocal tariffs from US are set to be announced. The corresponding retaliatory measures from the European Union, Canada, China, and Japan—and the potential for further US escalation in response—will dictate how deep the economic impact may run. The developments in the second quarter will ultimately determine whether the US markets are in merely a medium-term correction or entering an outright bear market.

    For S&P 500, fall from 6147.43 is currently seen as a correction to the up trend from 3491.58 (2022 low) only. While further decline remains in favor, downside should be contained by 38.2% retracement of 3491.58 to 6147.43 at 5132.89.

    However, firm break of 5132.89 will raise the chance of long term reversal, and target trend line support (now at around 4740).

    Similarly, DOW should now be in correction to the whole rally from 28660.94 (2022 low). While further fall is expected, downside should be contained by 38.2% retracement of 28660.04 to 45703.63 at 38803.98. However, sustained break of this fibonacci level will argue that larger scale reversal is underway.

    Dollar Index May Stabilize Around 61.8% Retracement Level, But Downside Risks Remain

    The sharp decline in Dollar Index slowed last week, as market expectations for Fed’s next rate cut have shifted back from May to June. Despite softer-than-expected consumer inflation data, traders are acknowledging that Fed will likely need more time to assess the economic impact of escalating tariffs before making a policy move.

    June FOMC meeting offers the central bank a broader window to evaluate the full effects of reciprocal trade measures and any additional retaliatory tariffs. Additionally, Fed will have a fresh set of economic projections by then, providing a more comprehensive view of inflation, growth, and labor market trends.

    Technically, Dollar Index is now hovering around 61.8% retracement of 99.57 to 110.17 at 103.61. This level could provide some short-term stabilization, particularly as D RSI also suggests oversold conditions. Some consolidations might follow first, or even a notable recovery.

    However, risks will continue to stay on the downside as long as 55 D EMA (now at 106.37) holds. Sustained break of 103.61 will extend the fall from 110.17 to 99.57 low (2023 low).

    Eurozone Confidence Surges, DAX and Euro Poised for Further Gains

    Euro and Germany’s DAX lost some momentum last week, but Friday’s bounce suggests both may be gearing up to extend their recent rallies.

    In a major political breakthrough, Chancellor-in-waiting Friedrich Merz announced on Friday that he had secured the backing of the Greens for a massive increase in state borrowing. With support from the Social Democrats already in place, Merz now has the two-thirds parliamentary majority required to pass constitutional amendments.

    The highly anticipated vote is scheduled for next week and, if approved, would mark a historic shift in Germany’s fiscal policy, paving the way for significant infrastructure and defense spending.

    Merz’s declaration that “Germany is back” highlighted the renewed optimism surrounding both the German and broader European economies.

    This growing confidence is also reflected in recent sentiment indicators. Eurozone Sentix Investor Confidence Index surged from -12.7 to -2.9 in March, reaching its highest level since June 2024. More notably, Expectations Index skyrocketed from 1.0 to 18.0, marking its third consecutive monthly increase and the highest level since July 2021. This surge represents the largest monthly improvement since 2012.

    Germany’s investor confidence has also rebounded sharply, signaling a significant turnaround in market expectations. The German Sentix Investor Confidence Index jumped from -29.7 to -12.5, its strongest level since April 2023. Meanwhile, the Expectations Index surged from -5.8 to 20.5, reaching its highest point since July 2021.

    For DAX, near term outlook stays bullish with 22226.34 support intact. Current trend should continue to 161.8% projection of 14630.21 to 18892.92 from 17024.82 at 23921.87. Decisive break there would pave the way to 200% projection 25550.22 next.

    Nevertheless, rejection by 23921.87 will indicate medium term topping, on bearish divergence condition in D MACD. DAX should then turn into consolidations, until fresh catalyst pushes it through to new records.

    The key for Euro remains on whether EUR/CHF could decisively break through the long term channel resistance to solidify its bullish trend reversal. In this case, stronger rally should be seen to 0.9928 resistance at least.

    However, break of 0.9489 support will suggest rejection by the channel resistance, and keep outlook bearish for EUR/CHF, which might also be an indication of Euro’s outlook elsewhere.

    NZD/JPY as a Top Gainer, But Bearish Trend Remains Intact

    NZD/JPY was among the top-performing currency pairs last week, rising by over 1.1%. However, the crosses continued to trade within falling channel that originated from 92.45 high. It’s also capped well below 55 D EMA (now at 86.45).

    Thus, while the current rebound signals some near-term buying interest, the broader technical picture remains bearish.

    On the upside, NZD/JPY could face strong resistance from 86.71 (38.2% retracement of 92.45 to 83.14 at 86.96). Only a firm break of this cluster resistance zone would confirm bullish trend reversal.

    Otherwise, fall from 92.45 is still in favor to continue. Indeed, firm break of 83.02 (2024 low) will resume whole down trend from 99.01 (2024 high).

     

    USD/JPY Weekly Outlook

    USD/JPY edged lower to 146.52 last week but recovered since then. Initial bias remains neutral this week for more consolidations. Upside of recovery should be limited by 150.92 support turned resistance. On the downside, sustained trading below 61.8% retracement of 139.57 to 158.86 at 146.32 will pave the way to 139.57 support.

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

    In the long term picture, it’s still early to conclude that up trend from 75.56 (2011 low) has completed. A medium term corrective phase should have commenced, with risk of deep correction towards 55 M EMA (now at 136.88).



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

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


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

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

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

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

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

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

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

     

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

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

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

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

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

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

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

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

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

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

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

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

    BoC rate cut, US inflation and consumer sentiment

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

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

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

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

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

    Here are some highlights for the week:

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

    USD/JPY Daily Outlook

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

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

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

    Economic Indicators Update

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

     



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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

    Risk Aversion Drags Yields Down, But Lifts Dollar Higher

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

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

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

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

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

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

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

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

    Bitcoin and Gold Tumble on Risk-Off Sentiment

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

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

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

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

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

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

    EUR/USD Weekly Outlook

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

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

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



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