Tag: SNB

  • Markets Calm, Geopolitics Linger as Fed, BoJ, BoE, and SNB Loom

    Markets Calm, Geopolitics Linger as Fed, BoJ, BoE, and SNB Loom



    Global markets were broadly steady on Monday, despite ongoing conflicts in the Middle East. The Nikkei led Asian bourses with a 1.26% while European indexes also opened higher. Even with Israel and Iran continuing to exchange military strikes, investor sentiment remained resilient. US equity futures are also treading water, suggesting cautiousness rather than panic ahead of a high-stakes week for global monetary policy.

    Oil prices ticked higher on geopolitical concerns but quickly settled back into Friday’s range, indicating that markets are becoming more conditioned to the risk headlines unless there is a major disruption to oil flows. Meanwhile, Gold gave back early gains after briefly spiking near a two-month high. The pullback reflects a modest unwinding of haven flows as traders turn their focus to upcoming central bank decisions and data rather than reacting solely to geopolitical developments.

    This week will be busy, with four major central banks—Fed, BoJ, BoE, and SNB—set to announce policy decisions. The backdrop is particularly complex: markets are navigating geopolitical flare-ups, looming tariff deadlines, and a busy calendar of economic data including retail sales, inflation, and employment reports. Investors will be looking for clues not only on rate direction but also on how policymakers assess the broader risk outlook.

    Technically, further rise is expected in Gold as long as 3376.70 minor support holds, for retesting 3499.79 high. Decisive break there will resume larger up trend. Nevertheless, break of 3376.70 will turn focus back to 3293.35 support. Firm break there will argue that corrective pattern from 3499.79 is extending with another falling leg.

    In Asia, Nikkei rose 1.26%. Hong Kong HSI is up 0.84%. China Shanghai SSE is up 0.35%. Singapore Strait Times is up 0.02%. Japan 10-year JGB yield rose 0.06 to 1.462.

    ECB’s Nagel warns against premature policy commitment

    German ECB Governing Council member Joachim Nagel struck a cautious tone at a conference today, warning against locking in any specific policy path amid persistent global uncertainty.

    Markets currently price in only one more rate cut by year-end. But Nagel resisted endorsing that outlook, stressing that rapidly evolving conditions make it unwise to pre-commit.

    “We must keep our eyes and ears open for the risks to price stability,” he said, pointing specifically to current developments in the Middle East as a source of heightened uncertainty.

    Nagel also offered a downbeat assessment of Germany’s near-term prospects, forecasting stagnation in Q2 and flagging the global trade war as a significant drag. He estimated that escalating trade tensions could shave as much as 0.75 percentage points off German growth over the medium term.

    ECB’s de Guindos sees inflation risks balanced, Euro strength not a concern

    In a Reuters interview, ECB Vice President Luis de Guindos downplayed concerns over a return to the ultra-low inflation era of the 2010s, despite the recent strengthening of Euro. De Guindos acknowledged that these developments could weigh on headline inflation but emphasized that “the risk of undershooting is very limited.” He maintained that inflation risks are now “balanced”. Euro’s recent appreciation was neither rapid nor volatile, and therefore “not going to be a big obstacle” at 1.15 level.

    De Guindos expressed confidence that inflation will rebound after dipping to 1.4% in Q1 2026, citing a still-tight labor market and sustained wage pressures. Compensation growth, supported by union demands, is expected to remain near 3%. This aligns with ECB’s medium-term outlook of returning inflation to its 2% target.

    While stopping short of explicitly endorsing a pause, de Guindos indicated that market pricing for just one more rate cut, potentially later this year, was consistent with ECB President Christine Lagarde’s latest messaging.

    “Markets have understood perfectly well what the President said about being in a good position,” he noted, adding that investors now correctly anticipate that the ECB is nearing the end of its easing cycle.

    NZ BNZ services slumps to 44.0, economy returning to recession

    New Zealand’s services sector took a steep turn downward in May, with the BusinessNZ Performance of Services Index plunging from 48.1 to 44.0, the lowest reading since June 2024. Activity and new orders led the decline, falling from 46.7 and 50.2 to 40.1 and 43.2 respectively, as businesses reported broad-based weakness in demand. Employment also edged down from 47.9 to 47.2.

    Sentiment on the ground paints an equally grim picture. Negative commentary from survey respondents rose to 65.6%, up from 61.8% in April. Businesses cited reduced consumer spending, revenue declines, and heightened uncertainty over inflation, interest rates, and the economic outlook. Many reported that customers are delaying decisions and becoming more cautious in their spending—mirroring trends typically seen during periods of economic stress.

    BNZ Senior Economist Doug Steel noted that the PSI collapse closely follows the earlier fall in the Performance of Manufacturing Index, reinforcing signs of widespread economic fragility. With both key sectors now contracting, concerns are rising that New Zealand may be “returning to recession”.

    China’s retail sales shine with 6.4% yoy growth, but production and investment drag continues

    China’s latest economic data for May paints a mixed picture. Industrial production rose 5.8% yoy, falling short of the expected 6.0% and reflecting lingering weakness in external demand. This comes on the heels of a sharp -34.5% yoy drop in exports to the US, despite the mid-May rollback of some tariffs. The full impact of reduced tariffs is expected to emerge more clearly in June though.

    In contrast, retail sales provided a bright spot, jumping 6.4% yoy and beating forecasts of 5.0% yoy. The rebound was supported by the government’s aggressive push to boost consumer spending through its appliance and vehicle trade-in program. The Ministry of Commerce reported that the campaign has already generated over CNY 1.1m in sales this year.

    However, fixed asset investment remains a drag, growing only 3.7% ytd yoy versus expectations of 3.9%. The persistent weakness in property investment, down 10.7% in the first five months of the year, highlights ongoing strain in the real estate sector.

    Four central banks, one volatile week

    Markets are heading into a packed week, with four major central banks—Fed, BoJ, BoE, and SNB—set to announce policy decisions, all against the backdrop of heightened geopolitical risk, trade policy uncertainty, and a flurry of critical economic data. Alongside the rate decisions, key data including retail sales, inflation, and job report will further shape expectations.

    Fed is widely expected to hold rates steady at 4.25–4.50%, with near-universal pricing in the futures market reflecting that consensus. There is little urgency for Fed to act, given the still-resilient labor market and the fiscal support flowing from new tax and spending legislation. However, the path ahead is anything but straightforward. While recent CPI and PPI data showed no clear sign of tariffs filtering through, the risk of a renewed trade war is growing. Whether tariffs are rolled back or re-escalated after the 90-day truce expires will heavily influence Fed’s next move. A Reuters poll shows economists split—55% expect rate cuts to resume in Q3, while 42% forecast cuts only in Q4 or later.

    Meanwhile, oil prices are emerging as a new threat to the disinflation trend. If the Middle East conflict worsens, a sustained energy rally could delay the Fed’s easing cycle further. That’s a major variable markets will be watching, especially if headline inflation picks up again. Fed Chair Powell will likely emphasize data dependency while avoiding strong forward guidance, leaving markets to interpret incoming economic and geopolitical developments on their own.

    BoJ is also expected to keep its policy rate unchanged at 0.50%. With trade tensions high, the odds of another hike this year have dropped sharply. A Reuters poll found 52% of economists now expect no further move in 2025, while over three-quarters foresee one 25bps hike by March 2026. If trade talks stabilize and global demand revives, the BoJ could reconsider tightening, but for now, the path of least resistance is to wait and observe.

    BoE meets amid growing evidence of domestic weakness, including softer-than-expected GDP and labor market data. Still, policymakers are expected to hold the Bank Rate at 4.25% this week. The BoE has been moving cautiously and gradually, citing lingering inflation and wage pressures. The Monetary Policy Committee remains divided: two members pushed for a 50bps cut at the last meeting, while others voted to hold. A Reuters poll shows most economists expect 25bps cuts in both Q3 and Q4, bringing the rate down to 3.75% by year-end. However, that easing path will also hinge on upcoming inflation data, due this week.

    Among the four, SNB stands out as the only one likely to ease. A 25bps cut to 0.00% is widely anticipated as SNB confronts rising deflationary pressure. May’s consumer price index fell -0.1% yoy, the first negative print in over four years. Coupled with the strong Swiss Franc, which has appreciated significantly amid geopolitical risk flows, deflation risks are intensifying. Markets are even speculating that the SNB could pre-emptively cut by 50bps or signal readiness to re-enter negative territory if warranted.

    Beyond the rate decisions, other important central bank communications are scheduled too. BoC will release its summary of deliberations, and the BoJ will publish minutes of its recent meeting—both likely to offer insight into policy calibration ahead. Meanwhile, key economic data including retail sales from the US, UK, and Canada, UK CPI, and Australian employment figures.

    USD/CAD Daily Outlook

    Daily Pivots: (S1) 1.3550; (P) 1.3601; (R1) 1.3635; More…

    USD/CAD’s decline continues today and intraday bias stays on the downside. Current fall from 1.4791 should target 100% projection of 1.4414 to 1.3749 from 1.4014 at 1.3349. On the upside, through, break of 1.3650 minor resistance will turn intraday bias neutral first.

    In the bigger picture, price actions from 1.4791 medium term top could either be a correction to rise from 1.2005 (2021 low), or trend reversal. In either case, further decline is expected as long as 1.4014 resistance holds. Next target is 61.8% retracement of 1.2005 (2021 low) to 1.4791 at 1.3069.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    22:30 NZD Business NZ PSI May 48.5
    23:01 GBP Rightmove House Price Index M/M Jun 0.60%
    02:00 CNY Industrial Production Y/Y May 6.00% 6.10%
    02:00 CNY Retail Sales Y/Y May 5.00% 5.10%
    02:00 CNY Fixed Asset Investment YTD Y/Y May 3.90% 4.00%
    06:30 CHF PPI M/M May 0.10% 0.10%
    06:30 CHF PPI Y/Y May -0.50%
    07:00 CHF SECO Economic Forecasts
    12:30 USD Empire State Manufacturing Jun -6.7 -9.2

     



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  • USD/CHF wobbles near six-week low around 0.8200, US NFP in focus

    USD/CHF wobbles near six-week low around 0.8200, US NFP in focus


    • USD/CHF trades cautiously around 0.8200, while investors await key US NFP data for May.
    • Disappointing US ADP Employment and ISM Services PMI data for May have battered the US Dollar.
    • The Swiss CPI deflated by 0.1% in May, paving the way for more interest rate cuts from the SNB.

    The USD/CHF pair trades with caution near the six-week low around 0.8200 during late Asian trading hours on Thursday. Investors brace for significant volatility in the pair as the United States (US) Nonfarm Payrolls (NFP) data takes centre stage, which will reflect the current status of the labor market.

    The US Dollar (USD) fell sharply on Wednesday after the release of a string of disappointing US economic data for May, notably a sharp slowdown in the private sector labor demand. The ADP Employment Change data showed that the private sector added 37K fresh workers, the lowest reading seen since the Covid era in February 2021.

    Additionally, weak Services PMI and rising input costs in the services sector, which accounts for the two-third of the overall economic activity, have prompted stagflation risks. According to the US ISM Services PMI report, activities in the sector unexpectedly declined, and the sub-component Prices Paid grew at a faster pace. The scenario of rising input costs and labor market slowdown often leads to stagflation.

    On the trade front, investors seek fresh cues on trade negotiations between Washington and Beijing. On Wednesday, the comments from US President Donald Trump in a post on Truth.Social signaled that trade negotiations with Chinese leader Xi Jinping won’t be easy. “I like President Xi of China, always have, and always will, but he is VERY TOUGH, AND EXTREMELY HARD TO MAKE A DEAL WITH!!!” Trump wrote.

    In the Swiss region, the scenario of deflation has raised expectations of an interest rate cut by the Swiss National Bank (SNB) in the monetary policy meeting on June 19. On Tuesday, the data showed that the Swiss Consumer Price Index (CPI) deflated by 0.1% on year, as expected, in May after remaining flat in April.

    SNB President Martin Schlegel already warned in an event in Basel in the last week of May that Swiss inflation could enter negative territory, Reuters reported. However, he ruled out expectations that short-term inflation hiccups could lead to monetary policy adjustments, stating that the central bank is more focused on maintaining price stability in the medium term.

    “Even negative inflation figures cannot be ruled out in the coming months,” Schlegel said and added, “The SNB does not necessarily have to react to this.”

     

    US Dollar FAQs

    The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022.
    Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.

    The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates.
    When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.

    In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system.
    It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.

    Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.



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

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


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

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

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

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

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

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

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

    SNB’ Schlegel signals willingness to revisit negative rates

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    EUR/GBP Mid-Day Outlook

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

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

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

    Economic Indicators Update

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

     



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  • Markets Steady as US Yields Dip Amid Continuous Tariff Rumors

    Markets Steady as US Yields Dip Amid Continuous Tariff Rumors


    Global financial markets are relatively stable heading into the end of the week, with risk appetite showing further signs of improvement. European equities are trading modestly higher, following rebounds seen earlier in Japan and Hong Kong. However, US futures are slightly in the red despite strong earnings reports from tech heavyweights Alphabet and Intel. Still, one supportive development is the continued pullback in US Treasury yields, with the 10-year dipping below 4.3% mark—viewed as a positive sign for US assets.

    Meanwhile, the trade war front is seeing renewed speculation, especially regarding US-China tariff relations. According to multiple media reports, China has quietly granted tariff exemptions on some US goods—including integrated circuits—previously subject to its 125% retaliatory duties. While no formal statement has been issued by Chinese authorities, there are reports of internal government consultations with foreign businesses. A list of 131 product categories is circulating on social media is believed to outline those under consideration for exemption. These steps signal a possible softening of Beijing’s stance and a willingness to preserve critical supply chains.

    Meanwhile, US President Donald Trump told Time magazine that China is actively engaging in talks with Washington to strike a tariff deal, and claimed that President Xi Jinping had recently called him. However, China’s Foreign Ministry declined to comment on Trump’s statement and previously warned the US to stop “misleading the public” about the status of bilateral negotiations. The conflicting narratives underscore the fog of uncertainty surrounding trade diplomacy, though market participants appear cautiously hopeful that both sides are seeking a path to de-escalation.

    In the currency markets, the week’s performance leaderboard remains largely unchanged. Kiwi is holding firmly at the top. Sterling and Aussie are also among the week’s better performers. On the other end of the spectrum, Swiss franc, Japanese Yen, and Euro are lagging—reflecting fading safe-haven demand. Dollar and Loonie sit in the middle.

    In Europe, at the time of writing, FTSE is up 0.28%. DAX is up 0.87%. CAC is up 0.65%. UK 10-year yield is down -0.021 at 4.482. Germany 10-year yield is up 0.018 at 2.471. Earlier in Asia, Nikkei rose 1.90%. Hong Kong HSI rose 0.32%. China Shanghai SSE fell -0.07%. Singapore Strait Times fell -0.21%. Japan 10-year JGB yield rose 0.03 to 1.34.

    Canada retail sales fall -0.4% mom in Feb, but core spending offers rebound hopes

    Canadian retail sales declined by -0.4% mom to CAD 69.3B in February, in line with market expectations. The overall weakness was driven primarily by a -2.6%mom drop in motor vehicle and parts dealers, with all four store categories in the subsector posting declines.

    However, beneath the surface, the data showed encouraging signs. Core retail sales—which exclude fuel and vehicle-related sales—rose by 0.5% mom.

    Looking ahead, Statistics Canada’s advance estimate points to a 0.7% mom increase in total sales for March.

    SNB’s Schlegel: Growth may miss forecasts due to trade uncertainty

    Swiss National Bank Chairman Martin Schlegel warned at the central bank’s annual general meeting that high levels of trade policy uncertainty continue to cloud the economic outlook.

    “It remains very uncertain how inflation and the economy in Switzerland will develop,” Schlegel said, adding that “an economic slowdown cannot be ruled out.”

    Growth forecasts are already under pressure, with SNB’s March projection of 1% to 1.5% GDP growth this year falling below Switzerland’s long-term average of 1.8%.

    Schlegel reiterated that SNB stands ready to adjust policy if needed, including interest rate changes and foreign exchange interventions. However, he acknowledged the limits of monetary policy in addressing deeper structural uncertainty.

    “Price stability cannot prevent trade policy uncertainty,” he cautioned, but emphasized that maintaining stable prices provides an essential foundation for the broader economy.

    UK retail sales rise 0.4% mom in March, 1.6% qoq in Q1

    UK retail sales surprised to the upside in March, rising by 0.4% mom, defying market expectations for a -0.3% mom decline.

    The unexpected strength was attributed largely to favorable weather conditions, which lifted sales at clothing and outdoor retailers. However, this gain was partially offset by weaker performance at supermarkets.

    Looking beyond the monthly figure, the broader quarterly performance painted an encouraging picture of consumer resilience. Retail sales volumes grew by 1.6% qoq 1.7% yoy in Q1. These results indicate that UK consumers remain relatively active despite broader economic uncertainties.

    Tokyo CPI core surges to 3.4% in April, strengthening case for BoJ June hike

    Inflation in Japan’s capital city surged in April, with Tokyo core CPI (excluding food) accelerating from 2.4% yoy to 3.4% yoy, above the 3.2% yoy forecast. The more domestically focused core-core measure (excluding food and energy) also rose sharply, from 2.2% yoy to 3.1% yoy. Headline CPI jumped from 2.9% yoy to 3.5% yoy.

    Despite the upside surprise, BoJ is still expected to hold rates steady at its May 1 policy meeting as it gauges the broader impact of recent US tariffs and awaits progress in ongoing trade negotiations. However, with inflation gathering pace across key categories, market expectations are shifting toward a rate hike as soon as June.

    USD/CHF Mid-Day Outlook

    Daily Pivots: (S1) 0.8237; (P) 0.8273; (R1) 0.8306; More….

    USD/CHF’s corrective recovery from 0.8038 is still in progress and intraday bias stays on the upside. Further rise would be seen but upside should be limited by 38.2% retracement of 0.9200 to 0.8038 at 0.8482. On the downside, below 0.8196 minor support will bring retest of 0.8038. Firm break there will resume larger down trend.

    In the bigger picture, long term down trend from 1.0342 (2017 high) is still in progress and met 61.8% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.8079 already. In any case, outlook will stay bearish as long as 55 W EMA (now at 0.8794) holds. Sustained break of 0.8079 will target 100% projection at 0.7382.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    23:01 GBP GfK Consumer Confidence Apr -23 -22 -19
    23:30 JPY Tokyo CPI Y/Y Apr 3.50% 2.90%
    23:30 JPY Tokyo CPI Core Y/Y Apr 3.40% 3.20% 2.40%
    23:30 JPY Tokyo CPI Core-Core Y/Y Apr 3.10% 2.20%
    06:00 GBP Retail Sales M/M Mar 0.40% -0.30% 1.00% 0.70%
    12:30 CAD Retail Sales M/M Feb -0.40% -0.40% -0.60%
    12:30 CAD Retail Sales ex Autos M/M Feb 0.50% 0.00% 0.20%
    14:00 USD UoM Consumer Sentiment Index Apr 50.7 50.8
    14:00 USD UoM Consumer Inflation Expectations Apr 6.70%

     



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  • Sterling Holds Firm After BoE, But Dollar and Yen Outperform

    Sterling Holds Firm After BoE, But Dollar and Yen Outperform


    Sterling is trading slightly firmer today, though it struggles against the rebounding Dollar and Yen. BoE’s rate decision leaned slightly more hawkish than expected, with only one member of the MPC, the known dove Swati Dhingra, voting for a rate cut. The rest supported keeping rates on hold. The overall tone of the statement remained unchanged, reinforcing a gradual and cautious approach to monetary easing. While BoE acknowledged downside risks to growth, it sounded alert on inflation persistence, signaling that the central bank is unlikely to rush into aggressive rate cuts.

    Meanwhile, Swiss Franc weakened after the SNB cut rates by 25bps to 0.25%. The message wasn’t particularly dovish. The central bank still see inflation rising back to 0.8% in 2026. Given that interest rates are already at an ultra-low level, if incoming data aligns with this forecast, further rate cuts may not be necessary anytime soon. This outlook helped cushion Franc’s downside but was not enough to prevent weakness against stronger currencies like Yen and Dollar.

    In the broader forex markets, Dollar and Yen are leading the charge today, though their rebounds remain relatively unconvincing. Both currencies have struggled to sustain momentum so far despite benefiting mildly from renewed risk aversion in global markets. Meanwhile, Kiwi and Aussie are under pressure, appearing to be weighed down by dampened sentiment. Loonie and European majors are stuck in the middle of the pack.

    Technically, Gold is struggling to extend gains, as it loses momentum near key resistance levels. It has so far failed to decisively break above the 61.8% projection of 2584.24 to 2956.09 from 2832.41 at 3062.21, a level that coincides with a medium-term rising channel resistance. A break below 3022.66 support would indicate short-term topping, potentially leading to a deeper pullback toward the 55 4H EMA (now at 2983.99) or even further into the 2832.41/2956.09 support zone.

    In Europe, at the time of writing, FTSE is down -0.07%. DAX is down -1.40%. CAC is down -0.96%. UK 10-year yield is down -0.045 at 4.597. Germany 10-year yield is down -0.043 at 2.764. Earlier in Asia, Japan was on holiday. Hong Kong HSI fell -2.23%. China Shanghai SSE fell -0.51%. Singapore Strait Times rose 0.57%.

    US initial jobless claims rise to 223k vs exp 222k

    US initial jobless claims rose 2k to 223k in the week ending March 15, slightly above expectation of 222k. Four-week moving average of initial claims rose 750 to 227k.

    Continuing claims rose 33k to 1892k in the week ending March 18. Four-week moving average of continuing claims rose 6k to 1876k.

    BoE holds rates at 4.50%, Dhingra lone dissenter for a cut

    BoE left the benchmark Bank Rate unchanged at 4.50%, in line with market expectations. Known dove Swati Dhingra once again dissenting, and voted in favor of a 25bps rate cut. However, Catherine Mann, who had previously voted for a 50bps cut, switched her stance and supported keeping rates on hold.

    The accompanying statement emphasized a “gradual and careful approach” to rate cuts, reinforcing that BoE is not in a rush to ease policy despite some signs of economic softness.

    BoE also highlighted growing global uncertainties, particularly surrounding intensified trade policy risks and geopolitical tensions. The committee acknowledged the impact of new US tariffs and retaliatory measures from some governments. Additionally, recent German fiscal reforms were noted.

    While UK GDP growth has been “slightly stronger than expected”, business surveys continue to point to underlying weakness in employment intentions and broader economic activity. BoE expects CPI to rise to around 3.75% in Q3 2025, and to “fall back thereafter”. But policymakers remain cautious about potential persistent inflationary pressures.

    UK payrolled employment rises 21k in Feb, unemployment rate unchanged at 4.4% in Jan

    In February, UK payrolled employment rose by 21k (0.1% mom). However, median monthly pay growth slowed to 5.0% yoy from 6.0%, reinforcing signs that wage pressures are gradually easing. However claimant count, surged 44.2k, far exceeding expectations of 7.9k.

    In the three months to January, unemployment rate remained unchanged at 4.4%, slightly better than the expected 4.5%. Average earnings including bonuses rose by 5.8% yoy, just below expectations of 5.9%. Excluding bonuses, wages rose 5.9% yoy, in line with forecasts.

    SNB cuts 25bps, flags downside inflation risks and uncertain growth outlook

    SNB delivered a widely expected 25bps rate cut, bringing the policy rate down to 0.25%. In its statement, SNB justified the decision by pointing to low inflationary pressures and “heightened downside risks to inflation”.

    The central bank acknowledged that Switzerland’s economic outlook has become “considerably more uncertain”, particularly due to rising global trade tensions and geopolitical risks. The external environment remains a key threat to growth.

    The new conditional inflation forecast suggests that inflation will remain well within its price stability range, averaging 0.4% in 2025, and 0.8% in both 2026 and 2027. These projections assume that the policy rate stays at 0.25% throughout the forecast horizon.

    On the growth front, SNB expects GDP to expand between 1% and 1.5% in 2025, with domestic demand benefiting from rising real wages and easier monetary conditions. However, weak external demand is expected to act as a drag on growth. For 2026, SNB anticipates GDP growth of around 1.5%.

    ECB’s Lagarde warns US-EU tariff war could slash eurozone growth by 0.5%

    Speaking to a European Parliament committe, ECB President Christine Lagarde warned that US tariffs of 25% on European imports could have a significant negative impact on the Eurozone economy, cutting growth by around 0.3% in the first year.

    If the EU responds with retaliatory tariffs, the impact could deepen, reducing Eurozone GDP growth by as much as 0.5%.

    While the sharpest impact would be felt in the first year, Lagarde emphasized that the effects would be long-lasting, leaving a “persistent negative effect on the level of output”.

    Beyond growth concerns, inflation outlook would also become highly uncertain in such a scenario.

    In the short term, EU retaliatory measures and a weaker Euro—stemming from lower US demand for European products—could push inflation higher by around 0.5%.

    In the medium term, weaker economic activity would dampen price pressures, ultimately counteracting the initial inflationary impact.

    New Zealand GDP exits recession with stronger-than-expected 0.7% qoq growth in Q4

    New Zealand’s economy expanded by 0.7% qoq in Q4, surpassing expectations of 0.4% qoq and officially pulling the country out of recession. However, the broader picture remains mixed, as GDP still declined by -0.5% yoy, reflecting the lingering impact of previous contractions.

    The positive quarterly growth was driven by expansions in 11 out of 16 industries, with the rental, hiring, and real estate sector, retail trade, and healthcare services leading the gains.

    Despite the overall improvement, some key sectors struggled, with construction and information media & telecommunications posting declines.

    Still, a major positive takeaway from the report is that GDP per capita rose by 0.4% in Q4, marking its first increase in two years.

    Australian employment plunges -52.8k in Feb, unemployment rate unchanged at 4.1%

    Australia’s employment dropped sharply by -52.8k in February, significantly missing market expectations of 30k gain. The decline was broad-based, with full-time jobs falling by -35.7k and part-time employment down by -17k.

    Unemployment rate remained steady at 4.1%, in line with forecasts. The participation rate declined by -0.4% to 66.8%, suggesting that fewer people were actively seeking work, which helped keep the jobless rate from rising. Additionally, monthly hours worked fell by -0.4% mom, reflecting softer labor market conditions.

    The Australian Bureau of Statistics attributed part of the decline in employment to fewer older workers re-entering the labor force. However, the broader trend still points to resilience in the job market, with employment up by 266k people, or 1.9%, compared to last year. The annual employment growth rate remains close to the 20-year pre-pandemic average of 2.0%.

    GBP/USD Mid-Day Outlook

    Daily Pivots: (S1) 1.2969; (P) 1.2990; (R1) 1.3025; More…

    Intraday bias in GBP/USD is turned neutral again with current retreat. On the downside, firm break of 1.2910 support should confirm short term topping, on bearish divergence condition in 4H MACD. In this case, intraday bias will be back on the downside for near term channel support (now at 1.2770). On the upside, though, above 1.3013 will resume the rally from 1.2099 towards 1.3433 high.

    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
    21:45 NZD GDP Q/Q Q4 0.70% 0.40% -1.00% -1.10%
    00:30 AUD Employment Change Feb -52.8K 30K 44K 30.5K
    00:30 AUD Unemployment Rate Feb 4.10% 4.10% 4.10%
    01:00 CNY 1-Y Loan Prime Rate 3.10% 3.10% 3.10%
    01:00 CNY 5-Y Loan Prime Rate 3.60% 3.60% 3.60%
    07:00 CHF Trade Balance (CHF) Feb 4.80B 5.01B 6.12B 6.15B
    07:00 EUR Germany PPI M/M Feb -0.20% 0.20% -0.10%
    07:00 EUR Germany PPI Y/Y Feb 0.70% 1.00% 0.50%
    07:00 GBP Claimant Count Change Feb 44.2K 7.9K 22K
    07:00 GBP ILO Unemployment Rate (3M) Jan 4.40% 4.50% 4.40%
    07:00 GBP Average Earnings Including Bonus 3M/Y Jan 5.80% 5.90% 6.00% 6.10%
    07:00 GBP Average Earnings Excluding Bonus 3M/Y Jan 5.90% 5.90% 5.90%
    08:30 CHF SNB Interest Rate Decision 0.25% 0.25% 0.50%
    09:00 CHF SNB Press Conference
    09:00 EUR ECB Economic Bulletin
    11:00 GBP BoE Interest Rate Decision 4.50% 4.50% 4.50%
    11:00 GBP MPC Official Bank Rate Votes 0–1–8 0–2–7 0–9–0
    12:30 CAD Industrial Product Price M/M Feb 0.40% 0.30% 1.60%
    12:30 CAD Raw Material Price Index M/M Feb 0.30% -0.30% 3.70%
    12:30 USD Current Account (USD) Q4 -304B -337B -311B -310B
    12:30 USD Initial Jobless Claims (Mar 14) 223K 222K 220K 221K
    12:30 USD Philadelphia Fed Survey Mar 12.5 12.1 18.1
    14:00 USD Existing Home Sales Feb 3.92M 4.08M
    14:30 USD Natural Gas Storage 3B -62B

     



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  • Yen Rebounds on Risk-Off Mood in Asia, Focus Shifts to SNB and BoE

    Yen Rebounds on Risk-Off Mood in Asia, Focus Shifts to SNB and BoE


    Asian markets are showing signs of mild risk-off sentiment today, with Hong Kong and China stocks retreating from recent gains. The weaker regional tone contributed to a stronger Yen. Additionally, Yen’s rebound is also fueled by post-FOMC Dollar softness. The technical picture suggests that the recent pullback in Yen against Dollar has likely run its course, allowing the currency to regain some ground.

    Meanwhile, the weaker regional sentiment has put pressure on New Zealand Dollar, despite the strong GDP data that showed the country exiting recession. Aussie is also under pressure, not just due to the broader market risk aversion but also because of softer-than-expected employment data, which saw a surprise contraction in jobs. While both the Kiwi and Aussie have had some resilience earlier this week, today’s price action suggests that traders are probably turning more cautious.

    SNB rate decision will be the first major focus in the European session, with the central bank widely expected to deliver another 25bps rate cut. A key question is whether SNB signals that the current easing cycle is nearing its end. Attention will then shift to BoE, which is widely expected to keep its benchmark interest rate steady. The focus will be on the voting composition within the MPC.

    For the week so far, Dollar is currently the worst performer, followed by Euro and Aussie. On the other hand, Swiss Franc is the strongest, followed by Kiwi and Sterling. Loonie and Yen are positioning in the middle, with Yen’s outlook improving due to today’s risk-off flows.

    In Asia, Japan is on holiday. Hong Kong HSI is down -1.51%. China Shanghai SSE is down -0.25%. Singapore Strait Times is up 0.67%. Overnight, DOW rose 0.92%. S&P 500 rose 1.08%. NASDAQ rose 1.41%. 10-year yield fell -0.025 to 4.256.

    US stocks recovered as Fed sticks to two rate cut outlook for 2025

    US stocks closed higher overnight, and extended their near-term consolidations. Investors were somewhat relieved that Fed maintained its outlook for two rate cuts this year. However, the central bank also introduced a note of caution, warning in its statement that “uncertainty around the economic outlook has increased” and that it remains “attentive to the risks to both sides of its dual mandate.”

    In the post-meeting press conference, Chair Jerome Powell explicitly addressed the impact of tariffs. He warned that “the arrival of tariff inflation may delay further progress” on disinflation. He also noted that Fed’s quarterly summary of economic projections does not show further downward progress on inflation this year, attributing this to new tariffs coming into effect.

    This acknowledgment reinforces the stance that while rate cuts remain in the pipeline, the timing and extent of policy easing will depend on how inflation evolves in the face of trade disruptions and supply chain adjustments.

    Fed left its benchmark interest rate unchanged at 4.25-4.50%, a widely expected move. Fed fund futures now assign roughly 70% probability that the next rate cut will come in June, compared to just 47% a month ago.

    Technically, S&P 500 turned into consolidations after falling to 5504.65 last week. 55 W EMA (now at 5596.07) could offer some support for a near term recovery. But risk will stay on the downside as long as 55 D EMA (now at 5873.77) holds.

    On resumption, fall from 6147.43, as a correction to the rise from 3491.58, should target 38.2% retracement at 5132.89.

    New Zealand GDP exits recession with stronger-than-expected 0.7% qoq growth in Q4

    New Zealand’s economy expanded by 0.7% qoq in Q4, surpassing expectations of 0.4% qoq and officially pulling the country out of recession. However, the broader picture remains mixed, as GDP still declined by -0.5% yoy, reflecting the lingering impact of previous contractions.

    The positive quarterly growth was driven by expansions in 11 out of 16 industries, with the rental, hiring, and real estate sector, retail trade, and healthcare services leading the gains.

    Despite the overall improvement, some key sectors struggled, with construction and information media & telecommunications posting declines.

    Still, a major positive takeaway from the report is that GDP per capita rose by 0.4% in Q4, marking its first increase in two years.

    Australian employment plunges -52.8k in Feb, unemployment rate unchanged at 4.1%

    Australia’s employment dropped sharply by -52.8k in February, significantly missing market expectations of 30k gain. The decline was broad-based, with full-time jobs falling by -35.7k and part-time employment down by -17k.

    Unemployment rate remained steady at 4.1%, in line with forecasts. The participation rate declined by -0.4% to 66.8%, suggesting that fewer people were actively seeking work, which helped keep the jobless rate from rising. Additionally, monthly hours worked fell by -0.4% mom, reflecting softer labor market conditions.

    The Australian Bureau of Statistics attributed part of the decline in employment to fewer older workers re-entering the labor force. However, the broader trend still points to resilience in the job market, with employment up by 266k people, or 1.9%, compared to last year. The annual employment growth rate remains close to the 20-year pre-pandemic average of 2.0%.

    SNB to cut, BoE to hold, a look at GBP/CHF

    Two major central banks will announce their monetary policy decisions today, with SNB leading, followed by BoE.

    SNB is widely expected to lower its policy rate by 25bps to 0.25%. With inflation at just 0.3% in February, well below the mid-point of target range, there is both room and necessity for further easing to keep medium-term inflation expectations anchored closer to 1%.

    However, the urgency for additional policy support appears to be diminishing, especially with growing optimism around Eurozone economy. Stronger Eurozone growth, driven by major fiscal expansion plans, is expected to lift Euro and boost demand for Swiss exports, which could help mitigate recession and deflation risks in Switzerland.

    A Reuters poll of economists showed that most expect rates to remain at 0.25% by year-end, while 10 foresee a move to 0%, and only three expect SNB to maintain the current 0.50% level.

    Meanwhile, BoE is widely expected to hold its Bank Rate steady at 4.5%, with little change to its cautious forward guidance. A Reuters poll of 61 economists showed unanimous expectations for a rate hold today, with the next cuts projected for May, August, and November.

    The key focus for markets will be whether any additional Monetary Policy Committee members join Catherine Mann and Swati Dhingra in voting for an immediate rate cut, which could signal a shift toward a more dovish stance in the coming months.

    Technically, while GBP/CHF extended the rally from 1.1086, it has clearly struggled to find convincing momentum. It’s plausible that this rise is the third leg of the corrective rebound from 1.0741, which has already completed after meeting 61.8% projection of 1.0741 to 1.1368 from 1.1086 at 11437. Break of 1.1299 support will solidify this bearish case and bring deeper fall back to 1.1086 support. Nevertheless firm break of 1.1501 will pave the way to 1.1675 resistance next.

    USD/JPY Daily Outlook

    Daily Pivots: (S1) 148.15; (P) 149.15; (R1) 149.69; More…

    USD/JPY’s currently steep decline suggests rejection by near term falling channel resistance. Immediate focus is now on 148.22 minor support. Firm break there will indicate that corrective rebound from 146.52 has completed and bring retest of this low first. Sustained trading below 61.8% retracement of 139.57 to 158.86 at 146.32 will resume the fall from 158.86 to 139.57 support. In case of another recovery, upside should be limited by 150.92 support turned resistance.

    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
    21:45 NZD GDP Q/Q Q4 0.70% 0.40% -1.00% -1.10%
    00:30 AUD Employment Change Feb -52.8K 30K 44K 30.5K
    00:30 AUD Unemployment Rate Feb 4.10% 4.10% 4.10%
    01:00 CNY 1-Y Loan Prime Rate 3.10% 3.10% 3.10%
    01:00 CNY 5-Y Loan Prime Rate 3.60% 3.60% 3.60%
    07:00 CHF Trade Balance (CHF) Feb 5.01B 6.12B
    07:00 EUR Germany PPI M/M Feb 0.20% -0.10%
    07:00 EUR Germany PPI Y/Y Feb 1.00% 0.50%
    07:00 GBP Claimant Count Change Feb 7.9K 22K
    07:00 GBP ILO Unemployment Rate (3M) Jan 4.50% 4.40%
    07:00 GBP Average Earnings Including Bonus 3M/Y Jan 5.90% 6.00%
    07:00 GBP Average Earnings Excluding Bonus 3M/Y Jan 5.90%
    08:30 CHF SNB Interest Rate Decision 0.25% 0.50%
    09:00 CHF SNB Press Conference
    09:00 EUR ECB Economic Bulletin
    11:00 GBP BoE Interest Rate Decision 4.50% 4.50%
    11:00 GBP MPC Official Bank Rate Votes 0–2–7 0–9–0
    12:30 CAD Industrial Product Price M/M Feb 0.30% 1.60%
    12:30 CAD Raw Material Price Index M/M Feb -0.30% 3.70%
    12:30 USD Current Account (USD) Q4 -337B -311B
    12:30 USD Initial Jobless Claims (Mar 14) 222K 220K
    12:30 USD Philadelphia Fed Survey Mar 12.1 18.1
    14:00 USD Existing Home Sales Feb 3.92M 4.08M
    14:30 USD Natural Gas Storage 3B -62B

     



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  • China Stimulus Fuels Asian Rally, But Market Caution Persists on US Outlook

    China Stimulus Fuels Asian Rally, But Market Caution Persists on US Outlook


    Asian markets opened the week on a positive note, buoyed by stronger-than-expected economic data from China and optimism surrounding Beijing’s latest efforts to boost domestic consumption. Investors welcomed China’s “special action plan” aimed at stimulating household spending, which aligns with Premier Li Qiang’s government report last week that named consumption growth as a top priority. The latest measures also follow commitments from financial regulators to ease consumer credit quotas and loan terms, signaling a broad push to inject liquidity into the economy and support consumer demand.

    While the plan does not appear to introduce any groundbreaking new policies, its classification as an “action plan” suggests that concrete steps at the local level will soon follow. Given past challenges in reviving domestic demand, this structured approach offers hope that implementation will be more effective than previous, less-defined efforts. Investors appear to be cautiously optimistic that China’s stimulus measures will help stabilize growth, particularly amid continued weakness in real estate and private investment.

    Meanwhile, US futures are trending lower, reflecting growing fears of an impending economic slowdown. Treasury Secretary Scott Bessent’s remarks over the weekend did little to reassure investors, as he acknowledged that there are “no guarantees” the US will avoid a recession. While Bessent emphasized the need to transition away from excessive government spending, his comments about market corrections being “healthy” and his dismissal of recent stock market losses failed to inspire confidence. His focus on tax policy, deregulation, and energy security was seen as a long-term strategy rather than an immediate remedy for economic concerns.

    On the currency front, New Zealand Dollar is currently the strongest performer this month, despite today’s weaker services data. Swiss Franc follows behind, while Australian Dollar takes the third spot. On the weaker side, Canadian Dollar sits at the bottom, trailed by Dollar and British Pound. Meanwhile, Euro and Yen are positioned in the middle.

    Technically, while Hong Kong’s HSI gains today, the broader picture suggests upside momentum is fading, as seen in D MACD. Current rally from 18671.49 may extend higher, but strong resistance is expected around the 25K psychological level, which coincides with 100% projection of 16964.28 to 23241.74 from 18671.49 at 24948.95. Break of 23198.13 support will argue that the a near term correction has already started back to 55 D EMA (now at 21988), or 22k in short.

    In Asia, at the time of writing, Nikkei is up 1.21%. Hong Kong HSI is up 1.37%. China Shanghai SSE is up 0.28%. Singapore Strait Times is up 0.84%. Japan 10-year JGB yield is down -0.011 at 1.517.

    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.

    ECB’s de Guindos: Trade and geopolitical risks make uncertainty worse than pandemic time

    ECB Vice President Luis de Guindos expressed confidence that inflation is on track to reach the 2% target “the end of this year or the beginning of next.” He added that “all indicators for services and underlying inflation are moving in the right direction.”

    However, he warned that uncertainty in the global economy is “even higher than it was during the pandemic”, with mounting geopolitical risks and shifting trade policies. A key concern is the more protectionist stance of the new US. administration, which de Guindos sees as a major departure from multilateral cooperation. “This is a very important change, and a big source of uncertainty,” he warned.

    Despite improving conditions—real wages rising, inflation easing, and financing conditions loosening—consumption in the Eurozone remains weak. De Guindos attributed this sluggish demand to consumer sentiment, noting that households are hesitant to spend due to fears about the medium-term economic outlook. “The possibility of a trade war or wider geopolitical conflict has an impact on consumer confidence,” he noted.

    On the fiscal front, de Guindos acknowledged the massive defense spending plans by European governments as “certainly a decision in the right direction”. Nevertheless, he cautioned that it’s too early to determine the full economic impact. While increased defense investment is likely to support growth, he believes it will have only a limited effect on inflation.

    Four central banks take center stage amid global data deluge

    Central bank policy decisions will dominate market attention this week, as Fed, BoJ, BoE and SNB each convene to set monetary policy. The announcements come against a backdrop of critical data releases, including inflation figures from Canada and Japan, employment reports from the UK and Australia, retail sales updates from the US and Canada, as well as GDP from New Zealand.

    Fed is widely expected to hold rates steady at 4.25-4.50%, with virtually no chance of a surprise move. While markets anticipate no immediate change, there remains keen interest in the new economic projections. Back in December, the median forecast called for just two rate cuts by year-end, bringing the rate down to 3.75–4.00%. Any downward revision to this path would solidify expectations for a June cut, making it in line with Fed fund futures pricing. Additionally, by the end of 2027, Fed sees rates back at 3.00–3.25%, marginally above the longer-run neutral estimate at 3.00%. Markets will also watch whether Fed’s new projections suggest faster pace of reaching neutral, which would in turn indicate a dovish turn on the economic outlook.

    BoJ is also expected to hold rates steady at 0.50%, with 61 of 62 economists in a recent Reuters poll forecasting no change this week. poll. However, expectations are growing for a rate hike later this year, with 18 of 61 economists predicting a move to 0.75% in Q2, while 40 of 57 see it happening in Q3. The timing will largely depend on wage negotiations, which has so far been strong. Many of Japan’s largest corporations already met union demands for significant pay raises. This raises the possibility of an earlier-than-expected hike, and markets will be looking for any guidance from BoJ Governor Kazuo Ueda regarding the bank’s next steps.

    BoE will also hold rates steady at 4.50%, maintaining its measured approach of one 25bps cut per quarter. Inflation expectations remain sticky, with the latest BoE survey showing that five-year inflation expectations rose to 3.6% in February, up from 3.4% in November—the highest level since 2019. This could keep the majority of the MPC hesitant to ease policy further prematurely. The key question at this meeting will be whether more members join Catherine Mann and Swati Dhingra in voting for a more aggressive loosening of monetary policy.

    In contrast, SNB is forecast to cut its key policy rate by another 25bps, bringing it down to 0.25%. Swiss inflation dropped to just 0.3% in February, the lowest since April 2021, which strengthens the argument for another rate cut. With inflation now sitting at the lower end of the 0-2% target range, policymakers are likely to lower rates further to prevent a deflationary environment. Market expectations suggest that there is already a 20% probability that SNB will cut rates again in June, bringing interest rates down to 0%.

    Here are some highlights for the week:

    • Monday: New Zealand BNZ services; China industrial production, retail sales, fixed asset investment; Canada housing starts; US retail sales, Empire State manufacturing, business inventories, NAHB housing index.
    • Tuesday: Japan tertiary industry index; Germany ZEW economic sentiment; Eurozone trade balance; Canada CPI; US housing starts and building permits, industrial production.
    • Wednesday: New Zealand current account; Japan BoJ rate decision, trade balance, machine orders; Eurozone CPI final; Fed rate decision.
    • Thursday: New Zealand GDP; Australia employment; SNB rate decision, Swiss trade balance; Germany PPI; BoE rate decision, UK employment; Canada IPPI and RMPI; US jobless claims, Philly Fed survey, current account, existing home sales.
    • Friday: New Zealand trade balance; Japan CPI; UK Gfk consumer confidence; Eurozone current account; Canada retail sales, new housing price index.

    AUD/USD Daily Report

    Daily Pivots: (S1) 0.6292; (P) 0.6312; (R1) 0.6345; More…

    Intraday bias in AUD/USD remains neutral first as range trading continues. On the downside, break of 0.6186 will target 0.6087 support first. Firm break there will resume whole decline from 0.6941. On the upside, sustained break of 0.6407 will resume the rebound from 0.6087 to 100% projection of 0.6087 to 0.6407 from 0.6186 at 0.6506, even still as a corrective move.

    In the bigger picture, fall from 0.6941 (2024 high) is seen as part of the down trend from 0.8006 (2021 high). Next medium term target is 61.8% projection of 0.8006 to 0.6169 from 0.6941 at 0.5806. In any case, outlook will stay bearish as long as 55 W EMA (now at 0.6482) 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 249K 240K
    12:30 USD Empire State Manufacturing Index Mar -1.9 5.7
    12:30 USD Retail Sales M/M Feb 0.70% -0.90%
    12:30 USD Retail Sales ex Autos M/M Feb 0.50% -0.40%
    14:00 USD NAHB Housing Market Index Mar 43 42

     



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  • China Stimulus Fuels Asian Rally, But Market Caution Persists on US Outlook

    Safe Havens Reverse Gains as Tech Decline Subsides, Dollar Gains on Trade Plans


    The sharp selloff in equities sparked by AI competition concerns appears to have run its course for now. While NASDAQ dropped more than -3% yesterday, the selling pressure did not intensify as the session progressed. DOW, on the other hand, demonstrated resilience, closing up 0.65%. This relatively stable market sentiment has led to reversal in safe-haven flows, with both Swiss Franc and Japanese Yen giving up most of their earlier gains and showing signs of returning to weakness.

    Meanwhile, Dollar found fresh support from reports of new tariff measures. According to the Financial Times, Treasury Secretary Scott Bessant is pushing for a universal 2.5% tariff that would increase incrementally each month, potentially reaching as high as 20%.

    US President Donald Trump hinted at an even more aggressive rate, emphasizing that higher tariffs on imports would be balanced by lower taxes for American workers and businesses. Trump also renewed his push for a corporate tax rate cut to 15%—down from 21%—for companies producing goods domestically.

    In the currency markets, Yen continues to lead as the strongest performer this week, followed by Swiss Franc and Dollar. On the other end, commodity-linked currencies have come under significant pressure, with Aussie leading the declines, followed by Kiwi and Loonie. Euro and British Pound are trading in the middle of the pack.

    While this still reflects a broadly risk-off sentiment, the picture could shift quickly albeit another swift in sentiment. U.S. durable goods orders and consumer confidence data are in focus today. But the spotlight will soon turn to key central bank decisions from BoC and FOMC tomorrow, and ECB on Thursday.

    Technically, USD/CHF is well supported by the near term rising channel so far, as rally from 0.8374 remains intact. Break of 0.9107 minor resistance should bring rise resumption to through 0.9200 high to 0.9223 key medium term resistance. Reaction from there will decide whether the pair is already in larger bullish trend reversal.

    Australia NAB business confidence rises to -2, price pressures persist

    Australia’s NAB Business Confidence showed slight improvement in December, rising from -3 to -2, but remains below the long-term average since early 2023. Business Conditions, on the other hand, posted a stronger gain, climbing from 3 to 6.

    Breaking down the details, trading conditions improved from 6 to 9, profitability rose from 0 to 4, and employment conditions ticked up from 3 to 4.

    Price pressures continue to persist, with purchase cost growth rising slightly to 1.5% in quarterly equivalent terms. Labour cost growth edged lower to 1.4%, but output price growth increased by 0.3 percentage points to 0.9%. Retail prices also ticked up to 0.7%.

    According to NAB Chief Economist Alan Oster, “The uptick in purchase cost growth and final product prices reminds us that businesses continue to face some price pressures.”

    SNB’s Schlegel: Negative rates won’t be taken lightly

    SNB Chair Martin Schlegel said on Monday that while the central bank is reluctant to reintroduce negative interest rates, it cannot rule them out entirely.

    He stated, “negative interest rates have served their purpose, but it is not something the SNB would do lightly,” .

    Schlegel also downplayed the risks of deflation, noting that occasional months of negative inflation “is not a problem”.

    “Our concept is price stability over the mid term,” he emphasized.

    Markets currently see 64% chance of SNB cutting rates from 0.5% to 0.25% in March, with a 27% likelihood of a further cut to 0% by June.

    GBP/JPY Daily Outlook

    Daily Pivots: (S1) 191.98; (P) 193.31; (R1) 194.47; More…

    GBP/JPY recovered above 192.05 minor support and intraday bias stays neutral for the moment. Overall outlook is unchanged that corrective pattern from 180.00 might extend. On the upside above 194.73 will target 198.94/197.79 resistance zone. On the downside, however, break of 192.05 minor support will turn bias back to the downside for 189.31 support instead.

    In the bigger picture, price actions from 208.09 are seen as a correction to whole rally from 123.94 (2020 low). The range of consolidation should be set between 38.2% retracement of 123.94 to 208.09 at 175.94 and 208.09. However, decisive break of 175.94 will argue that deeper correction is underway.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    23:50 JPY Corporate Service Price Index Y/Y Dec 2.90% 3.20% 3.00%
    00:30 AUD NAB Business Confidence Dec -2 -3
    00:30 AUD NAB Business Conditions Dec 6 2 3
    13:30 USD Durable Goods Orders Dec 0.80% -1.20%
    13:30 USD Durable Goods Orders ex Transport Dec 0.40% -0.20%
    14:00 USD S&P/CS Composite-20 HPI Y/Y Nov 4.10% 4.20%
    14:00 USD Housing Price Index M/M Nov 0.20% 0.40%
    15:00 USD Consumer Confidence Jan 105.7 104.7

     



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  • Dollar Recovery Capped by Stocks Rally, S&P 500 Ready for New Record

    Dollar Recovery Capped by Stocks Rally, S&P 500 Ready for New Record


    Despite being pressured in the past few days, Dollar remains relatively resilient, refusing to drop despite renewed selling pressure earlier today. US President Donald Trump’s tariff rhetoric is having a diminishing effect on markets, as traders shift their attention back to fundamental and intermarket dynamics. The first significant market reaction to tariffs is likely to come only after actual implementation, with the initial measures on Canada, Mexico, and China anticipated on February 1.

    A key intermarket factor aiding Dollar’s stability is recovery in US Treasury yields, which is providing some support. However, upside momentum of the greenback is clearly capped by strong risk-on sentiment in equity markets. In particular, S&P 500, currently hovering just inch below its all-time high of 6099.97, is showing robust upward momentum. Decisive break above this level would confirm the resumption of the index’s long term up trend, with upper channel resistance (now at around 6380) as next target.

    For the week so far, Japanese Yen is the weakest performer as markets look past BoJ’s expected rate hike on Friday. Dollar follows as the second worst performer, trailed Loonie. In contrast, Kiwi is still leading gains, despite expectations of another 50bps RBNZ rate cut after inflation data. Euro is supported by ECB officials’ reassurances of gradual easing, making it the second-best performer. Aussie Australian Dollar comes in third strongest, with Sterling and Swiss Franc positioned in the middle of the pack.

    ECB’s Lagarde highlights regular, gradual rate cuts as policy diverges from Fed

    ECB President Christine Lagarde emphasized the central bank’s commitment to a “regular, gradual path” of monetary easing, citing progress in disinflation across the Eurozone.

    Speaking to CNBC, Lagarde reiterated that the pace of rate cuts will depend on incoming data. Meanwhile, she described the neutral rate — where monetary policy neither stimulates nor restricts the economy — as between 1.75% and 2.25%.

    Lagarde also acknowledged the divergence in monetary policy paths between ECB and Fed. She attributed this gap to differing economic circumstances, noting that the two central banks “did not reduce rates at the same pace.” Markets, she said, are pricing in “vastly different monetary policy moves” over the next few months, reflecting these fundamental differences.

    On external risks, Lagarde played down concerns about inflation being exported to Europe from the US, suggesting that any reigniting of U.S. inflation would primarily impact the U.S. economy. She added, “We are not overly concerned by the export of inflation to Europe.” However, she acknowledged potential spillover effects through the exchange rate, which “may have consequences.”

    SNB’s Schlegel: Negative rates remain a tool, despite being unpopular

    SNB Chair Martin Schlegel said today at the World Economic Forum in Davos that with the policy rate currently at 0.50%, “we still have some room” for adjustments. But he ruled out any firm commitment on future rate moves.

    While negative rates remain an unpopular tool in Switzerland, Schlegel noted that the SNB would reintroduce them if deemed necessary to stabilize monetary conditions.

    Looking ahead to the SNB’s next policy meeting in March, Schlegel indicated that the central bank will evaluate whether further rate adjustments are warranted.

    “At the moment monetary conditions are appropriate. We decide from quarter to quarter and then we will see,” he said, refraining from estimating the likelihood of rates turning negative again.

    Schlegel also addressed risks stemming from global uncertainties, particularly the tariff hikes proposed by Trump administration. While he downplayed the direct impact of such measures on Swiss inflation, he acknowledged that heightened global risks could bolster the safe-haven appeal of the Swiss Franc.

    “Whenever there is a crisis, investors tend to buy the Swiss Franc,” Schlegel said, highlighting the currency’s role in monetary conditions alongside interest rates.

    New Zealand CPI unchanged at 2.2% yoy, non-tradeable pressures persist

    New Zealand’s CPI rose 0.5% qoq in Q4 2024, in line with expectations, as tradeable inflation increased 0.3% qoq and non-tradeable inflation rose 0.7% qoq. Annually, CPI was unchanged at 2.2% yoy, slightly exceeding the anticipated 2.1% yoy. This marks the second consecutive quarter that inflation has stayed within RBNZ’s target range of 1% to 3%.

    The data highlights diverging trends within inflation components. Non-tradeable inflation, which reflects domestic demand and supply conditions and excludes foreign competition, stood at 4.5% yoy, highlighting persistent internal price pressures. Tradeable inflation, influenced by global factors, recorded a -1.1% yoy decline.

    Rent prices were the largest contributor to the annual CPI increase, rising 4.2% and accounting for nearly 20% of the overall 2.2% gain. Lower petrol prices, down -9.2% yoy, offset some of the upward momentum, with CPI excluding petrol increasing 2.7% yoy.

    Australia’s Westpac Leading Index falls to 0.25%, signals gradual growth pickup

    Westpac Leading Index for Australia dipped slightly in December, moving from 0.33% to 0.25%. Westpac noted that while the growth signal remains modest, it reflects a marked improvement from the consistently negative and below-trend readings observed over the past two years. This uptick hints at a gradual lift in economic momentum through the first half of 2025.

    Westpac forecasts GDP growth to improve steadily over the course of 2025, projecting a year-end expansion of 2.2%—a notable recovery from the weak 0.8% growth recorded in the year to September 2024. However, the bank noted that while this represents progress, it remains below the economy’s long-term potential.

    Westpac highlighted that recent improvements in the Leading Index coincide with mixed signals on broader economy. A key concern for RBA is the labor market, where the “rebalancing” stalled in H2 2024.

    “A further slowdown in underlying measures of inflation could still see the Bank ease in February or April but we suspect the RBA will need to be more comfortable about some of these risks before it is prepared to begin easing,” Westpac noted.

    USD/CHF Mid-Day Outlook

    Daily Pivots: (S1) 0.9032; (P) 0.9077; (R1) 0.9102; More…

    Intraday bias in USD/CHF stays neutral for now, as the pair is in mild recovery. Price actions from 0.9200 are seen as a near term corrective pattern only. Further rally is expected with 0.9007 support intact. On the upside, decisive break of 0.9223 will carry larger bullish implications. However, break of 0.9007 will turn bias back to the downside for deeper pull back to 55 D EMA (now at 0.8950).

    In the bigger picture, as long as 0.9223 resistance holds, price actions from 0.8332 (2023 low) are seen as a medium term corrective pattern. That is, long term down trend is in favor to resume through 0.8332 at a later stage. However, sustained break of 0.9223 will be an important sign of bullish trend reversal.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    21:45 NZD CPI Q/Q Q4 0.50% 0.50% 0.60%
    21:45 NZD CPI Y/Y Q4 2.20% 2.10% 2.20%
    00:00 AUD Westpac Leading Index M/M Dec 0.00% 0.10%
    07:00 GBP Public Sector Net Borrowing (GBP) Dec 17.8B 13.7B 11.2B 11.8B
    13:30 CAD Industrial Product Price M/M Dec 0.20% 0.80% 0.60%
    13:30 CAD Raw Material Price Index Dec 1.30% 0.40% -0.50% -0.10%

     



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