Tag: United States

  • 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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  • Glimmers of Trade Optimism Lift Asian Markets, But Concrete Progress Still Elusive

    Glimmers of Trade Optimism Lift Asian Markets, But Concrete Progress Still Elusive


    There’s a cautious tone of optimism in Asian markets today, though gains are largely concentrated in Japan, South Korea, and Hong Kong. This moderate rally is being supported by a handful of headlines suggesting incremental movement in global trade diplomacy, even if concrete progress remains limited.

    One of the more notable developments comes from a Bloomberg report indicating that China is considering suspending its 125% tariffs on certain US imports, including medical equipment, industrial chemicals, and possibly even aircraft leases. While such a move would mark a significant de-escalation, it remains speculative at this stage.

    Adding to the mix, U.S. President Donald Trump pushed back on China’s claims that no talks were underway between Washington and Beijing. Trump insisted that “they had a meeting this morning,” although it was unclear who “they” referred to—even he conceded the ambiguity. With no official confirmation from either side, the market reaction has been understandably restrained.

    More tangible, however, was news from Washington of a “very successful” trade meeting between the US and South Korea. Treasury Secretary Scott Bessent expressed unexpected optimism following the bilateral “2+2” talks, suggesting that technical-level negotiations could begin as early as next week. South Korea is hoping to strike a deal with the US by July to avert impending tariffs. The news gave a noticeable lift to South Korean shipbuilding stocks, a sector highly sensitive to global trade developments.

    In Japan, Prime Minister Shigeru Ishiba unveiled an emergency economic package designed to cushion the impact of higher US tariffs. The stimulus includes corporate financing support, consumer-focused measures to boost domestic spending, and targeted relief such as subsidies for energy bills and fuel price reductions. This has added to the positive tone in Japanese equities, as the government shows readiness to act swiftly in cushioning external shocks and stabilizing demand.

    Currency markets are also reflecting shifting sentiment. Kiwi continues to lead the pack this week, followed by Aussie and Dollar. On the weaker end, safe-haven currencies like Swiss Franc, Yen, and Euro remain under some pressure as investors unwind defensive positions.

    Sterling and Loonie are holding in the middle of the pack, awaiting further direction from today’s retail sales reports out of the UK and Canada. Market participants will also be watching for any comments from SNB Chair Schlegel regarding the Franc’s recent strength amid global risk aversion.

    Technically, it’s possible that AUD/JPY’s fall from 102.39 has completed as a five-wave impulse at 86.03, which also marks the completion of the whole three-wave correction from 109.36. For now, further rise is in favor as long as 89.62 support holds. Next target is 55 D EMA (now at 92.97). Sustained trading above there will solidify bullish reversal, and target 38.2% retracement of 109.36 to 86.03 at 94.94 next.

    In Asia, at the time of writing, Nikkei is up 1.80%. Hong Kong HSI is up 1.05%. China Shanghai SSE is up 0.05%. Singapore Strait Times is down -0.02%. Japan 10-year JGB yield is up 0.028 at 1.337. Overnight, DOW rose 1.23%. S&P 500 rose 2.03%. NASDAQ rose 2.74%. 10-year yield fell -0.082 to 4.305.

    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.

    BoJ’s Ueda says G20 peers aAlign on tariff risks to trade and sentiment

    BoJ Governor Kazuo Ueda acknowledged growing global concern over the economic impact of tariffs, following discussions with international counterparts at a G20 finance ministers’ meeting.

    Speaking at a press conference, Ueda said many global policymakers “roughly had the same view” that tariffs weigh on trade activity, weaken business sentiment, and increase market volatility. He noted that these factors will be integrated into BoJ’s evolving assessment of Japan’s economic outlook and monetary policy.

    Ueda reaffirmed BoJ’s intention to raise interest rates gradually, provided underlying inflation continues to converge toward the 2% target. But he emphasized a cautious, data-dependent approach.

    “We would like to scrutinize various data that comes in, without pre-conception,” he said.

    Fed’s Kashkari: Trade shift could raise US borrowing costs

    Minneapolis Fed President Neel Kashkari highlighted the economic risks tied to shifts in the US trade balance and lingering uncertainty from ongoing trade disputes.

    Speaking at an event overnight, Kashkari noted that the US’s persistent trade deficit has long been supported by foreign capital inflows, which have helped keep interest rates low. However, if the U.S. were to move toward a trade surplus and lose its status as the “singular premier destination for capital”, borrowing costs could rise, along with the neutral interest rate.

    Kashkari emphasized that resolving current trade disputes with major partners could provide much-needed clarity for businesses and households, reducing the “extraordinary uncertainty” they currently face.

    He warned that a collective loss of confidence could quickly ripple through the economy, “really bring down the economy, really slow it down” and potentially triggering job losses. While such a downturn hasn’t materialized yet, Kashkari said it’s a risk he is “keeping a close eye on.”

    USD/CAD Daily Outlook

    Daily Pivots: (S1) 1.3830; (P) 1.3864; (R1) 1.3889; More…

    Intraday bias in USD/CAD stays mildly on the upside at this point. Recovery from 1.3780 short term bottom could extend higher. However, upside should be limited by 1.4150 support turned resistance (38.2% retracement of 1.4791 to 1.3780 at 1.4166. On the downside, firm break of 1.3780 will resume the whole fall from 1.4791.

    In the bigger picture, the break of 1.3976 resistance turned support (2022 high) and 55 W EMA (now at 1.3982) indicates that a medium term top is already in place at 1.4791. Fall from there would either be a correction to rise from 1.2005, or trend reversal. In either case, firm break of 38.2% retracement of 1.2005 (2021 low) to 1.4791 at 1.3727 will pave the way back to 61.8% retracement at 1.3069.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    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 -0.60% 1%
    12:30 CAD Retail Sales M/M Feb -0.40% -0.60%
    12:30 CAD Retail Sales ex Autos M/M Feb 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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  • Dollar Rebound Stalls as US-China Trade Talks Hit a Wall

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


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

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

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

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

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

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

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

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

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

    US initial jobless claims rise to 222k, matched expectations

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

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

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

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

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

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

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

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

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

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

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

    USD/CHF Mid-Day Outlook

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

    USD/CHF’s rebound from 0.8038 is still in progress and intraday bias stays mildly on the upside. However, strong resistance should be seen from 38.2% retracement of 0.9200 to 0.8038 at 0.8482 to limit upside. On the downside, break of 0.8038 will resume larger down trend.

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

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    23:50 JPY Corporate Service Price Index Y/Y Mar 3.10% 3% 3% 3.20%
    08:00 EUR Germany IFO Business Climate Apr 86.9 85.2 86.7
    08:00 EUR Germany IFO Current Assessment Apr 86.4 85.5 85.7
    08:00 EUR Germany IFO Expectations Apr 87.4 85 87.7
    12:30 USD Initial Jobless Claims (Apr 18) 222K 222K 215K 216K
    12:30 USD Durable Goods Orders Mar 9.20% 1.50% 1.00%
    12:30 USD Durable Goods Orders ex-Trans Mar 0.00% 0.20% 0.70%
    14:00 USD Existing Home Sales Mar 4.14M 4.26M
    14:30 USD Natural Gas Storage 69B 16B

     



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  • Markets Pause After Relief Rally, Bessent Tempers De-escalation Optimism

    Markets Pause After Relief Rally, Bessent Tempers De-escalation Optimism


    Markets are treading water in the Asian session today, with most asset classes trading mixed and within familiar ranges. While US equities closed higher overnight, much of the early gains were pared back, signaling the fragility of the current risk-on mood. The price action reflects what is often seen during a relief rally—short-lived optimism that fades quickly if underlying uncertainty persists. Hopes of a breakthrough in US-China tariff talks briefly lifted sentiment, but optimism quickly met a dose of reality from Washington.

    US Treasury Secretary Scott Bessent pushed back against speculation that President Donald Trump had offered any unilateral gesture to ease tariffs on China. “No unilateral offer—none at all,” Bessent clarified. He acknowledged that current tariff levels are likely unsustainable but stressed that any reduction would have to be mutual. His remarks serve as a reminder that structural obstacles in the trade negotiations remain and that headline-driven rallies may lack staying power.

    In the currency markets, price actions are subdued, with all major pairs and crosses trading within yesterday’s ranges. Kiwi is leading gains for the week so far, followed by Dollar and Loonie. On the other side, the safe-haven trio in on the back foot, with Swiss Franc, Yen, and Euro the weakest performers, in line with stabilizing risk sentiment and a broader unwinding of prior defensive flows. Sterling and Aussie are middling.

    Technically, Gold’s breach of 3283.69 minor support indicates short term topping at 3499.79, just ahead of 3500 psychological level. Some consolidations should be seen in the near term, with risk of deeper pullback. But downside should be contained by 3167.62 cluster support (38.2% retracement of 2584.24 to 3499.79 at 3150.04 to bring rebound. Gold’s long term up trend is expected to continue after the consolidation completes.

    In Asia, at the time of writing, Nikkei is up 0.40%. Hong Kong HSI is down -1.08%. China Shanghai SSE is up 0.06%. Singapore Strait Times is up 0.26%. Japan 10-year JGB yield is up 0.001 at 1.325. Overnight, DOW rose 1.07%. S&P 500 rose 1.67%. NASDAQ rose 2.50%. 10-year yield fell -0.02 to 4.387.

    Looking ahead, German Ifo business climate is the main feature in European session. Later in the day, US will release jobless claims, durable goods orders, and existing home sales.

    IMF: BoJ may delay rate hike on tariff risk, cacks Yen’s haven role

    Nada Choueiri, deputy director of IMF’s Asia Pacific Department, told Reuters that BoJ is likely to delay further interest rate hikes as heightened uncertainty from US tariff policy weighs on business sentiment and economic outlook.

    She noted that many Japanese firms are now hesitant to move forward with investment plans, opting instead to wait for greater clarity on global trade developments. “This is postponing investment decisions as well,” Choueiri said, adding that the downside risks to both growth and inflation have increased.

    “We do see that if our reference scenario materializes, the BOJ interest rate increases will be pushed backwards in time,” she said.

    Choueiri also commented on the recent appreciation of Yen, reaffirming its role as a “safe-haven currency”, supported by the country’s economic stability and predictability.

    Fed’s Beige Book: Stagnant growth, tariff-driven inflation

    The latest Fed Beige Book painted a picture of a stagnating US economy, with activity described as “little changed” across most of the country. Of the 12 Districts, only five reported slight growth, while three saw flat conditions and the remaining four noted modest declines.

    However, the most striking theme running through the report was the “pervasive” uncertainty around international trade policy, which was highlighted in nearly all Districts as a key concern weighing on sentiment and business planning.

    Inflation pressures remain persistent, with half of the Districts describing price growth as moderate and the other half calling it modest. However, many businesses signaled “elevated input cost growth” tied to tariffs, with some already receiving notices from suppliers warning of upcoming price hikes.

    In response, firms have started add “tariff surcharge” or shortening their pricing terms. Still, the ability to fully pass on higher costs is proving difficult in some sectors, particularly for consumer-facing sectors where demand remains sluggish.

    ECB’s Lane sees Dollar outflows as rebalancing, not the end of dominance

    Speaking at an IIF conference overnight, ECB Chief Economist Philip Lane downplayed concerns over recent portfolio shifts away from US Dollar assets, suggesting the move may reflect a normalization rather than a structural retreat.

    Lane noted that allocations are likely moving from an overweight position in Dollar-denominated assets toward a more balanced distribution among global currencies.

    He pointed out that US assets had been “priced to perfection” following US President Donald Trump’s election last year, making some degree of reallocation expected as valuations adjust.

    Lane also addressed recent outflows from U.S. Treasuries, framing them as part of this rebalancing process. “It can either settle down or invite a deeper rethink,” he said, leaving the door open to further shifts depending on global investor sentiment.

    However, he admitted that despite the near-term adjustments, Dollar is still expected to far outweigh Euro in most global portfolios.

    ECB’s Knot and Muller downplay tariff impacts on inflation and growth

    Dutch ECB Governing Council member Klaas Knot noted that the combination of US tariffs, a stronger Euro, and falling energy prices could push eurozone inflation lower than expected in the short term.

    “The strong euro, together with falling energy prices, suggests that the near-term impact might not be so inflationary after all,” Knot said. However, he cautioned that medium-term risks remain, especially if global supply chain disruptions intensify. He supported keeping the ECB’s key policy rate within a neutral range of 1.75% to 2.25%, where it currently stands.

    Echoing a cautious but measured tone, Estonia’s ECB Governing Council member Madis Muller acknowledged that the US’s evolving trade policy creates “quite a bit more challenging” outlook for the Eurozone. Nevertheless, he maintained that moderate growth remains achievable, albeit at a slower pace than previously anticipated.

    Muller added that he is not forecasting a recession, noting that the impact of trade tensions, while significant, is unlikely to derail the region’s economic recovery entirely. Though, he emphasized the need for optionality, suggesting that more accommodation could be warranted if conditions deteriorate

    BoE’s Bailey: We must take tariff-related growth risks very seriously

    BoE Governor Andrew Bailey emphasized the growing downside risks to UK growth stemming from US President Donald Trump’s tariff policies. Speaking at an IIF conference, Bailey said, “We do have to take very seriously the risk to growth,” highlighting the UK’s vulnerability as a highly open economy.

    He noted that the impact of U.S. trade measures extends far beyond bilateral ties, influencing the UK through broader disruptions in global trade dynamics.

    When asked how much the BoE is factoring in the effects of US trade policy, Bailey confirmed that the issue is front and center. “We’re currently working through that because we’ve got an interest rate decision coming in two weeks’ time,” he said.

    USD/CAD Daily Outlook

    Daily Pivots: (S1) 1.3818; (P) 1.3861; (R1) 1.3925; More…

    A short term bottom should be in place at 1.3780, just ahead of 100% projection of 1.4791 to 1.4150 from 1.4414 at 1.3773, and on bullish convergence condition in 4H MACD. Intraday bias in USD/CAD is mildly on the upside for recovery. But upside should be limited by 1.4150 support turned resistance (38.2% retracement of 1.4791 to 1.3780 at 1.4166. On the downside, firm break of 1.3780 will resume the whole fall from 1.4791.

    In the bigger picture, the break of 1.3976 resistance turned support (2022 high) and 55 W EMA (now at 1.3982) indicates that a medium term top is already in place at 1.4791. Fall from there would either be a correction to rise from 1.2005, or trend reversal. In either case, firm break of 38.2% retracement of 1.2005 (2021 low) to 1.4791 at 1.3727 will pave the way back to 61.8% retracement at 1.3069.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    23:50 JPY Corporate Service Price Index Y/Y Mar 3.10% 3% 3% 3.20%
    08:00 EUR Germany IFO Business Climate Apr 85.2 86.7
    08:00 EUR Germany IFO Current Assessment Apr 85.5 85.7
    08:00 EUR Germany IFO Expectations Apr 85 87.7
    12:30 USD Initial Jobless Claims (Apr 18) 222K 215K
    12:30 USD Durable Goods Orders Mar 1.50% 1.00%
    12:30 USD Durable Goods Orders ex-Trans Mar 0.20% 0.70%
    14:00 USD Existing Home Sales Mar 4.14M 4.26M
    14:30 USD Natural Gas Storage 69B 16B

     



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  • Markets Rebound as Trump Softens on Tariffs and Powell, Risk Sentiment Regains Ground

    Markets Rebound as Trump Softens on Tariffs and Powell, Risk Sentiment Regains Ground


    US stock staged a strong rebound overnight, erasing all of Monday’s steep losses as risk sentiment recovered on signs of potential de-escalation in US-China trade conflicts. The sharp reversal in equities was driven by multiple headlines suggesting a thaw in relations, including comments from US Treasury Secretary Scott Bessent and President Donald Trump that tariffs may soon come down. The recovery extended into Asian markets, with relief spreading after Trump also backed away from threats to fire Fed Chair Jerome Powell.

    In a closed-door meeting with investors, Bessent reportedly said he expects “a de-escalation” in the trade standoff with China in the “very near future,” acknowledging that the current tariff regime—now as high as 145% on Chinese goods—is unsustainable. “We have an embargo now, on both sides, right?” he added, highlighting the urgency to reach a deal. Trump echoed that tone during a press conference in the Oval Office, stating that the current tariff rates “won’t be that high” and expressing optimism that an agreement with Beijing could be reached “pretty quickly.” He also pledged not to “play hardball” during the negotiations, a marked shift in tone from recent weeks.

    In another positive turn for market stability, Trump publicly backed off from his threat to remove Fed Chair Powell. “No, I have no intention of firing him,” he told reporters, although he reiterated his preference for interest rate cuts. The reversal comes just days after sharp market losses partly triggered by growing concerns over Fed independence. Markets took the remarks in stride, viewing them as a sign that political pressure may ease for now, and that the central bank will retain the space to operate without further direct confrontation from the White House.

    In currency markets, Swiss Franc is currently the week’s weakest performer, followed by the Euro and Sterling. On the stronger side, Kiwi leads, with Aussie and Loonie also firming. Dollar, which rebounded notably, and Japanese Yen are holding in the middle of the pack.

    Technically, Bitcoin’s rebound from the 74,373 level gathered momentum a decisive break through 88,769 resistance. This move suggests that the correction from the 109,571 high may have already completed at the 73,812 cluster support area. While it’s still early to confirm a full resumption of the long-term uptrend, the rally may signal an early return of risk-on sentiment. A retest of 109,571 peak appears likely as bullish momentum rebuilds.

    Looking ahead, Eurozone will release PMI flash and trade balance. UK will also release PMI flash. Later in the day, US will release PMI flash and new home sales, as well as Fed’s Beige Book economic report.

    In Asia, at the time of writing, Nikkei is up 1.72%. Hong Kong HSI is up 2.61%. China Shanghai SSE is up 0.10%. Singapore Strait Times is up 1.05%. Japan 10-year JGB yield is up 0.012 at 1.324. Overnight, DOW rose 2.66%. S&P 500 rose 2.51%. NASDAQ rose 2.71%. 10-year yield fell -0.016 to 4.389.

    Japan’s PMI composite rises to 51.1, service leads while manufacturing drags

    Japan’s flash PMI data for April signaled a return to growth in the private sector, with Composite PMI rising from 48.9 to 51.1. The recovery was driven primarily by a rebound in the services sector, where activity rose to 52.2 from 50.0. Meanwhile, manufacturing remained in contraction, though the pace of decline eased slightly, with the PMI inching up from 48.4 to 48.5.

    According to S&P Global’s Annabel Fiddes, the divergence between sectors reflected subdued factory output versus strengthening service demand.

    A closer look at new business trends revealed further divergence. Manufacturers reported the sharpest drop in new orders in over a year, driven by falling foreign demand and persistent concerns over tariffs and client spending. In contrast, service providers saw their strongest rise in new work since January.

    Still, inflationary pressures were strong across the board, with input costs rising at the fastest pace in two years, prompting firms to pass on those costs to customers via higher selling prices.

    Overall optimism for output over the next year fell to its lowest level since August 2020, during the early phase of the COVID-19 crisis.

    Australia’s PMI composite dips to 51.4, cost pressures emerge

    Australia’s flash PMI data for April showed continued, albeit slower, expansion in the private sector, with Manufacturing PMI slipping from 52.1 to 51.7 and Services PMI easing from 51.6 to 51.4. The Composite PMI also declined slightly from 51.6 to 51.4.

    Despite the modest pullback, S&P Global’s Jingyi Pan noted that domestic demand remained a “strong proponent” of business activity, supporting further job creation across sectors. The data suggests a solid start to Q2, underpinned by internal momentum, even as external headwinds mount.

    However, the impact of US tariffs are starting to show. Export performance weakened, and manufacturers reported “intensification of cost pressures” due to currency fluctuations.

    In response, many firms passed on higher costs to clients, pushing overall selling price inflation to a nine-month high.

    Fed’s Kugler stresses caution amid tariff shock and inflation risks

    Fed Governor Adriana Kugler said in a speech that she supports holding interest rates steady as long as upside inflation risks persist, provided that economic activity and employment remain stable.

    Kugler noted that the current policy stance is “well positioned” to adapt to evolving macroeconomic conditions, but emphasized the need for caution given the increasing complexity of the outlook.

    She highlighted a significant rise in uncertainty, pointing to a dual threat: upward pressure on inflation and downside risks to employment.

    The recent escalation in tariffs, described as “significantly larger” than previously expected, has heightened concerns about both growth and price stability.

    Kugler warned that “the economic effects of tariffs and the associated uncertainty are also likely to be larger than anticipated.”

    Fed’s Kashkari warns of policy dilemma amid tariff tensions and market strains

    Minneapolis Fed President Neel Kashkari said overnight that it’s “too soon” to determine the future path of US interest rates. While he acknowledged that tariffs alone may not necessarily reignite persistent inflation, he emphasized that Fed cannot dismiss the risk, especially given the still-elevated price levels in recent months.

    At the same time, Kashkari noted that tariffs are likely to weigh on growth, creating a policy dilemma: Fed cannot simultaneously counter rising inflation and rising unemployment without making difficult trade-offs.

    Kashkari highlighted that the growing uncertainty surrounding US trade policy is compounding the challenge. While resolution could come quickly if negotiations succeed, the current lack of clarity is already deterring both consumer and business activity.

    Adding to the complexity, Kashkari pointed to additional pressure from a weakening dollar and rising Treasury yields, as global investors begin to question the attractiveness of US assets.

    “If we’re no longer the economy that investors around the world say, hey, this is the preeminent competitive economy,” he cautioned, “then we probably have less runway.”

    USD/CHF Daily Outlook

    Daily Pivots: (S1) 0.8106; (P) 0.8149; (R1) 0.8233; More…

    USD/CHF’s break of 0.8196 minor resistance suggests short term bottoming at 0.8038, on bullish convergence condition in 4H MACD. Intraday bias is back on the upside for stronger recovery to 38.2% retracement of 0.9200 to 0.8038 at 0.8482. Strong resistance should be seen there to limit upside. On the downside, break of 0.8038 will resume larger down trend.

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

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    23:00 AUD Manufacturing PMI Apr P 51.7 52.1
    23:00 AUD Services PMI Apr P 51.4 51.6
    00:30 JPY Manufacturing PMI Apr P 48.5 48.7 48.4
    00:30 JPY Services PMI Apr P 52.2 50
    04:30 JPY Tertiary Industry Index M/M Feb 0.50% -0.30%
    06:00 UK Public Sector Net Borrowing (GBP) Mar 15.4B 10.7B
    07:15 EUR France Manufacturing PMI Apr P 47.7 48.5
    07:15 EUR France Services PMI Apr P 47.6 47.9
    07:30 EUR Germany Manufacturing PMI Apr P 47.5 48.3
    07:30 EUR Germany Services PMI Apr P 50.3 50.9
    08:00 EUR Eurozone Manufacturing PMI Apr P 47.4 48.6
    08:00 EUR Eurozone Services PMI Apr P 50.4 51
    08:30 GBP Manufacturing PMI Apr P 44 44.9
    08:30 GBP Services PMI Apr P 51.4 52.5
    09:00 EUR Eurozone Trade Balance (EUR) Feb 14.9B 14.0B
    12:30 CAD New Housing Price Index M/M Mar 0.00% 0.10%
    13:45 USD Manufacturing PMI Apr P 49.3 50.2
    13:45 USD Services PMI Apr P 52.9 54.4
    14:00 USD New Home Sales Mar 679K 676K
    14:30 USD Crude Oil Inventories 1.6M 0.5M
    18:00 USD Fed’s Beige Book

     



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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    USD/JPY Daily Outlook

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

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

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

    Economic Indicators Update

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

     



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  • Dollar Slumps as Fed Independence in Question; Euro and Gold Surge on Haven Demand

    Dollar Slumps as Fed Independence in Question; Euro and Gold Surge on Haven Demand


    Dollar weakened broadly in thin holiday trading today, dragged down by mounting concerns over the independence of the Federal Reserve. Investor anxiety escalated after White House economic adviser Kevin Hassett indicated that US President Donald Trump is continuing to explore whether he can remove Fed Chair Jerome Powell. While the legal basis for such a move is untested and unclear, the mere suggestion of political interference in the central bank’s policy process has significantly undermined market confidence.

    This brewing conflict comes amid already heightened uncertainty surrounding US trade policy. Trump’s aggressive use of tariffs, most recently through sweeping reciprocal levies, has put the Fed in a difficult position. Officials including Powell have repeatedly warned that tariffs could simultaneously fuel inflation and suppress economic growth, increasing the risk of stagflation. A sudden crystallization of the threat to Fed independence would not only worsen market volatility but also raise tail risks, potentially triggering a broader loss of faith in US assets.

    Powell, for his part, has firmly defended the Fed’s independence. In remarks last week, he asserted, “We’re never going to be influenced by any political pressure… Our independence is a matter of law.” He also reminded that Fed governors “are not removable except for cause,” and emphasized the long, fixed terms that protect against political meddling. While the “cause” does not typically include policy disagreements, the intensifying standoff with the White House has cast a long shadow over US institutions. Ad for now, the markets appear to be voting with their feet—out of the Dollar and into alternatives.

    Euro has emerged as the biggest gainer in today’s subdued session, extending recent strength as investors seek refuge in the most liquid and viable alternative to Dollar. With its deep capital markets, relative political stability, and credible central bank, Euro is increasingly seen as a safer store of value amid the implosion of confidence in US governance. Other safe havens like the Japanese Yen and Swiss Franc are also holding firm, but it is Euro and Gold that are leading the charge.

    Gold prices have surged to fresh record highs, fueled by a flight to safety and fears of policy instability. Technically, Gold is still in upside acceleration as suggested in D MACD. Despite overbought condition, there is no sign of topping yet. Decisive break of 161.8% projection of 2293.45 to 2789.92 from 2584.24 at 3387.52 will pave the way to 200% projection at 3577.18 next. Outlook will stay bullish as long as 3167.60 resistance turned support holds, in case of retreat.

    China holds benchmark lending rates steady

    China kept its benchmark lending rates unchanged for the sixth consecutive month today. One-year loan prime rate was held at 3.1% and the five-year LPR steady at 3.6%.

    Subdued domestic inflation and growing global trade headwind, particularly the latest wave of tariff threats from the US, argue in favor of further policy easing However, PBoC appears reluctant to move ahead of Fed.

    A premature rate cut could exacerbate downward pressure on the yuan, fueling capital outflows and financial instability.

    April PMIs to gauge global business fallout from tariffs

    The spotlight in the coming week will be on the flash PMI readings for April, covering major economies including Australia, Japan, the Eurozone, the UK, and the U.S. These surveys will serve as a timely barometer for assessing how global business conditions have responded to the surge in trade tensions following US President Donald Trump’s “Liberation Day” tariff announcement earlier this month.

    March PMIs had already reflected some of the early impact of trade policy uncertainty, particularly in North America. Notable takeaways included rising manufacturing input costs in the US and early signs of softening trade flows.

    The upcoming data will be critical in identifying how deeply those measures are now affecting business conditions. Analysts will be watching for deterioration in new orders, delivery times, and price components—key indicators of disrupted supply chains and cost pass-through.

    Beyond the PMIs, a series of supporting data will also shape market sentiment. US durable goods orders will be closely watched for signs of weakening beyond autos. Germany’s Ifo business climate and expectations index will give a read on sentiment in Europe’s largest economy. Additionally, retail sales data from both the UK and Canada could reflect how consumers are responding to expected price shifts and economic uncertainty.

    Here are some highlights for the week:

    • Monday: China loan prime rate decision.
    • Tuesday: Canada IPPI and RMPI; Eurozone consumer confidence.
    • Wednesday: Australia PMIs; JapanPMIs, tertiary industry index; Eurozone PMIs, trade balance; UK PMIs; US PMIs, new home sales, Fed’s Beige Book.
    • Thursday: Japan corporate service prices; Germany Ifo; US jobless claims, durable goods, existing home sales.
    • Friday: Japan Tokyo CPI; UK Gfk consumer sentiment, retail sales; Canada retail sales.

    EUR/USD Daily Outlook

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

    EUR/USD’s rally resumed by breaking through 1.1472 today and intraday bias is back on the upside. Current rise from 1.0176 should target 161.8% projection of 1.0358 to 1.0953 from 1.0731 at 1.1694 next. On the downside, below 1.1357 minor support will turn intraday bias neutral and bring consolidations again, before staging another rally.

    In the bigger picture, rise from 0.9534 long term bottom could be correcting the multi-decade downtrend or the start of a long term up trend. In either case, further rise should be seen to 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916. This will now remain the favored case as long as 55 W EMA (now at 1.0776) holds.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    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%
    14:00 USD Leading Indicator Apr -0.50% -0.30%

     



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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    Australia jobs rise 32.2k in March, misses expectations

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

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

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

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

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

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

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

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

    EUR/USD Mid-Day Outlook

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

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

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

    Economic Indicators Update

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

     



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

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


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

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

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

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

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

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

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

    Fed’s Powell warns of dual-mandate tensions ahead

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

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

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

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

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

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

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

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

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

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

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

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

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

    Australia jobs rise 32.2k in March, misses expectations

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

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

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

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

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

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

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

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

    Looking ahead

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

    USD/CAD Daily Outlook

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

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

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

    Economic Indicators Update

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

     



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  • Risk Appetite Eases; Markets Await Clarity from US-Japan Negotiations

    Risk Appetite Eases; Markets Await Clarity from US-Japan Negotiations


    Global markets are trading with a mildly risk-off tone today, with losses spanning from Asia through to Europe, and US futures following suit. Technology stocks are under pressure, led by AI-chip giant Nvidia, which warned of significant charges stemming from new US restrictions on semiconductor exports to China. The announcement marks the latest escalation in trade tensions between Washington and Beijing, particularly in high-tech sectors where geopolitical and economic interests are increasingly colliding.

    Despite the drag from tech, the broader equity pullback remains relatively contained. Some support is being drawn from slightly stronger-than-expected US retail sales data, which helped ease fears of a sharp consumer slowdown. Still, sentiment remains cautious ahead of potential headlines from US-Japan negotiations later today. The discussion is expected to touch on key topics including tariffs, defense cost-sharing, energy policy, and exchange rate management. The results of these talks could offer a clearer view of US President Donald Trump’s broader trade strategy and whether current tariff policies are a prelude to further escalation.

    Meanwhile, pressure is mounting on BoJ, with reports suggesting it is preparing to downgrade its economic growth outlook at the April 30–May 1 policy meeting. BoJ’s current forecast of 1.1% GDP growth for fiscal 2025 is likely to be revised downward in response to the mounting impact of US tariffs. While inflation in Japan has been trending upward gradually, central bank officials are now questioning whether the external drag from trade tensions could offset domestic momentum.

    In the currency markets, the Swiss Franc is leading gains for the day, followed by Euro and Yen, as investors rotate back into safer assets. Dollar, by contrast, is the day’s weakest performer, followed by Kiwi and Pound. Loonie and Aussie are positioning in he middle.

    Technically, Sterling has shown some resilience this week, but signs of fatigue are emerging near key resistance levels. EUR/GBP has found support at 0.8518, while GBP/USD is struggling to break above its near-term channel ceiling. Pullback in the Pound from current levels is plausible, though any downside is likely to remain limited unless EUR/GBP breaks back above 0.8737. Conversely, a decisive upside break against both Euro and Dollar could reignite a broader rally in Sterling.

    In Europe, at the time of writing, FTSE is down -0.34%. DAX is down -0.54%. CAC is down -0.66%. UK 10-year yield is down -0.0037 at 4.622. Germany 10-year yield is down -0.034 at 2.502. Earlier in Asia, Nikkei fell -1.01%. Hong Kong HSI fell -1.91%. China Shanghai SSE rose 0.26%. Singapore Strait Times rose 1.04%. Japan 10-year JGB yield fell -0.078 to 1.298.

    US retail sales rise 1.4% mom in March, above exp 1.3%

    US retail sales rose 1.4% mom to USD 734.9B in March, slightly above expectation of 1.3% mom. Ex-auto sales rose 0.5% mom to USD 590.9B, above expectation of 0.4% mom. Ex-gasoline sales rose 1.7% mom to USD 683.4B. Ex-auto & gasoline sales rose 0.8% mom to USD 539.5B.

    Total sales for the January through March period were up 4.1% from the same period a year ago.

    Eurozone CPI finalized at 2.2% in March, core at 2.4%

    Final data confirmed that Eurozone headline inflation edged lower to 2.2% yoy in March, down from 2.3% in February. Core inflation (ex energy, food, alcohol & tobacco) also softened to 2.4% from 2.6%.

    Services was the main contributor to price pressures in Eurozone, adding 1.56 percentage points to the annual rate, followed by food, alcohol and tobacco at 0.57 points. Energy contributed negatively, subtracting -0.10 points from the overall figure.

    At the EU level, inflation was finalized at 2.5% yoy, an improvement from February’s 2.7% yoy. France registered the lowest annual rate at just 0.9%, while Denmark and Luxembourg followed at 1.5% and 1.5% respectively. In contrast, inflation remains more persistent in Eastern Europe, with Romania (5.1%), Hungary (4.8%), and Poland (4.4%)recording the highest annual rates.

    UK CPI falls to 2.6%, both goods and services inflation ease

    UK consumer inflation continued to ease in March, with headline CPI slowing to 2.6% yoy, slightly below the expected 2.7% and down from 2.8% yoy in February. On a monthly basis, prices rose 0.3%, also under consensus 0.4% mom forecast.

    The decline was broad-based, with annual goods inflation falling to 0.6% yoy from 0.8% yoy and services inflation easing to 4.7% yoy from 5.0% yoy.

    Core CPI (excluding energy, food, alcohol and tobacco) edged down to 3.4% as expected, from 3.5% previously.

    BoJ’s Ueda: US tariffs nearing bad scenario, policy response may be needed

    BoJ Governor Kazuo Ueda warned that US President Donald Trump’s escalating tariff policies have “moved closer towards the bad scenario” anticipated by the central bank.

    “We will scrutinise without pre-conception the extent to which US tariffs could hurt the economy,” he said in an interview with Sankei newspaper.

    “A policy response may become necessary. We will make an appropriate decision in accordance with changes in developments,” he added.

    Nevertheless, Ueda reiterated that BoJ will continue to raise interest rates “at an appropriate pace” as long as economic and price conditions align with its projections.

    On inflation, Ueda said domestic food price pressures are expected to ease. He sees real wages turning positive and continuing to rise into the second half of the year, supporting consumption and price stability.

    Still, he warned of dual risks: persistent inflation driven by global supply shocks, or a consumption drag caused by the rising cost of living.

    Australia Westpac leading index falls as tariff shock starting to weigh

    Australia’s Westpac Leading Index slipped from 0.9% to 0.6% in March. Westpac noted that the index has only just begun to reflect the escalating disruptions caused by US President Donald Trump’s reciprocal tariff announcement on April 2.

    While the immediate impact on Australia is seen as limited and manageable for now, “some further softening in the growth pulse looks likely in the months ahead”.

    Westpac has revised down its growth forecast for Australia in 2025 to 1.9% from 2.2%, citing the accumulating downside risks.

    Looking ahead to RBA’s May 19–20 meeting, Westpac expects the deteriorating global backdrop and clearer signs of inflation cooling will prompt a 25bps rate cut.

    Moreover, the tone of the meeting is likely to pivot more decisively “away from lingering questions about inflation to downside risks to growth.” Such a shift would lay the groundwork for additional policy easing in the second half of the year.

    China Q1 GDP tops forecasts with 5.4% growth

    China’s economy started the year on a stronger footing, with GDP expanding by 5.4% yoy in Q1, surpassing market expectations of 5.1%. On a quarterly basis, growth slowed to 1.2% from 1.6% in Q4.

    March’s activity indicators were broadly upbeat. Industrial production surged by 7.7% yoy, well above the 5.6% yoy forecast. Retail sales climbed 5.9%, also ahead of expectations of 5.1% yoy.

    Fixed asset investment increased 4.2% year-to-date, modestly exceeding projections. However, persistent weakness in the property sector continues to weigh on the recovery narrative. Property investment fell -9.9% in Q1, slightly worse than the -9.8% decline recorded over the first two months of the year. Private sector investment—a key gauge of business confidence—rose only 0.4%.

    USD/JPY Mid-Day Outlook

    Daily Pivots: (S1) 142.71; (P) 143.15; (R1) 143.70; More…

    USD/JPY is still bounded in consolidations from 142.05 temporary low and intraday bias remains neutral. Another recovery cannot be ruled out, but outlook will stay bearish as long as 151.20 resistance holds. Below 142.05 will resume the fall from 158.86 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.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    23:50 JPY Machinery Orders M/M Feb 4.30% 1.10% -3.50%
    01:00 AUD Westpac Leading Index M/M Mar -0.10% 0.06%
    02:00 CNY GDP Y/Y Q1 5.40% 5.10% 5.40%
    02:00 CNY Industrial Production Y/Y Mar 7.70% 5.60% 5.90%
    02:00 CNY Retail Sales Y/Y Mar 5.90% 4.10% 4.00%
    02:00 CNY Fixed Asset Investment YTD Y/Y Mar 4.20% 4.10% 4.10%
    06:00 GBP CPI M/M Mar 0.40% 0.40%
    06:00 GBP CPI Y/Y Mar 2.70% 2.80%
    06:00 GBP Core CPI Y/Y Mar 3.40% 3.50%
    06:00 GBP RPI M/M Mar 0.40% 0.60%
    06:00 GBP RPI Y/Y Mar 3.20% 3.40%
    08:00 EUR Eurozone Current Account (EUR) Feb 37.3B 35.4B
    09:00 EUR Eurozone CPI Y/Y Mar F 2.20% 2.20%
    09:00 EUR Eurozone CPI Core Y/Y Mar F 2.40% 2.40%
    12:30 USD Retail Sales M/M Mar 1.30% 0.20%
    12:30 USD Retail Sales ex Autos M/M Mar 0.40% 0.30%
    13:15 USD Industrial Production M/M Mar -0.30% 0.70%
    13:15 USD Capacity Utilization Mar 77.90% 78.20%
    13:45 CAD BoC Interest Rate Decision 2.75% 2.75%
    14:30 USD Crude Oil Inventories 0.4M 2.6M

     



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  • Aussie Rises on Risk Rebound; RBA Keeps May Decision Open-Ended

    Aussie Rises on Risk Rebound; RBA Keeps May Decision Open-Ended


    Commodity currencies, including Australian, New Zealand, and Canadian Dollars, are trading broadly higher in today’s Asian session, buoyed by continued recovery in global stock markets. Sterling is also advancing alongside, supported by improving risk sentiment. Meanwhile, traditional safe havens like the Swiss Franc, Japanese Yen, are on the back, along with the greenback foot. Swiss Franc is particularly soft, pulling back after recent strong gains. Euro remains directionless in the middle of the pack, showing little inclination to break out against Dollar yet.

    In RBA’s minutes policymakers explicitly citing China’s response as a pivotal factor shaping Australia’s economic outlook and, by extension, future rate decisions. Given that China remains the only major economy actively retaliating against US tariffs, the fallout from a protracted trade war could be particularly impactful for Australia. While some analysts read the RBA’s language as a signal that a rate cut may come as soon as May, the actual odds remain more evenly balanced than market consensus might suggest. Tomorrow’s Australian employment report could help clarify the picture, at least a little bit.

    Fed Governor Christopher Waller’s speech is worth a read. It offered a structured view of the unfolding US tariff regime. Waller outlined two potential paths: one focused on reshoring manufacturing and reducing trade dependency—implying a prolonged period of elevated tariffs. The other, a route aimed at leveraging tariffs to negotiate lower trade barriers from other countries. The ultimate outcome hinges on the political objectives of the Trump administration. But in reality, the likely result may lie somewhere between those extremes.

    Technically, Bitcoin is showing signs of stabilizing after its recent pullback. It remains well supported by 73812 cluster support (38.2% retracement of 15452 to 109571 at 73617) for now. Bullish convergence condition in D MACD is raising chance of a near term reversal. Firm break of 88769 resistance will argue that correction from 109571 has completed already, and the larger up trend remains intact. Retest of 109571 high should then be seen next.

    In Asia, at the time of writing, Nikkei is up 0.96%. Hong Kong HSI is down -0.11%. China Shanghai SSE is down -0.17%. Singapore Strait Times is up 1.75%. Japan 10-year JGB yield is up 0.032 at 1.372. Overnight, DOW rose 0.78%. S&P 500 rose 0.79%. NASDAQ rose 0.64%. 10-year yield fell -0.129 to 4.364.

    Fed’s Waller weighs two tariff paths

    In a speech overnight, Fed Governor Christopher Waller laid out two divergent scenarios for US tariff policy and their economic fallout.

    The first scenario assumes high tariffs, near average 25% or more, and remain in place for an extended period. This reflects a structural shift toward domestic production and reduced trade dependence. The second scenario envisions a negotiated reduction in foreign trade barriers, which would lower the average tariff rate back to around 10%, closer to the levels anticipated earlier this year.

    Waller warned that if the “high-tariff” regime holds, the US economy is likely to “slow to a crawl” with inflation rising to around 4% before retreating in 2026, assuming inflation expectations remain anchored. In this scenario, the unemployment rate could climb toward 5% next year as business investment weakens under higher costs and persistent uncertainty.

    In contrast, if the current pause in reciprocal tariffs leads to meaningful progress in trade negotiations and the easing of barriers, Waller expects a milder economic impact. Under this “smaller tariff” path, the economy would continue to grow—albeit at a slower pace—while inflation would likely stay on a downward trend toward Fed’s 2% target. In such a case, he said, rate cuts could be warranted later this year as a “good news” policy move.

    Fed’s Bostic cautions against bold policy moves as trade fog stalls US economy

    Atlanta Fed President Raphael Bostic warned that the Trump administration’s tariff measures and broader policy ambiguity have effectively pushed the economy into a “big pause,” making it difficult for the Fed to chart a clear policy path.

    Bostic emphasized that this uncertainty argues against any aggressive policy shifts in either direction. “Moving too boldly with our policy in any direction wouldn’t be prudent.” He likened the current climate to a “really, really thick” fog that hampers effective decision-making.

    On the inflation front, Bostic acknowledged that tariffs are likely to exert upward pressure on prices. He now sees inflation returning to that level no sooner than 2027, well beyond previous expectations.

    Bostic also anticipates that economic growth will decelerate sharply, with GDP expanding just above 1% this year—less than half the pace seen in recent years.

    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.

    Looking ahead

    Germany ZEW economic sentiment, and Eurozone industrial production will be featured in European session. Later in the day, main focus is on Canada CPI. US will release Empire state manufacturing and import prices.

    AUD/USD Daily Report

    Daily Pivots: (S1) 0.6287; (P) 0.6315; (R1) 0.6355; More…

    AUD/USD’s rally from 0.5913 is still in progress and intraday bias stays on the upside. Firm break of 0.6407 resistance will pave the way to 61.8% retracement of 0.6941 to 0.5913 at 0.6548, even still as a corrective move. On the downside, below 0.6180 minor support will turn intraday bias neutral first.

    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. However, sustained trading above 55 W EMA (now at 0.6441) 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
    01:30 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 10.6 51.6
    09:00 EUR Germany ZEW Current Situation Apr -86 -87.6
    09:00 EUR Eurozone ZEW Economic Sentiment Apr 14.2 39.8
    09:00 EUR Eurozone Industrial Production M/M Feb 0.10% 0.80%
    12:15 CAD Housing Starts Y/Y Mar 238K 229K
    12:30 CAD Manufacturing Sales M/M Feb -0.20% 1.70%
    12:30 CAD CPI M/M Mar 0.70% 1.10%
    12:30 CAD CPI Y/Y Mar 2.60% 2.60%
    12:30 CAD CPI Median Y/Y Mar 2.90% 2.90%
    12:30 CAD CPI Trimmed Y/Y Mar 2.90% 2.90%
    12:30 CAD CPI Common Y/Y Mar 2.40% 2.50%
    12:30 USD Empire State Manufacturing Index Apr -14.8 -20
    12:30 USD Import Price Index M/M Mar 0.10% 0.40%

     



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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    Tariff Shockwaves Test BoC and ECB Resolve

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

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

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

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

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

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

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

    Here are some highlights for the week:

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

    USD/JPY Daily Outlook

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

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

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

    Economic Indicators Update

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

     



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  • A Whirlwind Week Leaves US Assets Reeling Amid Tariff Turmoil

    A Whirlwind Week Leaves US Assets Reeling Amid Tariff Turmoil


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    Stock Rebound Preserves Uptrend, But Recession Could Break the Spell

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

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

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

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

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

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

    Dollar Index Cracks 100 Psychological Level, Heading to 95?

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

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

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

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

    USD/CAD Weekly Outlook

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

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

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



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

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


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

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

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

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

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

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

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

    US PPI unexpectedly falls -0.3% mom in March

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    EUR/USD Mid-Day Outlook

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

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

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

    Economic Indicators Update

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

     



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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    USD/CHF Daily Outlook

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

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

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

    Economic Indicators Update

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

     



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  • Dollar Falls as Disinflation Accelerates, EU Holds Fire on Tariff Retaliation

    Dollar Falls as Disinflation Accelerates, EU Holds Fire on Tariff Retaliation


    Dollar faced renewed selling pressure in early US session, as markets digested softer-than-expected inflation data. The latest CPI report confirmed that disinflation is regaining traction, with both headline and core inflation easing more than expected in March. This strengthens the case for Fed to resume its rate cut cycle in the coming months.

    A May rate cut remains unlikely — with Fed fund futures currently pricing in an 84% chance of a hold. Markets are still more confident that a move will come by June, with odds now standing around 78%. If the disinflation trend persists, that expectation could soon become consensus.

    On the trade front, the mood is notably less tense today. The European Union announced a 90-day suspension of its first wave of retaliatory tariffs, originally planned in response to the US’s 25% steel and aluminum duties. This follows US decision to pause the broad reciprocal tariff for 90 days.

    European Commission President Ursula von der Leyen emphasized, “We want to give negotiations a chance”. But she also made clear that the EU remains ready to act if talks fail. Preparatory work for broader countermeasures remains underway, with all options said to be “on the table.”

    Despite this temporary de-escalation, overall market sentiment remains shaky. US futures are pointing to a weaker open after yesterday’s massive relief rally, suggesting that investors are still wary of the underlying risks. In contrast, European markets are tracking Asia higher, but overall confidence is fragile.

    In the currency markets, Dollar is currently the worst performer of the week, followed by Sterling and Loonie. Swiss Franc continues to shine as a safe haven, with Aussie and Kiwi showing resilience as well. Meanwhile, Yen and Euro are positioning in the middle.

    Technically, Gold’s rebound from 2956.61 extended higher today. The strong support from 2956.09, as well as rising trend line, keeps Gold’s up trend intact. Nevertheless, corrective pattern from 3167.62 might still be incomplete. Break of 3048.43 support will start another down leg. Though, firm break of 3167.62 will confirm up trend resumption.

    In Europe, at the time of writing, FTSE is up 3.84%. DAX is up 4.83%. CAC is up 4.49%. UK 10-year yield is down -0.073 at 4.742. Germany 10-year yield is up 0.049 at 2.640. Earlier in Asia, Nikkei rose 9.13%. Hong Kong HSI rose 2.06%. China Shanghai SSE rose 1.16%. Singapore Strait Times rose 5.43%. Japan 10-year JGB yield rose 0.095 to 1.377.

    US CPI surprise: Both headline and core inflation cools sharply in March

    US inflation came in much softer than expected in March, with headline CPI falling -0.1% mom, surprising markets that had forecast a 0.2% mom increase. Core CPI, which excludes food and energy, also underwhelmed with just a 0.1% mom gain, well below the anticipated 0.3% mom. The pullback was led by a -2.4% mom drop in energy prices, while food costs continued to climb, rising 0.4% mom.

    On an annual basis, the CPI decelerated from 2.8% yoy to 2.4% yoy, lower than the expected 2.5% yoy. Core CPI also slowed to 2.8% yoy, down from 3.1% yoy, and marked the smallest 12-month increase since March 2021. The sharp drop in energy prices, down -3.3% yoy, played a significant role, although food inflation remained sticky at 3.0% yoy.

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

    US initial jobless claims rose 4k to 223k in the week ending April 5, slightly above expectation of 222k. Four-week moving average of initial claims was unchanged at 223k.

    Continuing claims fell -43k to 1850k in the week ending March 29. Four-week moving average of continuing claims fell -250 to 1868k.

    ECB’s Villeroy: Thank God we created Euro, as tariff turmoil undermines Dollar

    French ECB Governing Council member François Villeroy de Galhau emphasized today that while the US has long championed the global centrality of the Dollar, recent policy moves on tariffs are beginning to erode international confidence in the greenback.

    Speaking on France Inter radio, Villeroy said the Trump administration’s approach is “very incoherent,” and suggested that its recent actions “play against the confidence” typically held in Dollar.

    He contrasted this with the Euro, praising Europe’s foresight in establishing its own independent monetary system 25 years ago. “Thank God that Europe… created the Euro,” he noted, adding that the bloc now enjoys “monetary autonomy” that allows ECB to manage interest rates in a way that diverges from US policy, something that was not possible in the past.

    RBA’s Bullock: Too early to call rate path amid tariff-driven uncertainty

    RBA Governor Michele Bullock stated today that it is “too early” to judge how escalating global trade war will shape the path of Australian interest rates. “it’s too early for us to determine what the path will be for interest rates,” she added.

    Bullock noted that “a period of uncertainty and adjustment” is inevitable as countries react to Washington’s trade moves. RBA plans to stay patient while assessing how these global shocks might affect both supply and demand dynamics. “It will take some time to see how all of this plays out,” she said.

    Japan’s PPI accelerates to 4.2% while import costs ease

    Japan’s PPI rose 4.2% yoy in March, a slight acceleration from February’s 4.1% yoy and topping expectations of 3.9% yoy rise. The increase was broad-based, with notable gains in food prices, which rose 3.1% yoy, and energy costs, with petroleum and coal prices surging by 8.6% yoy.

    Despite the uptick in domestic producer prices, import costs in Yen terms fell -2.2% yoy in March, extending the -0.9% decline in February. Export prices, however, rose a modest 0.3% yoy, slowing sharply from February’s 1.7% yoy growth.

    China’s CPI falls -0.1% yoy in March, PPI highlights persistent deflationary pressures

    China’s consumer inflation remained in negative territory for a second straight month in March, with CPI falling -0.1% yoy, missing expectations of 0.1% yoy increase. While the decline was narrower than February’s -0.7% yoy, it still reflects subdued demand pressures across the economy.

    Food prices was a drag, down -1.4% yoy, while service prices provided only modest support, rising 0.3% yoy. Core CPI, which excludes volatile food and energy prices, edged up to 0.5% yoy from 0.3% previously, offering a slight glimmer of resilience.

    However, with headline inflation still hovering around zero and signs of consumer caution persisting, the broader disinflation trend appears entrenched.

    On a monthly basis, CPI dropped -0.4% mom, following February’s -0.2% mom decline, suggesting continued weakness in household spending momentum.

    Meanwhile, producer prices extended their decline for a 30th straight month, with PPI dropping -2.5% yoy, deeper than the expected -2.3%.

    EUR/USD Mid-Day Outlook

    Daily Pivots: (S1) 1.0876; (P) 1.0986; (R1) 1.1057; More…

    Intraday bias in EUR/USD remains neutral first, but focus is immediately on 1.1145 resistance with today’s rebound. Firm break there will resume whole rally from 1.0176. Next target is 1.1213/74 key resistance zone next. In case of another retreat, downside should be contained by 38.2% retracement of 1.0176 to 1.1145 at 1.0775 to complete the near term consolidation.

    In the bigger picture, fall from 1.1274 (2024 high) has completed as a three wave correction to 1.0176. Rise from 0.9534 ready to resume. Decisive break of 1.1274 will target 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916. Also, that will send EUR/USD through the multi-decade channel resistance will carries larger bullish implication. This will now be the favored case as long as 1.0731 support holds.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    23:01 GBP RICS Housing Price Balance Mar 2% 8% 11%
    23:50 JPY Bank Lending Y/Y Mar 2.80% 3.10% 3.10% 3.00%
    23:50 JPY PPI Y/Y Mar 4.20% 3.90% 4.00% 4.10%
    01:30 CNY CPI M/M Mar -0.40% -0.20%
    01:30 CNY CPI Y/Y Mar -0.10% 0.10% -0.70%
    01:30 CNY PPI Y/Y Mar -2.50% -2.30% -2.20%
    12:30 CAD Building Permits M/M Feb 2.90% -0.90% -3.20% -4.30%
    12:30 USD Initial Jobless Claims (Apr 4) 223K 222K 219K
    12:30 USD CPI M/M Mar -0.10% 0.20% 0.20%
    12:30 USD CPI Y/Y Mar 2.40% 2.50% 2.80%
    12:30 USD CPI Core M/M Mar 0.10% 0.30% 0.20%
    12:30 USD CPI Core Y/Y Mar 2.80% 3.00% 3.10%
    14:30 USD Natural Gas Storage 60B 29B

     



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  • Markets Soar on Tariff Truce, Reentry Signal or Perfect Exit Opportunity?

    Markets Soar on Tariff Truce, Reentry Signal or Perfect Exit Opportunity?


    US stocks staged a powerful relief rally overnight, snapping back from the recent tariff-induced collapse. All three major indexes posted gains not seen in years, marking a dramatic reversal in sentiment. Yet, despite the scale of the rebound, it remains unclear whether this marks the beginning of genuine investor re-entry—or simply a massive short-covering rally triggered by a temporary policy U-turn.

    What markets need now isn’t just a pause, but clarity and consistency. If the 90-day negotiation window devolves into more confusion, or if tariffs on China continue to escalate, the gains seen today could vanish just as quickly as they arrived.

    The crux of the matter is whether yesterday’s rally represents just a reflexive bounce driven by short-covering and algorithmic momentum? With the market having been stretched to deeply oversold levels after recent collapse, the slightest spark was bound to trigger a sharp relief jump.

    More improtantly, it is uncertain if long-term investors view this bounce as a reason to re-engage with US assets, or merely as an opportunity to exit at better levels. If the latter proves true, this rally could quickly fade into yet another bear market trap.

    The catalyst behind the surge came from US President Donald Trump’s abrupt announcement that new 10% tariffs on most US trade partners—technically in effect just hours earlier—would be paused for 90 days to facilitate negotiations.

    In contrast, the administration simultaneously escalated its economic conflict with China, announcing an immediate increase in tariffs on Chinese imports to 125%. The White House reinforced the pressure with a warning: “Do not retaliate and you will be rewarded.”

    Technically, for DOW, this week’s low at 36,611.78 offers a potential base for near-term consolidation, especially given its proximity to 55 M EMA (now at 35595.76). However, any upside is likely to be capped by 61.8% retracement of 45073.63 to 36611.78 at 41841.20 to set the range for near term consolidations, well, probably for 90 days? Sustained break of 41841.20 is needed before declaring that this tariff crisis is over.

    In the currency markets, after all the volatility, Aussie is currently the strongest one for the week so far, followed by Kiwi, and then Loonie. Sterling is the worst performer, followed by Dollar, and then Euro. Swiss Franc and Yen are positioning in the middle.

    In Asia, at the time of writing, Nikkei is up 8.01%. Hong Kong HSI is up 1.96%. China Shanghai SSE is up 0.93%. Singapore Strait Times is up 5.73%. Japan 10-year JGB yield is up 0.045 at 1.327. Overnight, DOW rose 7.87%. S&P 500 rose 9.52%. NASDAQ rose 12.16%. 10-year yield rose 0.138 to 4.400.

    Fed minutes highlight pre-tariff caution, hint at tough tradeoffs ahead

    The minutes from the FOMC’s March meeting revealed growing concern among policymakers about the economic outlook, particularly amid rising uncertainty. While these discussions occurred before the dramatic escalation of the US tariff war in April, the insights remain valuable.

    “Almost all” participants viewed inflation risks as tilted to the “upside”, while “downside” risks to employment and growth were also flagged—setting the stage for a policy dilemma.

    Some officials highlighted that the Fed could soon face “difficult tradeoffs,” especially if inflation remains elevated while job and growth prospects deteriorate.

    Notably, a few participants also warned that an “abrupt repricing of risk in financial markets” could magnify the impact of any negative economic shocks. Given what has since transpired with global markets in April, these comments seem prescient.

    While the minutes may now appear somewhat outdated, they nonetheless provide a crucial baseline for understanding how the Fed might react in an increasingly fragile environment.

    Japan’s PPI accelerates to 4.2% while import costs ease

    Japan’s PPI rose 4.2% yoy in March, a slight acceleration from February’s 4.1% yoy and topping expectations of 3.9% yoy rise. The increase was broad-based, with notable gains in food prices, which rose 3.1% yoy, and energy costs, with petroleum and coal prices surging by 8.6% yoy.

    Despite the uptick in domestic producer prices, import costs in Yen terms fell -2.2% yoy in March, extending the -0.9% decline in February. Export prices, however, rose a modest 0.3% yoy, slowing sharply from February’s 1.7% yoy growth.

    China’s CPI falls -0.1% yoy in March, PPI highlights persistent deflationary pressures

    China’s consumer inflation remained in negative territory for a second straight month in March, with CPI falling -0.1% yoy, missing expectations of 0.1% yoy increase. While the decline was narrower than February’s -0.7% yoy, it still reflects subdued demand pressures across the economy.

    Food prices was a drag, down -1.4% yoy, while service prices provided only modest support, rising 0.3% yoy. Core CPI, which excludes volatile food and energy prices, edged up to 0.5% yoy from 0.3% previously, offering a slight glimmer of resilience.

    However, with headline inflation still hovering around zero and signs of consumer caution persisting, the broader disinflation trend appears entrenched.

    On a monthly basis, CPI dropped -0.4% mom, following February’s -0.2% mom decline, suggesting continued weakness in household spending momentum.

    Meanwhile, producer prices extended their decline for a 30th straight month, with PPI dropping -2.5% yoy, deeper than the expected -2.3%.

    AUD/USD Daily Report

    Daily Pivots: (S1) 0.5987; (P) 0.6081; (R1) 0.6249; More…

    AUD/USD’s rebound from 0.5913 extended higher, and it’s now pressing 55 4H EMA (now at 0.6146). Sustained trading above there will should confirm short term bottoming,and bring stronger rebound towards 0.6388 resistance. Nevertheless, rejection by the EMA, followed by break of 0.6057 minor support will bring retest of 0.5913 low, and resumption of larger fall from 0.6941 at a later stage.

    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 0.6388 resistance holds.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    23:01 GBP RICS Housing Price Balance Mar 2% 8% 11%
    23:50 JPY Bank Lending Y/Y Mar 2.80% 3.10% 3.10% 3.00%
    23:50 JPY PPI Y/Y Mar 4.20% 3.90% 4.00% 4.10%
    01:30 CNY CPI M/M Mar -0.40% -0.20%
    01:30 CNY CPI Y/Y Mar -0.10% 0.10% -0.70%
    01:30 CNY PPI Y/Y Mar -2.50% -2.30% -2.20%
    12:30 CAD Building Permits M/M Feb -0.90% -3.20%
    12:30 USD Initial Jobless Claims (Apr 4) 222K 219K
    12:30 USD CPI M/M Mar 0.20% 0.20%
    12:30 USD CPI Y/Y Mar 2.50% 2.80%
    12:30 USD CPI Core M/M Mar 0.30% 0.20%
    12:30 USD CPI Core Y/Y Mar 3.00% 3.10%
    14:30 USD Natural Gas Storage 60B 29B

     



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