Tag: USD

  • Euro Slips on Softer CPI, But Trading Largely Listless

    Euro Slips on Softer CPI, But Trading Largely Listless


    The currency markets remain largely listless today, with all major pairs and crosses still trapped within last week’s ranges. Euro edged slightly lower following the release of Eurozone CPI data, which showed inflation falling below the ECB’s 2% target for the first time since September last year. The core measure also softened notably, reinforcing the view that disinflationary pressures—particularly within services—are well entrenched. With inflation now comfortably back within target, markets have little doubt that ECB will proceed with a 25bps rate cut this Thursday.

    Uncertainty over tariffs continues to hover as a key wildcard. With little clarity on whether the US will escalate its trade actions further, markets are reluctant to commit. A July pause from ECB remains the base case, but further action could hinge on whether tariffs ultimately push inflation up through cost channels—or suppress demand and contribute to disinflation. This dilemma is front and center as policymakers navigate crosscurrents in growth and prices.

    Adding to the cautious mood, the OECD revised its global growth forecasts downward. It now sees world GDP expanding just 2.9% in both 2025 and 2026, citing increased trade barriers and lingering policy uncertainty as key drags. OECD Secretary General Mathias Cormann warned that a further 10 percentage point hike in US bilateral tariffs could shave 0.3% off global output over two years, while likely adding to inflation in affected countries.

    Technically, AUD/JPY continues to press 38.2% retracement of 86.03 to 95.63 at 91.96. Firm break of this fibonacci level will extend the correction from 95.63 to 100% projection of 95.63 to 91.64 from 93.85 at 89.86. Nevertheless, strong bounce from current level, followed by break of 93.85 resistance, will argue that rise from 86.03 is ready to resume through 95.63.

    In Europe, at the time of writing, FTSE is up 0.17%. DAX is up 0.16%. CAC is down -0.15%. UK 10-year yield is down -0.038 at 4.632. Germany 10-year yield is down -0.019 at 2.51. Earlier in Asia, Nikkei fell -0.06%. Hong Kong HSI rose 1.53%. China Shanghai SSE rose 0.43%. Singapore Strait times rose 0.10%. Japan 10-year JGB yield fell -0.27 to 1.482.

    BoE’s Bailey: Rate path still downward, but clouded by unpredictability

    BoE Governor Andrew Bailey told the Treasury Committee today that while the direction for interest rates remains downward, the outlook has become increasingly uncertain.

    Declining to pre-commit to a vote at the upcoming June meeting, Bailey said, “the path remains downwards, but how far and how quickly is now shrouded in a lot more uncertainty.”

    He emphasized the role of external forces, noting that the Bank has revised its language to reflect the “unpredictable” nature of the current global environment.

    His comments were echoed by fellow policymakers Catherine Mann and Sarah Breeden, who both acknowledged that rates are likely headed lower but stressed the difficulty in forecasting the exact pace or scale of future cuts.

    Mann warned against assuming a fixed glide path, while Breeden said “there is uncertainty about how far, how fast.”

    Eurozone CPI falls to 1.9%, below ECB target for first time since Sep 2024

    Eurozone inflation dipped back below the ECB’s 2% target for the first time since September 2024. Headline CPI fell from 2.2% yoy to 1.9% yoy in May, undershooting expectations of 2.0%. Core CPI (ex-energy, food, alcohol & tobacco) also eased more than forecast to 2.3% from 2.7%.

    The disinflation was led by a sharp slowdown in services inflation, which dropped from 4.0% yoy to 3.2% yoy. Non-energy industrial goods remained unchanged at 0.6% yoy. Energy prices continued to contract at -3.6% yoy, reinforcing the broader downward pressure. Despite a slight uptick in food and alcohol inflation to 3.3% yoy, the overall picture confirms easing price momentum across key sectors.

    Swiss CPI falls to -0.1% yoy, first negative since 2021

    Swiss consumer inflation turned negative in May for the first time since March 2021, with headline CPI falling -0.1% yoy, down from 0.0% in April yoy. Core inflation, which strips out volatile components such as fresh food and energy, slipped to 0.5% yoy from 0.6% yoy previously.

    On a monthly basis, both headline and core CPI rose 0.1%, in line with expectations.

    The breakdown reveals that domestic product prices grew just 0.2% mom and decelerated to from 0.8% yoy to 0.6% yoy. Imported goods prices were flat on the month and fell -2.4% yoy, ticked up from -2.5% yoy.

    BoJ’s Ueda: Ready to hike if wage growth recovers from tariff drag

    BoJ Governor Kazuo Ueda told parliament today that recently imposed U.S. tariffs could weigh on Japanese corporate sentiment, potentially impacting winter bonus payments and next year’s wage negotiations.

    He acknowledged that wage growth may “slow somewhat” in the near term due to these external pressures. However, Ueda expressed confidence that wage momentum would eventually “re-accelerate”, helping to sustain a moderate growth in household consumption.

    Looking ahead, Ueda reiterated the BoJ’s readiness to adjust its ultra-loose policy if the economy evolves in line with its projections. “If we’re convinced our forecast will materialize, we will adjust the degree of monetary support by raising interest rates,” he said.

    However, he cautioned that uncertainty surrounding the economic outlook remains “extremely high.”

    RBA’s Hunter: AUD’s recent resilience linked to global shift away from USD exposure

    RBA Chief Economist Sarah Hunter addressed the unusual behavior of the Australian Dollar in recent months in a speech today. She highlighted that while initial moves were consistent with past risk-off episodes, the currency’s subsequent rebound against the US Dollar stood out as “more unusual”.

    On a “trade-weighted” basis, AUD has remained broadly stable, even though it has appreciated against the greenback and the Chinese renminbi, while weakening against most other major currencies.

    This divergence, Hunter explained, stems from “offsetting factors”. Global growth concerns have pressured the AUD against safe-haven and cyclical peers, while simultaneous outflows from US assets have weakened the US Dollar.

    Hunter cautioned that it’s too soon to tell whether this trend will persist, but acknowledged that recent market behavior reflects shifting investor sentiment, particularly toward capital reallocation away from US assets. As a result, Australian Dollar’s relative resilience against USD may be underpinned by portfolio rebalancing and perceived relative economic stability.

    Hunter noted that the trade-weighted index has reverted to “pre-shock values”, suggesting minimal net change in the foreign-currency value of Australian exports. However, the “relative move of capital” into Australia, at a time when the US is facing policy and tariff-related volatility, could offer some support to “domestic investment activity”, providing a cushion to the broader economy amid global uncertainties.

    RBA Minutes: 25bps cut chosen for caution and predictability after debating hold and 50bps options

    RBA’s May 20 meeting minutes revealed that policymakers weighed three policy options—holding rates, a 25bps cut, or a larger 50bps reduction—before ultimately opting for a modest 25bps cut to 3.85%.

    The case for easing hinged on three key factors: sustained progress in bringing inflation back toward target without upside surprises, weakening global conditions and household consumption, and the view that a cut would be the “path of least regret” given the risk distribution.

    While members discussed a 50bps reduction after deciding to ease, they found the case for a larger move unconvincing. Australian data at the time showed little evidence that trade-related global uncertainty was materially harming domestic activity. Furthermore, some scenarios might even result in upward pressure on inflation, prompting caution. The Board also assessed that it was “not yet time to move monetary policy to an expansionary stance”.

    Ultimately, the Board judged that to move “cautiously and predictably” was more appropriate.

    Caixin PMI manufacturing drops to 48.3, as China faces marked weakening at start of Q2

    China’s manufacturing sector unexpectedly shrank in May, with Caixin PMI falling to 48.3 from 50.4, well below market expectations of 50.6. This marked the first contraction in eight months and the lowest reading since September 2022.

    According to Caixin Insight’s Wang Zhe, both supply and demand weakened, with a particularly notable drag from overseas demand. Employment continued to contract, pricing pressures remained subdued, and logistics saw moderate delays. Although business optimism saw a marginal recovery, the broader picture points to intensifying headwinds.

    The report highlights the fragile start to Q2, with Wang pointing to a “marked weakening” in key economic indicators and a “significantly intensified” level of downward pressure.

    EUR/USD Mid-Day Outlook

    Daily Pivots: (S1) 1.1377; (P) 1.1413; (R1) 1.1480; More…

    Intraday bias in EUR/USD is turned neutral with current retreat. Rebound from 1.1064 could extend higher, but strong resistance should be seen from 1.1572 to limit upside, at least on first attempt. On the downside, break of 1.1209 support will indicate that the corrective pattern from 1.1572 has started the third leg, and target 1.1064 support.

    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 1.0856) holds.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    22:45 NZD Terms of Trade Index Q1 1.90% 3.60% 3.10% 3.20%
    23:50 JPY Monetary Base Y/Y May -3.40% -4.20% -4.80%
    01:30 AUD RBA Meeting Minutes
    01:30 AUD Current Account (AUD) Q1 -14.7B -12.0B -12.5B -16.3B
    01:45 CNY Caixin Manufacturing PMI May 48.3 50.6 50.4
    06:30 CHF CPI M/M May 0.10% 0.10% 0.00%
    06:30 CHF CPI Y/Y May -0.10% -0.10% 0%
    09:00 EUR Eurozone Unemployment Rate Apr 6.20% 6.20% 6.20% 6.30%
    09:00 EUR Eurozone CPI Y/Y May P 1.90% 2.00% 2.20%
    09:00 EUR Eurozone CPI Core Y/Y May P 2.30% 2.40% 2.70%
    14:00 USD Factory Orders M/M Apr -3.10% 3.40%

     



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  • Dollar Struggles, Gold Rally Stalls, Trade Uncertainty Caps Conviction

    Dollar Struggles, Gold Rally Stalls, Trade Uncertainty Caps Conviction


    Global markets remain mixed, reflecting a cautious investor mood amid heightened trade uncertainty and a lack of clear directional drivers. US stocks closed modestly higher overnight, reversing losses from earlier in the session. Asian equities broadly followed the rebound, seemingly brushing off disappointing Chinese manufacturing data. The overall tone, however, remains indecisive, with no strong commitment to risk assets or safe havens.

    In the currency markets, Dollar is recovering slightly after a brief selloff, but still stands as the week’s worst performer. Loonie and Aussie follow behind. Yen continues to lead on safe-haven demand. Kiwi and Euro are also holding firmer, with Sterling and Swiss Franc sitting mid-pack. The lack of clear directional bias reflects the broader market indecision, as traders await clarity on the outcome of key trade negotiations.

    Underlying this market hesitation is persistent uncertainty surrounding global trade. According to a Reuters report, the Trump administration is pressing trading partners to submit their “best offers” by Wednesday, as it pushes to fast-track negotiations ahead of the July 9 expiry of the current 90-day reciprocal tariff truce. The US is requesting commitments on tariff and quota concessions, along with action plans on non-tariff barriers.

    The draft communication from the US Trade Representative warns countries not to assume tariffs will be halted, even if court rulings go against the administration. The letter asserts that the White House intends to continue the tariff program under “other robust legal authorities” if necessary, signaling that tariffs remain a core policy tool in negotiations.

    With legal and diplomatic fronts both in flux, traders are taking a wait-and-see approach. Until there is clarity on the direction of US trade policy—particularly with key partners like China and the EU—market participants are likely to stay sidelined. For now, short-term positioning continues to be dictated more by event risk management than conviction.

    Technically, Gold’s rise from 3120.34 resumed by breaking through 3365.92 resistance. Further rally should be seen to retest 3499.79 high. but strong resistance could be seen there to limit upside on first attempt, to bring more sideway trading in the near term. Nevertheless, decisive break of 3499.79 will confirm larger up trend resumption.

    In Asia, at the time of writing, Nikkei is up 0.07%. Hong Kong HSI is up 1.10%. China Shanghai SSE is up 0.36%. Singapore Strait Times is down -0.26%. Japan 10-year JGB yield is down -0.025 at 1.484. Overnight, DOW rose 0.08%. S&P 500 rose 0.41%. NASDAQ rose 0.67%. 10-year yield rose 0.046 to 4.462.

    Looking ahead, Swiss CPI and Eurozone CPI flash are the main focuses in European session. US will release factory orders later in the day.

    BoJ’s Ueda: Ready to hike if wage growth recovers from tariff drag

    BoJ Governor Kazuo Ueda told parliament today that recently imposed U.S. tariffs could weigh on Japanese corporate sentiment, potentially impacting winter bonus payments and next year’s wage negotiations.

    He acknowledged that wage growth may “slow somewhat” in the near term due to these external pressures. However, Ueda expressed confidence that wage momentum would eventually “re-accelerate”, helping to sustain a moderate growth in household consumption.

    Looking ahead, Ueda reiterated the BoJ’s readiness to adjust its ultra-loose policy if the economy evolves in line with its projections. “If we’re convinced our forecast will materialize, we will adjust the degree of monetary support by raising interest rates,” he said.

    However, he cautioned that uncertainty surrounding the economic outlook remains “extremely high.”

    RBA’s Hunter: AUD’s recent resilience linked to global shift away from USD exposure

    RBA Chief Economist Sarah Hunter addressed the unusual behavior of the Australian Dollar in recent months in a speech today. She highlighted that while initial moves were consistent with past risk-off episodes, the currency’s subsequent rebound against the US Dollar stood out as “more unusual”.

    On a “trade-weighted” basis, AUD has remained broadly stable, even though it has appreciated against the greenback and the Chinese renminbi, while weakening against most other major currencies.

    This divergence, Hunter explained, stems from “offsetting factors”. Global growth concerns have pressured the AUD against safe-haven and cyclical peers, while simultaneous outflows from US assets have weakened the US Dollar.

    Hunter cautioned that it’s too soon to tell whether this trend will persist, but acknowledged that recent market behavior reflects shifting investor sentiment, particularly toward capital reallocation away from US assets. As a result, Australian Dollar’s relative resilience against USD may be underpinned by portfolio rebalancing and perceived relative economic stability.

    Hunter noted that the trade-weighted index has reverted to “pre-shock values”, suggesting minimal net change in the foreign-currency value of Australian exports. However, the “relative move of capital” into Australia, at a time when the US is facing policy and tariff-related volatility, could offer some support to “domestic investment activity”, providing a cushion to the broader economy amid global uncertainties.

    RBA Minutes: 25bps cut chosen for caution and predictability after debating hold and 50bps options

    RBA’s May 20 meeting minutes revealed that policymakers weighed three policy options—holding rates, a 25bps cut, or a larger 50bps reduction—before ultimately opting for a modest 25bps cut to 3.85%.

    The case for easing hinged on three key factors: sustained progress in bringing inflation back toward target without upside surprises, weakening global conditions and household consumption, and the view that a cut would be the “path of least regret” given the risk distribution.

    While members discussed a 50bps reduction after deciding to ease, they found the case for a larger move unconvincing. Australian data at the time showed little evidence that trade-related global uncertainty was materially harming domestic activity. Furthermore, some scenarios might even result in upward pressure on inflation, prompting caution. The Board also assessed that it was “not yet time to move monetary policy to an expansionary stance”.

    Ultimately, the Board judged that to move “cautiously and predictably” was more appropriate.

    Caixin PMI manufacturing drops to 48.3, as China faces marked weakening at start of Q2

    China’s manufacturing sector unexpectedly shrank in May, with Caixin PMI falling to 48.3 from 50.4, well below market expectations of 50.6. This marked the first contraction in eight months and the lowest reading since September 2022.

    According to Caixin Insight’s Wang Zhe, both supply and demand weakened, with a particularly notable drag from overseas demand. Employment continued to contract, pricing pressures remained subdued, and logistics saw moderate delays. Although business optimism saw a marginal recovery, the broader picture points to intensifying headwinds.

    The report highlights the fragile start to Q2, with Wang pointing to a “marked weakening” in key economic indicators and a “significantly intensified” level of downward pressure.

    Fed’s Goolsbee warns against repeating ‘transitory’ mistake on tariff inflation

    Chicago Fed President Austan Goolsbee said in a webcast overnight that tariffs typically lead to a one-time price increase rather than sustained inflation.

    Drawing on textbook theory, he said a 10% tariff would create a 10% rise in prices for imported goods for “one year”, after which the inflationary effect dissipates. Such shocks are usually seen as “transitory” by central banks, Goolsbee explained.

    However, he warned against underestimating potential risks, citing lessons from the pandemic-era supply chain disruptions. “We learned the last time around” not to dismiss inflation too quickly, Goolsbee said, referencing how persistent inflation caught the Fed off guard.

    He added that scenarios combining rising prices and weakening labor markets, a stagflationary mix, present the most difficult challenge for monetary policy, as “there’s not an obvious playbook”.

    USD/CHF Daily Outlook

    Daily Pivots: (S1) 0.8139; (P) 0.8189; (R1) 0.8222; More….

    Intraday bias in USD/CHF stays on the downside as fall from 0.8475 is in progress for 0.8038 low. Strong support could be seen from there to bring rebound, on first attempt. On the upside, above 0.8248 minor resistance will turn intraday bias neutral first. However, decisive break of 0.8038 will confirm larger down trend resumption.

    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 0.8732) holds. Sustained break of 0.8079 will target 100% projection at 0.7382.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    22:45 NZD Terms of Trade Index Q1 1.90% 3.60% 3.10% 3.20%
    23:50 JPY Monetary Base Y/Y May -3.40% -4.20% -4.80%
    01:30 AUD RBA Meeting Minutes
    01:30 AUD Current Account (AUD) Q1 -14.7B -12.0B -12.5B -16.3B
    01:45 CNY Caixin Manufacturing PMI May 48.3 50.6 50.4
    06:30 CHF CPI M/M May 0.10% 0.00%
    06:30 CHF CPI Y/Y May -0.10% 0%
    09:00 EUR Eurozone Unemployment Rate Apr 6.20% 6.20%
    09:00 EUR Eurozone CPI Y/Y May P 2.00% 2.20%
    09:00 EUR Eurozone CPI Core Y/Y May P 2.40% 2.70%
    14:00 USD Factory Orders M/M Apr -3.10% 3.40%

     



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  • Trade Tensions Drag Dollar While Oil Jumps on OPEC+ Hold

    Trade Tensions Drag Dollar While Oil Jumps on OPEC+ Hold


    Risk sentiment remains fragile as the US session gets underway, with equity markets under pressure from renewed tariff threats. European stocks are particularly heavy after US President Donald Trump threatened to double tariffs on imported steel. UK equities, however, are finding some support from Prime Minister Keir Starmer’s announcement of increased defense spending.

    In the currency markets, Dollar is under broad pressure, currently the weakest performer of the day as traders react to the heightened trade uncertainty again. Loonie and Swiss Franc are also underperforming. Kiwi leads gains, followed by Yen and Aussie. Sterling and Euro sit in the middle.

    Meanwhile, oil prices have jumped after OPEC+ confirmed it would maintain output increases in July at pace of 411k barrels per day. Markets had been wary of a possible larger hike, as hinted by sources late last week. That outcome would have likely sparked a sharp bearish gap on Monday’s open. The restraint from OPEC+ has thus supported a modest rebound in crude.

    Technically, despite the rebound, WTI crude remains capped below key cluster resistance at 65.24 (38.2% retracement of 81.01 to 55.20 at 65.05. As long as this resistance zone holds, outlook will stay bearish for down trend resumption through 55.20 at a later stage. Nevertheless, firm break of 65.05/24 would bring strong rally to 61.8% retracement at 71.15, with risk of bullish trend reversal.

    In Europe, at the time of writing, FTSE is up 0.08%. DAX is down -0.45%. CAC is down -0.58%. UK 10-year yield is up 0.025 at 4.674. Germany 10-year yield is up 0.036 at 2.541. Earlier in Asia, Nikkei fell -1.30%. Hong Kong HSI fell -0.57%. Singapore Strait Times fell -0.10%. Japan 10-year JGB yield rose 0.004 to 1.509.

    UK PMI manufacturing finalized at 46.4, with tentative signs of stabilization

    UK manufacturing activity remained in contraction in May, with PMI finalized at 46.4, up modestly from April’s 45.4.

    The data indicate that the sector continues to face “major challenges,” according to S&P Global’s Rob Dobson, citing turbulent domestic and global conditions, trade uncertainty, subdued client confidence, and increased wage costs tied to tax changes.

    Still, there are early signs that the worst of the downturn may be easing. The indexes for output and new orders have risen for two consecutive months and were stronger than the initial flash estimates, hinting at possible stabilization.

    However, Dobson warned that the sector could either steady or slip further depending on how trading conditions evolve in the coming months.

    Eurozone PMI manufacturing finalized at 49.4, recovery progressing

    Eurozone PMI manufacturing was finalized at 49.4 in May, up from April’s 49.0 and marking the highest level in 33 months.

    Production increased across all four major economies: Germany, France, Italy, and Spain, supporting economist Cyrus de la Rubia’s view that the recovery is gaining traction.

    De la Rubia also noted that output has now risen for three straight months, reinforcing the view that the recovery is gaining traction. Historical data suggests a 72% chance of another output increase next month.

    Falling input costs, driven by lower energy prices, have enabled manufacturers to cut selling prices again, offering the ECB more flexibility for its expected interest rate cuts.

    However, the outlook remains clouded by external risks, particularly the threat of higher US tariffs on EU goods. Any escalation in transatlantic trade tensions could quickly derail the fragile rebound.

    Swiss GDP grew 0.5% in Q1, pharma exports surge on tariff frontloading

    Switzerland’s GDP expanded by 0.5% qoq in Q1, beating market expectations of 0.4% qoq. When adjusted for the impact of major sporting events, GDP growth came in even stronger at 0.8% qoq. The State Secretariat for Economic Affairs noted that the services sector posted broad-based gains and domestic demand remained firm, contributing to the overall solid performance.

    A standout was the chemical and pharmaceutical sector, which surged 7.5% in the quarter, driven by a sharp rise in pharmaceutical exports. This lifted overall manufacturing output by 2.1% and goods exports by 5.0%. Notably, exports to the US jumped significantly, suggesting possible front-loading in anticipation of evolving US trade policy.

    Japan’s PMI manufacturing finalized at 49.5, firms eye recovery despite trade headwinds

    Japan’s PMI Manufacturing was finalized at 49.5 in May, up from April’s 48.7. S&P Global’s Annabel Fiddes noted that business conditions “moved closer to stabilisation,” as declines in sales eased and firms reported improved hiring activity.

    Global trade tensions stemming from US tariffs continue to weigh on demand, with businesses citing “increased client hesitancy” and weaker orders.

    Despite persistent external challenges around tariffs, sentiment around future output improved, and hiring rose at the fastest pace in over a year.

    EUR/USD Mid-Day Outlook

    Daily Pivots: (S1) 1.1310; (P) 1.1350; (R1) 1.1387; More…

    Intraday bias in EUR/USD is back on the upside as rebound from 1.1064 resumed by breaking through 1.1417. Further rise would be seen to retest 1.1572. Strong resistance could be seen there to limit upside at first attempt. Below 1.1311 minor support will turn intraday bias neutral first. Nevertheless, decisive break of 1.1572 will confirm larger up trend resumption.

    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 1.0856) holds.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    23:50 JPY Capital Spending Q1 6.40% 3.80% -0.20%
    00:30 JPY Manufacturing PMI May 49.4 49 49
    01:00 AUD TD-MI Inflation Gauge M/M May -0.40% 0.60%
    06:30 CHF Real Retail Sales Y/Y Apr 1.30% 2.50% 2.20% 2.10%
    07:00 CHF GDP Q/Q Q1 0.50% 0.40% 0.20% 0.30%
    07:30 CHF Manufacturing PMI May 42.1 48.1 45.8
    07:50 EUR France Manufacturing PMI May F 49.8 49.5 49.5
    07:55 EUR Germany Manufacturing PMI May F 48.3 48.8 48.8
    08:00 EUR Eurozone Manufacturing PMI May F 49.4 49.4 49.4
    08:30 GBP Manufacturing PMI May F 46.4 45.1 45.1
    08:30 GBP Mortgage Approvals Apr 60K 65K 64K
    08:30 GBP M4 Money Supply M/M Apr 0.00% 0.20% 0.30%
    13:30 CAD Manufacturing PMI May 45.3
    13:45 USD Manufacturing PMI May F 52.3 52.3
    14:00 USD ISM Manufacturing PMI May 49.3 48.7
    14:00 USD ISM Manufacturing Prices Paid May 70.2 69.8
    14:00 USD ISM Manufacturing Employment Index May 46.5
    14:00 USD Construction Spending M/M Apr 0.30% -0.50%

     



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  • Trade Chaos Likely to Linger, June to Bring More Uncertainty

    Trade Chaos Likely to Linger, June to Bring More Uncertainty


    Markets endured another week of trade confusion, with sentiment swinging sharply on alternating headlines. As a result, investor confidence remains fragile, with markets finding little footing as the tug-of-war between hopes of progress and fear of escalation continues.

    While the 90-day reciprocal tariff truce is now in effect, its second half is shaping up to be just as uncertain. There’s potential for additional trade agreements to be finalized in the coming weeks, especially among smaller economies or non-contentious regions. However, the negotiations that matter most—between the US and the EU, and the US and China—remain fraught with difficulty. These high-stakes talks carry the most weight for global markets and, therefore, also pose the greatest downside risk.

    Equity markets around the world are showing clear signs of fatigue. The bullish momentum that since mid-April has faded, replaced by choppy, indecisive price action. With global indexes indexes stalling, the stage is set for a prolonged period of sideways or probably downward movement.

    The old market adage “sell in May and go away” might have come slightly early for some. But given the current backdrop, the phrase may still apply—with a twist. For 2025, “sell in June is not too late” may prove to be the more accurate rule of thumb. Barring a clear and credible resolution on the major trade fronts, June could be another month of whipsaw trading, fragile sentiment, and rising caution.

    Overall in the currency markets, Dollar ended as the strongest one, followed by Loonie, and then Euro. Yen was the worst performer, followed by Aussie and then Sterling. Swiss Franc and Kiwi ended in the middle. But the pairs and crosses were merely in consolidations in general.

    Global Stock Markets Lose Momentum Further

    Technically, for DOW, upside momentum has clearly been diminishing as D MACD is trending below signal line. While another rise cannot be ruled out yet, strong resistance should emerge below 45073.63 high to cap upside.

    Rise from 36611.78 is seen as the as the second leg of the corrective pattern from 45073.63. Break of 41352.09 support will bring deeper fall back to 38.2% retracement of 36611.78 to 42842.04 at 40462.08. Decisive break there will suggest near term reversal, and target 61.8% retracement at 38991.74 and below.

    Similar picture is seen in NASDAQ as it’s also losing upside momentum as seen in D MACD. While another rise cannot be ruled out, upside should be capped by 20204.58 high. Break of 18599.68 support will bring deeper fall to 38.2% retracement of 14784.03 to 19389.39 at 17630.14. Further break there will argue that the corrective pattern from 20204.58 has already started the third leg.

    FTSE’s outlook is also similar, even though it’s an outperformer comparing to the US stock indexes. D MACD suggests that FTSE is also losing momentum. In case of another rise, upside should be limited by 8908.82 high. Break of 8604.80 support will bring deeper pullback to 38.2% retracement of 7544.83 to 8824.00 at 8335.36. Further break there will argue that corrective pattern from 8908.82 has started the third leg already.

    Even the record breaking DAX is also losing momentum as seen in D MACD. Strong resistance is expected from 100% projection of 17024.82 to 23476.01 from 18489.91 at 24940.97 to limit upside, in case of another rally. Bring of 23274.85 will indicate that a correction has started to 55 D EMA (now at 22848.19) and below.

    Dollar Index to Engage in More Consolidations before Downside Breakout

    Dollar Index gyrated in range above 97.92 short term bottom last week. Outlook is unchanged that it’s now in consolidation to the decline from 110.17. The pattern might be set to extend further due to market uncertainty. But in case of another rise, strong resistance should be seen from 38.2% retracement of 110.17 to 97.92 at 102.60 to limit upside. Firm break of 97.92 will confirm down trend resumption.

    Also, fall from 110.17 is seen as the third leg of the pattern from 114.77 (2022 high). On resumption, next target is 100% projection of 114.77 to 99.57 from 110.17 at 94.97.

    EUR/USD Weekly Outlook

    EUR/USD’s price actions from 1.1572 are seen as a corrective pattern to rally from 1.0176, which might still be extending. On the upside, above 1.1417 will bring retest of 1.1572 first. On the downside, below 1.1209 will target 1.1064 again. But overall, rise from 1.0176 is expected to resume after the correction completes at a later stage.

    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 1.0856) holds.

    In the long term picture, the case of long term bullish reversal is building up. Sustained break of falling channel resistance (now at around 1.1290) will argue that the down trend from 1.6039 (2008 high) has completed at 0.9534. A medium term up trend should then follow even as a corrective move. Next target is 38.2% retracement of 1.6039 to 0.9534 at 1.2019.



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

    Trade Rhetoric Sours Sentiment Again as US-China Tensions Resurface


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

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

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

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

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

    US core PCE inflation cools to 2.5%, income surges

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

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

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

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

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

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

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

    ECB’s Panetta signals diminished room for further rate cuts

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

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

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

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

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

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

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

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

    Swiss KOF rises to 98.5, but growth outlook remains subdued

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    USD/CHF Mid-Day Outlook

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

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

    In the bigger picture, long term down trend from 1.0342 (2017 high) is still in progress and met 61.8% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.8079 already. In any case, outlook will stay bearish as long as 55 W EMA (now at 0.8713) holds. Sustained break of 0.8079 will target 100% projection at 0.7382.

    Economic Indicators Update

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

     



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

    Dollar Reverses as Markets Doubt Lasting Impact of US Tariff Ruling


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    GBP/USD Mid-Day Outlook

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

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

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

    Economic Indicators Update

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

     



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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    EUR/USD Daily Outlook

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

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

    In the bigger picture, rise from 0.9534 long term bottom could be correcting the multi-decade downtrend or the start of a long term up trend. In either case, further rise should be seen to 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916. This will remain the favored case as long as 55 W EMA (now at 1.0858) holds.

    Economic Indicators Update

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

     



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

    Dollar Recovery Slows Ahead of FOMC Minutes as Market Seeks Clarity


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    USD/CHF Mid-Day Outlook

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

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

    In the bigger picture, long term down trend from 1.0342 (2017 high) is still in progress and met 61.8% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.8079 already. In any case, outlook will stay bearish as long as 55 W EMA (now at 0.8713) holds. Sustained break of 0.8079 will target 100% projection at 0.7382.

    Economic Indicators Update

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

     



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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    Fed’s Williams stresses need for vigilance on inflation expectations

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

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

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

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

    USD/JPY Daily Outlook

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

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

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

    Economic Indicators Update

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

     



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  • Yen Crushed as Super-Long JGB Yields Plunge on Supply Cut Speculation

    Yen Crushed as Super-Long JGB Yields Plunge on Supply Cut Speculation


    Yen is under intense selling pressure today, dragged down by a sharp plunge in super-long JGB yields. The 30-year yield closed at 2.836%, down significantly from 3.165% just days ago. This abrupt move followed a Reuters report suggesting that the Ministry of Finance may reduce super-long bond issuance as part of a potential tweak to its bond program. Discussions with market participants are expected to conclude by mid- to late-June, after which the MOF will formalize its decision.

    The reported consideration comes in response to a surge in super-long yields to multi-decade highs, which had mirrored global trends, particularly a selloff in US long bonds. A reduction in supply could help stabilize Japan’s long-end, which has come under additional pressure amid political calls for fiscal stimulus ahead of July’s upper house elections. Prime Minister Shigeru Ishiba faces growing demands for tax cuts and expansive spending measures, both of which could further exacerbate Japan’s already heavy debt load and add pressure on government financing costs.

    This bond market adjustment has compounded Yen weakness, particularly as global risk appetite revives. European equities are rallying, with DAX hitting a fresh record high, and US equity futures are pointing higher as well. This upswing in sentiment is fueling a rebound in Dollar, while Euro and Sterling are also firming against most peers. In contrast, the Swiss franc is underperforming, second only to Yen on the downside today. However, commodity currencies like Aussie, Kiwi and Loonie are showing muted reactions, failing to capitalize on the improved mood.

    Technically, one focus now is whether EUR/CHF’s rebound from 0.9291 could extend through 0.9419 resistance. In this case, that would signal resumption of rise from 0.9218. Next near term target will be 100% projection of 0.9218 to 0.9445 from 0.9291 at 0.9518.

    In Europe, at the time of writing, FTSE is up 0.72%. DAX is up 0.70%. CAC is up 0.09%. UK 10-year yield is down -0.005 at 4.678. Germany 10-year yield is down -0.018 at 2.544. Earlier in Asia, Nikkei rose 0.51%. Hong Kong HSI rose 0.43%. China Shanghai SSE fell -0.18%. Singapore Strait Times rose 0.53%. Japan 10-year JGB yield fell -0.03 to 1.466.

    US durable goods orders fall -6.3% mom, but core shows resilience

    US durable goods orders fell sharply by -6.3% mom in April to USD 296.3B, driven primarily by a steep -17.1% mom drop in transportation equipment. The headline decline, while severe, was less than the expected -8.0%.

    Orders excluding defense also posted a significant decline of -7.5% mom to USD 279.3B.

    However, the underlying picture was somewhat more stable. Orders excluding the often-volatile transportation component rose by 0.2% mom to USD 197.5B, beating expectations of a flat reading.

    This suggests that while large-ticket and defense-related items dragged the headline figure lower, private sector investment in capital goods is holding up better than feared.

    Fed’s Kashkari leans cautious on tariff shock, favors holding rates to anchor inflation expectations

    Speaking at the IMES conference in Japan, Minneapolis Fed President Neel Kashkari addressed the growing internal debate within Fed over how to respond to the inflationary effects of new US tariffs.

    He noted that some policymakers advocate “looking through” these price shocks, viewing them as “transitory”, akin to a one-time upward shift in the price level rather than persistent inflation. That approach would favor cutting interest rates to support economic activity during the adjustment period.

    However, Kashkari expressed skepticism toward this lenient view. He emphasized that trade negotiations are “unlikely to be resolved quickly”., warning of a prolonged period of elevated uncertainty and the risk of retaliatory measures.

    Tariffs on intermediate goods could lead to delayed but persistent inflationary pressure as cost increases pass through to final goods over time.

    Given these risks, Kashkari said he finds the case for holding rates steady more persuasive, especially in light of the need on “defending long-run inflation expectations”.

    While current policy is likely “only modestly restrictive”, he argued that caution is warranted until the full effects of tariffs become clearer.

    ECB’s Holzmann: Should pause rate cut until at least September

    Austrian ECB Governing Council member Robert Holzmann cautioned against further rate cuts in the near term, citing heightened uncertainty from the US-EU trade conflict and a belief that monetary policy is no longer the main drag on economic activity.

    Arguing that “moving further south would be more risky than staying where we are,” Holzmann said there is no justification for easing in June or July and suggested waiting until at least September before reassessing the need for further action.

    Holzmann also pointed to a notable rise in estimates of the neutral interest rate since early 2022, stating that ECB’s current policy stance is already “at least at the neutral level.”

    In his view, lower rates would provide little economic benefit, as lingering uncertainty, not borrowing costs, is the key factor suppressing growth.

    ECB’s Villeroy and Simuks Signal June rate cut

    Comments from ECB Governing Council members today reinforced expectations for a rate cut in June, as inflation continues to moderate across the Eurozone.

    French central bank chief François Villeroy de Galhau noted that policy normalization is “probably not complete,” and hinted that the upcoming ECB meeting is likely to deliver further action. He pointed to France’s May inflation reading of just 0.6% as a “very encouraging sign of disinflation in action”

    Separately, Lithuania’s Gediminas Šimkus struck a dovish tone, stating that the balance of inflation risks has shifted to the downside, citing trade frictions with the US and a stronger Euro as deflationary forces. He added that current borrowing costs sit at the upper bound of the neutral range, leaving room for more rate reductions.

    German Gfk consumer sentiment edges higher to -19.9, mood remains extremely low

    Germany’s GfK Consumer Sentiment rose for the third straight month, reaching -19.9 in June, its highest reading since November 2024, but slightly below expectations of -19.7. In May, income expectations surged 6.1 pts to 10.4, the best since October last year. Economic expectations climbed 2.9 pts to 13.1, their highest since April 2023.

    According to Rolf Bürkl of the NIM, the mood remains “extremely low,” with uncertainty still elevated due to global trade tensions, stock market volatility, and persistent fears of another year of economic “stagnation”. These concerns are encouraging households to prioritize saving over spending.

    BoJ’s Ueda highlights persistent food inflation and trade uncertainty

    In his remarks at the BoJ-IMES Conference, BoJ Governor Kazuo Ueda highlighted a fresh wave of price pressures, particularly from food, has emerged in Japan recently. Rice prices nearly doubling year-on-year and broader non-fresh food categories climbing 7%.

    While BoJ expects the latest food-driven inflation spike to be transitory, Ueda acknowledged that underlying inflation now hovers closer to the 2% mark than in previous years, warranting heightened vigilance.

    BoJ retains its baseline scenario that underlying inflation will gradually return to the 2% target over time. However, given the evolving backdrop of supply-driven shocks and heightened global uncertainty, Ueda reiterated that any adjustment in the degree of monetary easing will hinge on incoming data.

    “Considering the extremely high uncertainties, it is important for us to judge whether the outlook will be realized, without any preconceptions,” Ueda emphasized.

    USD/JPY Mid-Day Outlook

    Daily Pivots: (S1) 142.35; (P) 142.72; (R1) 143.20; More…

    USD/JPY recovered notably today but stays below 144.31 minor resistance. Intraday bias remains neutral first. On the upside, firm break of 144.31 will argue that fall from 148.64 has completed as a corrective pullback. Intraday bias will be turned back to the upside for 148.64 resistance next. Nevertheless, rejection by 144.31 will keep risks on the downside. Below 142.10 will target a retest on low.

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

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    23:01 GBP BRC Shop Price Index Y/Y May -0.10% 0.00% -0.10%
    23:50 JPY Corporate Service Price Index Y/Y Apr 3.10% 3.00% 3.10% 3.30%
    06:00 CHF Trade Balance (CHF) Apr 6.36B 5.55B 6.35B 6.29B
    06:00 EUR Germany GfK Consumer Sentiment Jun -19.9 -19.7 -20.6 -20.8
    09:00 EUR Eurozone Economic Sentiment May 94.8 94 93.6
    09:00 EUR Eurozone Industrial Confidence May -10.3 -11 -11.2 -11
    09:00 EUR Eurozone Services Sentiment May 1.5 1.4
    09:00 EUR Eurozone Consumer Confidence May F -15.2 -15.2 -15.2
    12:30 USD Durable Goods Orders Apr -6.30% -8.00% 7.50%
    12:30 USD Durable Goods Orders ex Transport Apr 0.20% 0.00% -0.40%
    13:00 USD S&P/CS Composite-20 HPI Y/Y Mar 4.50% 4.50%
    13:00 USD Housing Price Index M/M Mar 0.20% 0.10%
    14:00 USD Consumer Confidence May 87.1 86

     



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  • Markets Stay Guarded Despite China Profit Gains

    Markets Stay Guarded Despite China Profit Gains


    Markets were subdued in the Asian session today, showing little enthusiasm in response to China’s better-than-expected industrial profit figures. Profits rose 3.0% yoy in April, following a 2.6% gain in March, pushing year-to-date growth to 1.4%. The data was notably resilient given ongoing trade tensions. Still, the NBS struck a cautious tone, warning of persistent headwinds such as weak domestic demand, price pressures, and heightened global uncertainty stemming from ongoing trade war.

    Risk sentiment remains fragile despite US President Trump’s decision to postpone the threatened 50% tariff on EU goods until July 9. This move offers a temporary reprieve, but the lack of a clear path to resolution continues to weigh on investor confidence. US futures are holding up for now, but the news should have already been priced in. The broader concern is that even with paused escalations, the threat of further trade disruptions remain a structural drag on growth and trade.

    This cautious backdrop is reflected in persistent Dollar weakness and the steady resilience in Gold. As for today so far, commodity currencies are under mild pressure along with the greenback. Yen and Swiss Franc are the strongest performers, followed by Euro, while Sterling trades mixed.

    AUD/CAD is a pair to monitor this week, with Australian monthly CPI due Wednesday and Canadian GDP on Friday. Technically, rebound from 0.8440 stalled after hitting 0.9041. Price actions from there is currently seen as a corrective pattern only. Downside should be contained by 0.8799 support (38.2% retracement of 0.8440 to 0.9041 at 0.8811). Break of 0.9041 will resume the rally through 0.9132 resistance.

    In Asia, at the time of writing, Nikkei is down -0.23%. Hong Kong HSI is down -0.21%. China Shanghai SSE is down -0.33%. Singapore Strait Times is up 0.13%. Japan 10-year JGB yield is down -0.019 at 1.478.

    Looking ahead, Swiss trade balance and German Gfk consumer sentiment will be released in European session. Later in the day, US will publish durable goods orders, house price index and consumer confidence.

    BoJ’s Ueda highlights persistent food inflation and trade uncertainty

    In his remarks at the BoJ-IMES Conference, BoJ Governor Kazuo Ueda highlighted a fresh wave of price pressures, particularly from food, has emerged in Japan recently. Rice prices nearly doubling year-on-year and broader non-fresh food categories climbing 7%.

    While BoJ expects the latest food-driven inflation spike to be transitory, Ueda acknowledged that underlying inflation now hovers closer to the 2% mark than in previous years, warranting heightened vigilance.

    BoJ retains its baseline scenario that underlying inflation will gradually return to the 2% target over time. However, given the evolving backdrop of supply-driven shocks and heightened global uncertainty, Ueda reiterated that any adjustment in the degree of monetary easing will hinge on incoming data.

    “Considering the extremely high uncertainties, it is important for us to judge whether the outlook will be realized, without any preconceptions,” Ueda emphasized.

    Japan’s external assets hit record, but top creditor status lost to Germany

    Japan’s gross external assets soared to a record JPY 533.05T in 2024, marking a 12.9% increase from the previous year. This seventh consecutive annual rise was driven by a combination of Yen depreciation and continued outbound investment activity, especially in mergers and acquisitions.

    The Japanese government, businesses, and individuals collectively benefited from currency effects, as Dollar and Euro appreciated by 11.7% and 5% respectively against Yen, inflating the yen-denominated value of overseas holdings.

    Nevertheless, for the first time in 34 years, Germany overtook Japan with external assets totaling JPY 569.65T. China followed closely behind Japan with JPY 516.28T.

    While Yen’s depreciation offered valuation support, Japan’s position was undercut by Germany’s structurally stronger current account surplus.

    EUR/USD Daily Outlook

    Daily Pivots: (S1) 1.1360; (P) 1.1389; (R1) 1.1417; More…

    For now, further rise is expected in EUR/USD with 1.1255 support intact. Correction from 1.1572 should have completed at 1.1064. Rebound from there should target 1.1572 first. Decisive break there will resume larger up trend to 61.8% projection of 1.0176 to 1.1572 from 1.1064 at 1.1927. On the downside, however, break of 1.1255 will turn bias back to the downside to extend the corrective pattern with another falling leg.

    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 1.0858) holds.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    23:01 GBP BRC Shop Price Index Y/Y May -0.10% 0.00% -0.10%
    23:50 JPY Corporate Service Price Index Y/Y Apr 3.10% 3.00% 3.10% 3.30%
    06:00 CHF Trade Balance (CHF) Apr 5.55B 6.35B
    06:00 EUR Germany GfK Consumer Sentiment Jun -19.7 -20.6
    09:00 EUR Eurozone Economic Sentiment May 94 93.6
    09:00 EUR Eurozone Industrial Confidence May -11 -11.2
    09:00 EUR Eurozone Services Sentiment May 1.4
    09:00 EUR Eurozone Consumer Confidence May F -15.2 -15.2
    12:30 USD Durable Goods Orders Apr -8.00% 7.50%
    12:30 USD Durable Goods Orders ex Transport Apr 0.00% -0.40%
    13:00 USD S&P/CS Composite-20 HPI Y/Y Mar 4.50% 4.50%
    13:00 USD Housing Price Index M/M Mar 0.20% 0.10%
    14:00 USD Consumer Confidence May 87.1 86

     



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  • Risk Appetite Returns After Trump Backs Off Immediate EU Tariff Threat

    Risk Appetite Returns After Trump Backs Off Immediate EU Tariff Threat


    Global markets are showing tentative signs of relief after US President Donald Trump walked back his threat to impose a 50% tariff on the European Union. The abrupt shift to reinstate a July 9 deadline for negotiations has helped ease investor concerns for now. Stocks in Germany and France are trading modestly higher in European session, though the UK market remains closed for holiday. US equity futures are also pointing to a firmer open, suggesting a rebound from last week’s tariff-induced selloff. This shift in tone has also taken some steam out of safe-haven flows. Gold prices dipped slightly as investors rotated back into risk assets.

    The European Commission confirmed that trade representatives from both sides are scheduled to talk later today, describing the development as a “new impetus”. A Commission spokesperson noted that both parties have agreed to fast-track negotiations and remain in close contact, providing hope that a workable framework could still be reached before the “old” deadline.

    In the currency markets, the mildly risk-on environment is supporting higher-beta currencies. Kiwi and Aussie are leading the pack, with Sterling also gaining some traction. On the other hand, traditional safe havens like Yen, Swiss Franc are under modest pressure, while Dollar is also weak. Euro and Loonie positioning in the middle.

    For Gold, as long as 3279.22 support holds, the bullish case for Gold still holds. That is, correction from 3499.79 should have completed with three waves down to 3120.34. Further rise should be seen to retest 3499.79 next. Firm break there will resume larger up trend. Nevertheless, break of 3279.22 will dampen this case and extend the corrective pattern with another falling leg.

    In Europe, the UK is on holiday. DAX is up 1.45% at the time of writing, CAC i sup 0.97%. Germany 10-year yield is up 0.011 at 2.583. Earlier in Asia, Nikkei rose 1.00%. Hong Kong HSI fell -1.35%. China Shanghai SSE fell -0.05%. Singapore Strait Times fell -0.18%. Japan 10-year JGB yield fell -0.052 to 1.496.

    Fed Kashkari: Uncertainty to delay policy at least until September

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

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

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

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

    EUR/USD Mid-Day Outlook

    Daily Pivots: (S1) 1.1303; (P) 1.1339; (R1) 1.1402; More…

    Intraday bias in EUR/USD remains on the upside for the moment. Correction from 1.1572 should have completed at 1.1064. Further rise should be seen to retest 1.1572 first. Decisive break there will resume larger up trend to 61.8% projection of 1.0176 to 1.1572 from 1.1064 at 1.1927. On the downside, below 1.1255 minor support will turn intraday bias neutral, and probably extend the corrective pattern with another falling leg.

    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 1.0858) holds.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    05:00 JPY Leading Economic Index Mar F 108.1 107.7 107.7
    06:30 CHF Employment Level Q1 5.512M 5.534M

     



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

    Dollar Drops as Tariff Confusion Reignites and Trade Talks Drag On


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

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

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

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

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

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

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

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

    Fed Kashkari: Uncertainty to delay policy at least until September

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

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

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

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

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

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

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

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

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

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

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

    Here are some highlights for the week:

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

    GBP/USD Daily Outlook

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

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

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

    Economic Indicators Update

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

     



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  • Tariff Truce Wobbles at Halfway Mark; Risk Sentiment Falters on Renewed Threats

    Tariff Truce Wobbles at Halfway Mark; Risk Sentiment Falters on Renewed Threats


    Trade war roared back into focus late last week, derailing fragile market sentiment already strained by concerns over the ballooning US deficit. The catalyst came in the form of a sharp threat from US President Donald Trump on European Union imports. This abrupt escalation shattered hopes that the 90-day truce period would lead to calmer trade diplomacy, and instead reignited fears of a broader trade war just as markets were struggling to absorb fiscal uncertainty.

    US equities tumbled in response, with heavy losses across major indices, while European bourses weren’t spared either. Risk aversion swept through global markets, pushing investors toward traditional safe-haven assets.

    Dollar, which had already been under pressure from Moody’s downgrade and debt sustainability concerns, took another hit and ended the week as the worst-performing major currency. Confidence in US assets appears increasingly fragile as both fiscal and trade risks deepen.

    Aussie followed as the second weakest, burdened not just by global risk aversion but also by the dovish tone from RBA earlier in the week, while Loonie also suffered at the bottom.

    In contrast, the Japanese Yen and Swiss Franc surged to the top of the FX leaderboard, clearly benefiting from haven demand. Gold also staged a powerful rally, with its bullish momentum signaling deep market unease.

    Euro and Sterling settled in the middle of the pack. While the Euro showed some vulnerability to Trump’s tariff threat, it remained relatively supported. Sterling, meanwhile, was underpinned by a series of stronger-than-expected economic data, including upside surprises in inflation and retail sales.

    Trade War Returns to Spotlight as Trump’s Tariff Threat on EU Hammers Markets, Dollar Slides

    The global financial markets, which had been preoccupied with US sovereign debt concerns and the impact of a Moody’s downgrade earlier in the week, saw sentiment quickly shift as trade war tensions re-emerged. The trigger came late Friday, when US President Donald Trump declared he is “recommending a straight 50% Tariff on the European Union,” citing frustration with stalled negotiations. The announcement stunned investors and reignited fears of a wider spiral, sending US stocks and Dollar sharply lower into the weekly close.

    Equity markets, which had enjoyed a strong six-week rally driven by optimism from the 90-day tariff truce with major trading partners, were caught off guard. As little tangible progress was made halfway through the truce period, Trump’s shift back to hardline tactics was interpreted as a sign that the administration may be preparing to walk away from negotiation tables. The renewed threat has not only clouded the outlook for trade but also raised concerns over the policy direction in Washington.

    Speaking at a White House event, Trump made clear his stance: “I’m not looking for a deal. I mean, we’ve set the deal. It’s at 50%.” Treasury Secretary Scott Bessent echoed the sentiment, suggesting the tariff threat was intended to “light a fire under the EU.” These remarks hinted at a deliberate strategy to escalate pressure on Brussels ahead of the June 1 deadline.

    In response, European Commission Vice President Maros Sefcovic stated the EU remains “fully engaged” and committed to securing a mutually beneficial deal. He emphasized that negotiations must be “guided by mutual respect, not threats,” and warned the EU stands ready to defend its interests. Despite diplomatic overtures, the tone on both sides suggests little ground has been gained, making further market volatility likely as the deadline nears.

    In summary, the re-ignition of trade tensions with the EU has thrown markets back into uncertainty. With US fiscal policy already under scrutiny and tariff escalation threatening global growth, investors may remain on the defensive until clearer direction emerges, either through a breakthrough in negotiations or a change in Washington’s rhetoric. Until then, volatility and risk aversion are likely to dominate.

    Technically, DOW’s extended decline last week indicates that a short term top was already formed at 42842.04. More consolidations would be seen with risk of deeper decline. But overall near term outlook will stay bullish as long as 38.2% retracement of 36611.78 to 42842.04 at 40462.08 holds.

    However, rise from 36611.78 is seen as the second leg of the medium term corrective pattern from 45073.63 high. So, even in case of another rise, DOW should start to lose momentum again as it approaches 45073.63.

    Dollar Index’s late break of 99.17 support argues that corrective rebound from 97.92 might have completed at 101.97 already. Further decline is now in favor in the near term to retest 97.92 low first. Firm break there will resume the larger down trend to 61.8% projection of 100.17 to 97.92 from 101.97 at 94.40.

    European Stocks Also Hit by Tariff Shock; DAX and CAC Signal Near-Term Tops

    European equities also slumped in tandem with the US on Friday on Trump’s tariff threat. The announcement dealt a direct blow to investor sentiment across the region, with Germany’s DAX and France’s CAC 40 each falling around -1.6% on the day.

    However, Germany’s equity outlook, and to a lesser extent the region’s, should remain underpinned by fiscal expansion at both national and EU levels, which could cushion downside risks and support a medium-term bullish outlook.

    Technically, the late selloff in DAX indicates that 24154.24 record high should already be a short term top. Near term risk is mildly on the downside for pull back to 55 D EMA (now at 22610.12). Nevertheless, strong support should emerge from 38.2% retracement of 18489.91 to 24154.24 at 21989.23 to contain downside to bring rebound.

    CAC should have formed a short term top at 7955.53, and turned into consolidations. Given CAC’s underperformance comparing to DAX, there is risk of dipping through 38.2% retracement of 6763.76 to 7955.53 at 7500.27. But strong support should be seen above 61.8% retracement at 7219.02 to contain downside.

    Aussie Under Fire as RBA’s Dovish Cut Fuels July Easing Bets

    Aussie ended last week as one of the weakest performers among major currencies, additionally weighed down by the dovish 25bps rate cut from RBA. While the move was widely expected, RBA Governor Michele Bullock revealed that the board had actively considered a larger 50bps reduction before settling on the more measured step.

    Bullock also deliberately leave the door open for fasting easing, as she indicated that “if we need to move quickly, we can. We have got space.”

    Alongside the cut, RBA downgraded its 2025 GDP growth forecast from 2.1% to 1.9% and revised year-end CPI projections sharply lower, from 3.7% to 3.0%.

    These adjustments cemented the market’s view that the easing cycle has room to run, with rate futures now assigning more than 50% probability to another cut as early as July and fully pricing in a second 25bps cut by August.

    Technically, AUD/JPY failed to sustain above 38.2% retracement of 109.36 to 86.03 at 94.94, and retreated from there. Focus is now on 92.10 cluster support (38.2% retracement of 86.03 to 95.63 at 91.96).

    Strong rebound from 91.96/92.10 will retain near term bullishness. Further break of 95.63 will solidify the bullish case that whole fall form 109.36 has completed as a three-wave correction to 86.03.

    However, firm break of 91.96/92.10 will argue that the rebound has completed. More importantly, the down trend from 109.36 is likely still in progress for another low below 86.03.

    Gold Eyes Fresh Record High as Safe Haven Flows Persist

    Gold rallied strongly last week, supported by a confluence of factors including persistent concerns over the US fiscal outlook and escalating global trade tensions.

    With global equities showing signs of strain and long-dated US Treasury yields on the rise, capital has flowed steadily into Gold. The precious metal’s resilience suggests it may be gearing up to break above the record high of 3500, especially if risk aversion intensifies in the days ahead.

    Technically, corrective decline form 3499.79 should have completed with three waves down to 3120.34. That came after strong support from 55 D EMA (now at 3177.32) and 38.2% retracement of 2584.24 to 3499.79 at 3150.04.

    Further rise is expected as long as 3279.22 support holds, to retest 3499.79 high first. Decisive break there will resume larger up trend to 61.8% projection of 2584.24 to 3499.79 from 3120.34 at 3686.14 next.

    GBP/USD Weekly Outlook

    GBP/USD’s up trend resumed by breaking through 1.3442 resistance last week. Initial bias remains on the upside this week for 61.8% projection of 1.2706 to 1.3442 from 1.3138 at 1.3593, and then 100% projection at 1.3874. On the downside, below 1.3389 minor support will turn intraday bias neutral again first.

    In the bigger picture, up trend from 1.3051 (2022 low) is in progress. Next medium term target is 61.8% projection of 1.0351 to 1.3433 from 1.2099 at 1.4004. Outlook will now stay bullish as long as 55 W EMA (now at 1.2843) holds, even in case of deep pullback.

    In the long term picture, for now, price actions from 1.0351 (2022 low) are still seen as a corrective pattern to the long term down trend from 2.1161 (2007 high) only. However, firm break of 1.4248 resistance (38.2% retracement of 2.1161 to 1.0351 at 1.4480) will be a strong sign of long term bullish reversal.



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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

    ECB’s Rehn and Stournaras back June rate cut

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    EUR/USD Mid-Day Outlook

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

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

    In the bigger picture, rise from 0.9534 long term bottom could be correcting the multi-decade downtrend or the start of a long term up trend. In either case, further rise should be seen to 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916. This will now remain the favored case as long as 55 W EMA (now at 1.0818) holds.

    Economic Indicators Update

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

     



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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    USD/CAD Daily Outlook

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

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

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

    Economic Indicators Update

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

     



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  • Dollar Recovers as Markets Stabilize, Euro Pressured by PMI and Dovish ECB Accounts

    Dollar Recovers as Markets Stabilize, Euro Pressured by PMI and Dovish ECB Accounts


    Dollar staged a broad recovery today as financial markets found some footing following a volatile stretch dominated by US deficit concerns. US futures are trading flat, while 10-year Treasury yield has pared back modestly from recent highs, signaling a pause in the bond selloff. The calmer tone helped the greenback regain some traction.

    Support for Dollar came even after a narrow passage of a sweeping tax and spending bill in the US House of Representatives. The legislation, central to President Donald Trump’s policy agenda, introduces a range of tax breaks, most notably on tips and car loans, while substantially boosting military and border enforcement budgets. The Congressional Budget Office estimates the bill would add approximately USD 3.8 Trillion to debt over the next decade.

    In Europe, Euro came under some pressure following disappointing PMI data. The services sector unexpectedly slipped back into contraction territory in May, highlighting the fragility of the region’s recovery. The PMI Composite also dipped below 50, reinforcing the view that growth momentum is stalling again after a weak start to the year.

    Adding to Euro’s woes, ECB’s latest meeting accounts revealed internal discussions over a more aggressive 50 basis point rate cut in April, although the final decision was a unanimous 25 basis point reduction. While the accounts reflect growing confidence in disinflation trends, they also underscore a heightened sense of caution about weakening growth and the evolving global trade environment.

    Overall in the currency markets, Yen stands out as the strongest performer today so far, followed by Dollar, and then Sterling. Kiwi leads the losers, followed by Euro and Aussie. Loonie and Swiss Franc are positioning in the middle. Overall, today’s market tone isn’t clearly risk-on.

    Technically, Bitcoin finally surged to new record high above 110000 this week. Upside momentum remains strong as seen in D MACD. Current up trend could now be targeting 100% projection of 49008 to 109571 from 73473 at 134936 next. For now, outlook will remain bullish as long as 100692 support holds, in case of retreat.

    In Europe, at the time of writing, FTSE is down -0.77%. DAX is down -0.08%. CAC is down -1.05%. UK 10-year yield is up 0.008 at 4.769. Germany 10-year yield is down -0.002 at 2.652. Earlier in Asia, Nikkei fell -0.84%. Hong Kong HSI fell -1.19%. China SSE fell -0.22%. Singapore Strait Times fell -0.06%. Japan 10-year JGB yield rose 0.041 to 1.562.

    US initial jobless claims fall to 227k vs exp 230k

    US initial jobless claims fell -2k to 227k in the week ending May 17, below expectation of 230k. Four-week moving average of initial claims rose 1k to 232k.

    Continuing claims rose 36k to 1903k in the week ending May 10. Four-week moving average of continuing claims rose 18k to 1888k, highest since November 2021.

    UK PMI composite ticks up to 49.4, price pressures ease from April spike

    UK PMI Services rose modestly from 49.0 to 50.2, while Manufacturing PMI edged lower from 45.4 to 45.1. As a result, the Composite PMI ticked up from 48.5 to 49.4, still below the 50-mark that separates expansion from contraction.

    According to S&P Global’s Chris Williamson, business confidence has improved since April, helped in part by easing trade tensions. However, output across the private sector shrank for a second consecutive month, suggesting that the UK economy may be slipping into contraction for Q2.

    On a more encouraging note, inflationary pressures appear to have cooled significantly from April’s spike. This moderation in price growth, combined with lackluster output and emerging job losses, strengthens the case for further monetary easing by BoE in the coming months.

    ECB accounts: Some members see April rate cut as frontloading a June move

    ECB’s April 16–17 meeting accounts revealed unanimous support for the 25 basis point rate cut, the inflation shock was “nearly over”. The cut was not only as a response to improving inflation outlook but also as insurance against mounting downside risks to growth, driven by escalating global trade tensions.

    Several members specifically cited recent developments around tariffs as rationale for acting sooner rather than later. In their view, a cut at the April meeting could be seen as “frontloading a possible cut at the June meeting”, helping to anchor sentiment amid elevated market volatility.

    Some members noted that the tariff-driven uncertainty did not appear to be translating into inflationary pressure, partly due to Euro’s appreciation role as a “safe-haven currency”. Instead, tariff-related headwinds were increasingly viewed as disinflationary, especially as growth prospects weakened and financial conditions tightened.

    A minority on the Council even argued for a more aggressive 50 bps cut, citing a deterioration in the balance of risks since March. These members emphasized that “even in the event of a relatively mild trade conflict, uncertainty was already discouraging consumption and investment.

    Eurozone PMI composite falls to 49.5, services falter, manufacturing holds tentatively

    Eurozone’s private sector returned to contraction in May, with PMI Composite falling from 50.4 to 49.5, a six-month low. The drag came from the services sector, where the PMI dropped from 50.1 to 48.9, its weakest reading in 16 months. While the manufacturing index rose modestly from 49.0 to 49.4, marking a 33-month high, it remained in contractionary territory.

    According to HCOB Chief Economist Cyrus de la Rubia, the region’s economy “cannot seem to find its footing,” as growth signals remain elusive and sentiment subdued.

    The modest improvement in manufacturing may reflect front-loaded activity as firms seek to get ahead of US tariffs, rather than underlying demand strength. However, the downturn in services, typically more domestically oriented and less exposed to global trade, raises concern about internal demand softness.

    For the ECB, the numbers are “likely to leave it with mixed feelings”. While service sector inflation appears to be moderating, input costs — likely driven by wages — are ticking higher again. Manufacturing purchase prices, by contrast, continue to fall.

    German Ifo rises to 87.5, economy stabilizing with uncertainty eased

    Germany’s Ifo Business Climate Index rose to 87.5 in May, up from 86.9 in April, offering cautious optimism that the economy may be stabilizing.

    The improvement was driven by a notable rise in the Expectations Index, which climbed from 87.4 to 89.9, a sign that firms are growing more confident about future conditions. However, the Current Situation Index dipped slightly from 86.4 to 86.1.

    The Ifo Institute noted that “sentiment among German companies has improved” and that the recent surge in uncertainty has begun to ease.

    BoJ’s Noguchi: Must tread carefully with step-by-step policy normalization

    BoJ board member Asahi Noguchi emphasized the importance of a “measured, step-by-step” pace in raising interest rates, stressing the need to carefully assess the economic impact of each hike before proceeding further.

    Noguchi also addressed the upcoming interim review of BoJ’s bond tapering strategy, indicating that he sees no need for any major adjustments to the current plan, which runs through March 2026.

    He noted that the central bank should approach its long-term reduction in the balance sheet with flexibility, taking the time needed to ensure stability while maintaining the capacity to respond to “sudden market swings”.

    Any emergency increase in bond purchases, he noted, would be strictly conditional and “only be implemented during times of severe market disruption.”

    Japan’s PMI composite falls to 49.8, private sector contracts again

    Japan’s private sector activity fell back into contraction in May, with PMI Composite declining from 51.2 to 49.8. Manufacturing output edged higher from 48.7 to 49.0, but remained below the neutral 50 mark. The services sector, however, lost more momentum, with its PMI falling from 52.4 to 50.8.

    The decline in composite output reflects weakening domestic and external demand, as new business volumes fell for the first time in nearly a year.

    S&P Global’s Annabel Fiddes noted that elevated uncertainty around trade policy and foreign demand weighed heavily on business confidence, which sank to its second-lowest level since the pandemic’s onset.

    RBA’s Hauser: Post-tariff China outlook positive but incomplete

    In a speech focused on his recent visit to China following the sweeping tariff shifts of “Liberation Day”, RBA Deputy Governor Andrew Hauser noted there was a sense of “strong hand” in managing the economic fallout from US-imposed tariffs. Additionally, Australian firms operating in China perceived “opportunities amidst the risks”, as trade patterns began to shift.

    However, Hauser was quick to stress that this view was inherently limited, anchored to a moment in time and shaped by a single national perspective.

    Hauser laid out four key caveats. First, global tariff settings remain fluid, and data on their real-world economic effects is just beginning to emerge. Second, the assessments he heard may prove overly optimistic, domestic stimulus in China may underperform, and public tolerance for economic pain may be lower than expected.

    Third, indirect “general equilibrium” effects could emerge, including the possibility of intensified competition from Chinese firms offloading excess supply originally intended for US markets. While sectoral overlap with Australia is limited, it is a concern shared across the Asia-Pacific region.

    Finally, Hauser acknowledged the broader strategic uncertainties at play—factors beyond economics that could shape Australia’s position.

    Australia’s PMI Composite slips to 50.6; firms cite election drag on demand

    Australia’s private sector showed signs of slowing in May, with PMI Composite falling from 51.0 to a 3-month low of 50.6. Manufacturing index held steady at 51.7. But services weakened from 51.0 to 50.5, its lowest level in six months.

    According to S&P Global’s Andrew Harker, the sluggishness may be tied in part to election-related uncertainty, which “contributed to slower growth of new orders”. Still, firms remained cautiously optimistic, continuing to hire at a “solid pace”. With the political noise expected to ease, attention will turn to whether demand picks up in the months ahead.

    USD/CHF Mid-Day Outlook

    Daily Pivots: (S1) 0.8211; (P) 0.8251; (R1) 0.8251; More….

    Intraday bias in USD/CHF is turned neutral first with current recovery. But risk will remain on the downside as long as 0.8475 resistance holds. Corrective rebound from 0.8038 should have completed already. Below 0.8208 will bring retest of 0.8038 first. Firm break there will resume larger down trend to 61.8% projection of 0.9200 to 0.8038 from 0.8475 at 0.7757 next.

    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 0.8765) 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 May P 51.7 51.7
    23:00 AUD Services PMI May P 50.5 51
    23:50 JPY Machinery Orders M/M Mar 13.00% -1.60% 4.30%
    00:30 JPY Manufacturing PMI May P 49 49 48.7
    00:30 JPY Services PMI May P 50.8 52.4
    06:00 GBP Public Sector Net Borrowing (GBP) Apr 20.2B 17.7B 16.4B
    07:15 EUR France Manufacturing PMI May P 49.5 48.9 48.7
    07:15 EUR France Services PMI May P 47.4 47.7 47.3
    07:30 EUR Germany Manufacturing PMI May P 48.8 49 48.4
    07:30 EUR Germany Services PMI May P 47.2 49.5 49
    08:00 EUR Eurozone Manufacturing PMI May P 49.4 49.4 49
    08:00 EUR Eurozone Services PMI May P 48.9 50.4 50.1
    08:00 EUR Germany IFO Business Climate May 87.5 87.7 86.9
    08:00 EUR Germany IFO Current Assessment May 86.1 87 86.4
    08:00 EUR Germany IFO Expectations May 88.9 88.3 87.4
    08:30 GBP Manufacturing PMI May P 45.1 46.2 45.4
    08:30 GBP Services PMI May P 50.2 50 49
    11:30 EUR ECB Meeting Accounts
    12:30 CAD Industrial Product Price M/M Apr -0.80% -0.50% 0.50% 0.30%
    12:30 CAD Raw Material Price Index Apr -3.00% -2.20% -1% -0.70%
    12:30 USD Initial Jobless Claims (May 16) 227K 230K 229K
    13:45 USD Manufacturing PMI May P 49.9 50.2
    13:45 USD Services PMI May P 51 50.8
    14:00 USD Existing Home Sales Apr 4.10M 4.02M
    14:30 USD Natural Gas Storage 118B 110B

     



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