Tag: XAG

  • Markets Hold Breath as US-China Trade Talks Resume

    Markets Hold Breath as US-China Trade Talks Resume


    The cautious optimism in Asia failed to spill into European markets, as investors turned cautious ahead of today’s US-China trade talks in London. While no one expects a sweeping resolution to the broader trade conflict, hopes are centered on incremental progress—particularly around rare earths.

    Kevin Hassett, Director of the US National Economic Council, struck a pragmatic tone in his remarks today, emphasizing the goal of securing tangible commitments from China on resuming critical mineral exports. Hassett stated that the meeting’s purpose was to verify China’s seriousness, aiming for “a short meeting with a big, strong handshake.” He added that a mutual agreement could result in immediate easing of US export controls, clearing the path for further negotiations.

    Meanwhile, parallel trade efforts are underway between the US and Japan. Japan’s top trade envoy, Ryosei Akazawa, is reportedly planning his fourth US trip in as many weeks to engage in a sixth round of ministerial talks. While the discussions are said to be progressing, Akazawa conceded that the two sides have yet to reach a consensus. The urgency is growing ahead of the upcoming G7 summit in Canada, where a leaders’ meeting between the US and Japan may be on the agenda.

    In currency markets, Kiwi is leading gains today, followed by Aussie and Japanese Yen. On the other end, Swiss Franc is the weakest performer, trailed by Dollar and Euro. Sterling and Loonie are mixed in the middle.

    On the metals front, a divergence is forming between Gold and Silver. Gold is continuing its retreat, while Silver remains on a firm upward path. Technically, further rise in Silver is expected as long as 34.40 support holds, with focus on 100% projection of 28.28 to 33.66 from 31.65 at 37.03. Decisive break there could prompt further acceleration to 161.8% projection at 40.35.

    In Europe, at the time of writing, FTSE is down -0.24%. DAX is down -0.77% CAC is down -0.35%. UK 10-year yield is up 0.013 at 4.666. Germany 10-year yield is up 0.01 at 2.589. Earlier in Asia, Nikkei rose 0.92%. Hong Kong HSI rose 1.63%. China Shanghai SSE rose 0.43%. FTSE rose 0.05%. Japan 10-year JGB yield rose 0.019 to 1.479.

    ECB Kazimir: Likely at end of cuts, eyes summer data for fine-tuning

    Slovak ECB Governing Council member Peter Kazimir signaled a possible end to the current easing cycle, writing in an opinion piece today that “we’re nearly done with, if not already at the end of, the easing cycle.”

    While acknowledging the potential for weaker-than-expected economic growth in the eurozone, Kazimir emphasized the importance of staying focused on inflation to, which he warned could surprise to the upside.

    Looking ahead, Kazimir stressed the need for flexibility, noting that “incoming data throughout the summer will provide a clearer picture and guide our decisions on whether further fine-tuning is needed.”

    China’s CPI falls -0.1% yoy in May, negative for fourth month

    China’s headline CPI stayed in negative territory for the fourth consecutive month in May, coming in at -0.1% yoy, slightly better than the expected -0.2% yoy.

    The persistent softness in overall inflation was largely driven by a sharp -6.1% yoy decline in energy prices, which alone shaved off nearly half a percentage point from the annual CPI reading.

    On a monthly basis, CPI fell -0.2% mom, with energy again dragging down the figure through a -1.7% mom decline.

    In contrast, core inflation, which strips out food and energy prices, rose to 0.6% yoy, the highest level since January.

    Producer price pressures continue to weaken further, with PPI dropping to -3.3% yoy from -2.7% yoy previously, marking the deepest contraction in nearly two years. Wholesale prices have now been stuck in deflation since October 2022.

    China’s trade surplus widens to USD 103.2B in May, US exports slump -34.5% yoy

    China’s trade surplus widened to USD 103.2B in May, exceeding expectations of USD 101.3, even as headline export and import figures undershot forecasts. Exports rose 4.8% yoy, just shy of the 5.0% yoy consensus. Imports fell -3.4% yoy, a sharper drop than the anticipated -0.9% yoy.

    Exports to the US plunged -34.5% yoy, highlighting the entrenched trade tensions despite Washington’s partial tariff rollback in April. However, the impact was cushioned by robust growth in exports to ASEAN (15% yoy), the European Union (12% yoy), and Africa (33% yoy).

    EUR/USD Mid-Day Outlook

    Daily Pivots: (S1) 1.1359; (P) 1.1409; (R1) 1.1445; More…

    No change in EUR/USD’s outlook and intraday bias stays neutral. Price actions from 1.1572 are seen as a corrective pattern to rally from 1.0716. While rebound from 1.1064 might extend, strong resistance should emerge from 1.1572 to limit upside. On the downside, break of 1.1356 support will argue that the correction is already in the third leg, and target 1.1209 support for confirmation.

    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 1.0894) holds.


    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    22:45 NZD Manufacturing Sales Q1 5.10% 1.10% 3.00%
    23:50 JPY Bank Lending Y/Y May 2.40% 2.40% 2.40% 2.30%
    23:50 JPY Current Account (JPY) Apr 2.31T 2.59T 2.72T
    23:50 JPY GDP Q/Q Q1 F 0.00% -0.20% -0.20%
    23:50 JPY GDP Deflator Y/Y Q1 F 3.30% 3.30% 3.30%
    01:30 CNY CPI Y/Y May -0.10% -0.20% -0.10%
    01:30 CNY PPI Y/Y May -3.30% -3.00% -2.70%
    03:00 CNY Trade Balance (USD) May 103.2B 101.1B 96.2B
    05:00 JPY Eco Watchers Survey: Current May 44.4 43.9 42.6
    14:00 USD Wholesale Inventories M/M Apr F 0% 0%

     



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  • Euro Firms as ECB Lagarde Stays Confident; Silver Surges on Shift from US Assets

    Euro Firms as ECB Lagarde Stays Confident; Silver Surges on Shift from US Assets


    Euro surged against Dollar after ECB President Christine Lagarde struck a relatively confident tone in her post-meeting press conference. She downplayed immediate trade war fallout, stating that U.S. tariffs would likely impact growth more in 2026, by which time EU fiscal expansion—particularly military spending—would help cushion the blow.

    Also, Lagarde emphasized that the ECB is well positioned to respond to prevailing uncertainties. There was no explicit signal of a pause in the easing cycle, but the emphasis on a “meeting-by-meeting” approach suggests the ECB will tread carefully going forward.

    Meanwhile, US futures ticked up after Chinese state media reported that President Trump and President Xi had held a phone call, providing a modicum of relief amid heightened trade tensions. The news sparked a mild rally in US equity futures and lent support to risk-sensitive currencies like the Australian and Canadian Dollars.

    However, Dollar itself faced renewed pressure following a surprising jump in initial jobless claims. The data added to a string of disappointing US labor signals this week—weak ADP job growth and declines in ISM employment components—raising the risk of a downside surprise in Friday’s NFP report.

    Elsewhere, Silver extended its rally and surged to its highest level in 13 years. The move reflects growing investor demand for tangible, supply-constrained assets amid structural uncertainties around US fiscal and trade policies.

    For decades, persistent US current account deficits were offset by capital inflows into Treasuries and equities. That dynamic is now being reassessed, as sovereign wealth funds and large institutional investors rebalance away from the US due to rising geopolitical risk, trade protectionism, and concerns over long-term debt sustainability. This structural shift has driven renewed interest in precious and industrial metals.

    Technically, next near term target for Silver is 100% projection of 28.28 to 33.66 from 31.65 at 37.03. Decisive break there will pave the way to 161.8% projection at 40.35. For now, outlook will remain bullish as long as 33.66 resistance turned support holds, in case of retreat.

    In Europe, at the time of writing, FTSE is up 0.22%. DAX is up 0.52%. CAC is up 0.24%. UK 10-year yield is up 0.01 at 4.621. Germany 10-year yield is up 0.031 at 2.558. Earlier in Asia, Nikkei fell -0.51%. Hong Kong HSI rose 1.07%. China Shanghai SSE rose 0.23%. Singapore Strait Times rose 0.35%. Japan 10-year JGB yield fell -0.044 to 1.461.

    US initial jobless claims jump to 247k vs exp 235k

    US initial jobless claims rose 8k to 247k in the week ending May 30, above expectation of 235k. Four-week moving average of initial claims rose 4.5k to 235k. Continuing claims fell -3k to 1904k in the week ending May 24. Four-week moving average of continuing claims rose 8k to 1895k, highest since November 27, 2021.

    ECB cuts 25bps, downgrades inflation forecasts

    ECB lowered deposit rate by 25bps to 2.00% as widely expected. The central bank cited “exceptional uncertainty,” and its commitment to a data-dependent, meeting-by-meeting approach, refraining from offering forward guidance on the future path of interest rates.

    In the updated economic projections, ECB now expects headline inflation to average 2.0% in 2025 and 1.6% in 2026—down 0.3 percentage points from March’s forecast. Headline inflation would then return to target at 2.0% in 2027. The revision was largely due to lower energy prices and a stronger Euro.

    Core inflation is expected to ease to 2.4% in 2025 and 1.9% in both 2026 and 2027, broadly unchanged from previous forecasts.

    On growth, ECB projects real GDP to expand by 0.9% in 2025, 1.1% in 2026, and 1.3% in 2027. While the 2025 GDP forecast remains unchanged due to a strong first quarter, ECB acknowledged that the remainder of the year looks weaker, in part due to trade-related uncertainty.

    Weak global demand and potential retaliation to US tariffs could continue to drag on exports and business investment. However, rising public investment, particularly in defense and infrastructure, is expected to lend some support to growth in the medium term.

    Eurozone PPI slumps -2.2% mom on energy prices

    Eurozone PPI dropped sharply by -2.2% mom in April, steeper than the expected -1.8% mom. decline. Annual PPI rose just 0.7% yoy, below forecasts of 1.2% yoy. PPI ex-energy was up 0.1% mom, 1.1% yoy

    The drag on Eurozone PPI was driven primarily by a -7.7% mom fall in energy prices. Prices for intermediate goods also declined slightly by -0.1% mom, while capital goods prices held flat. In contrast, consumer goods offered some offset, with durable and non-durable segments rising 0.1% mom and 0.3% mom respectively.

    The broader EU showed a similar picture, with PPI falling -2.1% mom and rising just 0.6% yoy. Country-level data revealed significant monthly drops in industrial prices in France (-4.3%), Ireland (-4.0%), and Bulgaria (-4.9%). Only a handful of smaller economies like Cyprus and Malta posted slight increases.

    Japan’s real wages fall -1.8% yoy in April, down for the fourth month

    Real wages in Japan fell by -1.8% yoy in April, marking the fourth consecutive month of decline as persistent inflation continued to erode household purchasing power.

    While nominal wages rose 2.3% yoy, slightly below the expected 2.6%, gains were outpaced by a still-elevated consumer inflation rate of 4.1%, driven by rising food and energy costs. The inflation metric used by the labor ministry has remained near 4% for five straight months, keeping real income in negative territory.

    On the positive side, base salaries rose 2.2% yoy, the fastest increase in four months and well above March’s 1.4% yoy gain. This also marked the 42nd consecutive month of growth in regular pay. Overtime pay rebounded with a modest 0.8% yoy rise, while special payments grew 4.1% yoy.

    China’s Caixin PMI composite falls to 49.6, contracts for first time since 2022

    China’s Caixin PMI Services rose modestly from 50.7 to 51.1 in May, aligning with expectations. However, the gain in services was not enough to offset the drag from manufacturing, as PMI Composite slipped into contraction at 49.6, its first reading below 50 since December 2022.

    Wang Zhe of Caixin Insight Group noted that the manufacturing slump was weighing heavily on the overall market, with new export orders remaining “sluggish” across both goods and services. Although input costs rose slightly, firms were unable to pass these on to customers, with selling prices continuing to fall and compressing profit margins.

    Caixin flagged “unfavorable factors remain relatively prevalent”, with growing external trade uncertainty and “noticeable weakening” in macro indicators at the start of Q2. The “significantly intensified”downward pressure raises the urgency for further targeted policy support.

    EUR/USD Mid-Day Outlook

    Daily Pivots: (S1) 1.1371; (P) 1.1403; (R1) 1.1449; More…

    EUR/USD’s rebound from 1.1064 resumed by breaking through 1.1453 today. Intraday bias is back on the upside for 1.1572 high. Strong resistance could be seen there to limit upside, at least on first attempt. On the downside, On the downside, break of 1.1356 support will indicate that the corrective pattern from 1.1572 has started the third leg, and target 1.1209 support. 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
    23:30 JPY Labor Cash Earnings Y/Y Apr 2.30% 2.60% 2.30%
    01:30 AUD Trade Balance (AUD) Apr 5.41B 6.05B 6.90B 6.89B
    01:45 CNY Caixin Services PMI May 51.1 51.1 50.7
    06:00 EUR Germany Factory Orders M/M Apr 0.60% -1.10% 3.60% 3.40%
    07:00 CHF Unemployment Rate May 2.90% 2.80% 2.80%
    08:30 GBP Construction PMI May 47.9 47.2 46.6
    09:00 EUR Eurozone PPI M/M Apr -2.20% -1.80% -1.60% -1.70%
    09:00 EUR Eurozone PPI Y/Y Apr 0.70% 1.20% 1.90%
    11:30 USD Challenger Job Cuts Y/Y May 47.00% 62.70%
    12:15 EUR ECB Deposit Rate 2.00% 2.00% 2.25%
    12:30 CAD Trade Balance (CAD) Apr -7.1B 0.2B -0.5B -2.3B
    12:30 USD Initial Jobless Claims (May 30) 247K 235K 240K 239K
    12:30 USD Trade Balance (USD) Apr -61.6B -117.2B -140.5B -138.3B
    12:30 USD Nonfarm Productivity Q1 -1.50% -0.80% -0.80%
    12:30 USD Unit Labor Costs Q1 6.60% 5.70% 5.70%
    12:45 EUR ECB Press Conference
    14:00 CAD Ivey PMI May 48.3 47.9
    14:30 USD Natural Gas Storage 111B 101B

     



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  • Global Market Rout Deepens Ahead of US Jobs Data

    Global Market Rout Deepens Ahead of US Jobs Data


    There’s no relief in sight for the markets as risk aversion extends into Friday’s Asian session. Japan’s Nikkei is leading the losses once again, falling over -3% and cementing a near 10% weekly drop — the worst performance since early 2020. Singapore’s Strait Times Index has finally caught up with the global rout, slumping nearly -3% as traders there digest the full extent of the tariff-driven global selloff. Meanwhile, Hong Kong and China markets are taking a breather, closed for the Ching Ming Festival holiday. But the pause might only delay—not prevent—the contagion, as sentiment across asset continues to sour.

    US futures point to more pain ahead, with DOW at risk of closing below the psychological 40k psychological level this week. Markets appear unconvinced that a bottom is in sight, especially with geopolitical uncertainty and trade war escalation clouding the outlook. One of the clearest signs of deepening concern is the move in US Treasury yields. 10-year yield has broken below the critical 4% psychological support during Asian session, for the first time in six months. A weekly close below 4% could mark a seismic shift in sentiment, likely reinforcing safe-haven flows and risk aversion even further.

    Today’s U.S. non-farm payrolls report is the marquee event, but its interpretation is unlikely to offer a clear rescue narrative. A strong report won’t necessarily be bullish, as markets are more focused on looming global trade frictions than short-term economic strength. Conversely, a weak NFP print might push Fed rate cut expectations higher, but would also reinforce fears that the economy is already sliding into a downturn. In short, there’s little in this data that could provide comfort in the current climate.

    In currencies, despite the steep selloff, Dollar is not the weakest performer this week. That spot goes to the Aussie, followed by the greenback and Kiwi. At the other end, the new safe-haven trio of Swiss Franc, Japanese Yen, and Euro are leading the pack. Sterling and Loonie sit in the middle of the spectrum.

    Technically, Silver’s steep decline yesterday indicates that rise from 28.74 has already completed at 34.56, after rejection by 34.84 key resistance. Fall from 34.56 is now seen as the third leg of the corrective pattern from 34.84. Deeper fall should be seen to 30.78 support first. Firm break there will target 28.74 support, and possibly below.

    In Asia, at the time of writing, Nikkei is down -3.07%. Japan 10-year JGB yield is down -0.147 at 1.204. Singapore Strait Times is down -2.69%. Hong Kong and China are on holiday. Overnight, DOW fell -3.98%. S&P 500 fell -4.84%. NASDAQ fell -5.97%. 10-year yield fell -0.141 to 4.055.

    NFP unlikely to offer relief, miss could cement Q2 fed cut

    Today’s US non-farm payrolls report comes as the markets are already reeling from this week’s tariff shock. With consensus expecting a 128k rise in jobs for March and the unemployment rate holding steady at 4.1%, the print itself may not do much to lift sentiment or Dollar, even if it exceeds expectations.

    On the other hand, a downside surprise could further shift the odds in favor of a Fed rate cut in Q2. Currently, fed funds futures suggest nearly an 80% probability of a 25bps reduction in June.

    While Fed has signaled patience, deteriorating jobs data may leave policymakers with little choice but to move sooner rather than later. Such development would in turn apply further pressure on Dollar.

    Recent data paints a murky picture: the employment components in both ISM manufacturing (44.7) and services (46.2) surveys fell deep into contraction in March. ADP report came in at a modest 155k growth.

    Whether today’s NFP captures the full extent of that weakness as indicated by ISM data remains to be seen, but the underlying trend is clearly deteriorating.

    Fed’s Jefferson: Important to take time and think carefully amid sweeping policy shifts

    Fed Vice Chair Philip Jefferson reiterated in a speech overnight that there is “no need to be in a hurry” to adjust policy further. Current policy settings are appropriately positioned amid a period of sweeping changes in trade, immigration, fiscal, and regulatory policies.

    He stressed the importance of assessing the “cumulative effect” of these evolving policies before making any shifts in the monetary path.

    Commenting on the new of import tariffs announced this week after the formal remarks, Jefferson acknowledged the heightened uncertainty such measures introduce, adding that they could weigh on household sentiment and business investment.

    In this environment, Jefferson said it is important to “take our time and think carefully” as it evaluates the broader economic impact.

    Fed’s Cook: Risks tilt toward high inflation and slower growth

    Fed Governor Lisa Cook highlighted in a speech overnight that her baseline forecast sees the US economy will “slow moderately” this year, with a slight uptick in unemployment. Also, inflation progress will “stall in the near term”, because of tariffs and other policy changes.

    Cook acknowledged the potential for a more optimistic scenario in which new policies prove minimally disruptive and consumer demand holds up, allowing for stronger-than-expected growth.

    However, she placed “more weight on scenarios where risks are skewed to the upside for inflation and to the downside for growth”.

    Given the elevated risks and uncertainty, Cook supports the case to keep interest rates unchanged for now. With both sides of the Fed’s dual mandate facing uncertainty and risks, she stressed that policymakers must remain “patient but attentive”.

    BoJ’s Ueda: US tariffs likely to pressure Japan’s economy

    BoJ Governor Kazuo Ueda warned that the 24% tariffs imposed by the US on Japanese goods could have broad implications. He emphasized that heightened uncertainty over the economic outlook may weigh on corporate sentiment and trigger volatile market behavior. This, in turn, could place “downward pressure on global and Japanese economies”.

    Meanwhile, Ueda noted that the effect on inflation remains uncertain, as the tariffs could either suppress prices by weakening demand or push them higher through supply chain disruptions.

    Despite these concerns, Ueda maintained a cautiously optimistic view on Japan’s economy. He pointed out that corporate sentiment remains positive, and capital expenditure plans are stronger than in the same period of prior years.

    He referred to the latest Tankan survey as supportive of BoJ’s baseline view that Japan’s economy is “recovering moderately”. Still, Ueda noted that the survey, conducted from late February to March 31, may not have fully captured the impact of the US tariff announcements.

    BoJ Deputy Governor Shinichi Uchida, also speaking at the session, reiterated that the central bank remains committed to adjusting rates if the likelihood of achieving its 2% inflation target increases.

    Uchida emphasized that future policy decisions will be made on a meeting-by-meeting basis, based on updated forecasts, “without any preconception”.

    USD/CHF Daily Outlook

    Daily Pivots: (S1) 0.8483; (P) 0.8658; (R1) 0.8769; More…

    USD/CHF’s steep decline is still in progress and there is no sign of bottoming yet. Intraday bias stays on the downside for 100% projection of 0.9196 to 0.8757 from 0.8854 at 0.8415. On upside, above 0.8617 minor resistance will turn intraday bias neutral and bring consolidations. But recover should be limited below 0.8757 support turned resistance to bring another fall.

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

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    23:30 JPY Overall Household Spending Y/Y Feb -0.50% -0.70% 0.80%
    06:00 EUR Germany Factory Orders M/M Feb 3.30% -7.00%
    06:45 EUR France Industrial Output M/M Feb 0.50% -0.60%
    08:30 GBP Construction PMI Mar 46.7 44.6
    12:30 USD Nonfarm Payrolls Mar 128K 151K
    12:30 USD Unemployment Rate Mar 4.10% 4.10%
    12:30 USD Average Hourly Earnings M/M Mar 0.30% 0.30%
    12:30 CAD Net Change in Employment Mar 10.4K 1.1K
    12:30 CAD Unemployment Rate Mar 6.70% 6.60%

     



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  • Markets Driven by PMI Data and Tariff Speculations, Silver at Risk of Reversal

    Markets Driven by PMI Data and Tariff Speculations, Silver at Risk of Reversal


    Market sentiment today is largely influenced by a mix of global PMI releases and ongoing uncertainty around US tariff policy. There are reports suggesting the Trump administration may exclude a set of sector-specific tariffs from the sweeping reciprocal levies set to begin on April 2. US futures are pointing to a solid open, suggesting investors are hoping for a more surgical, less disruptive approach to trade action.

    However, clarity is still lacking. It’s unclear whether excluded sectors will be spared entirely or if reciprocal tariffs will blanket all imports, with sectoral levies added on top later. Despite the ambiguity, sentiment has been lifted, with US futures pointing to a solid open.

    European currencies are also finding some support alongside gains in regional equities. However, upside in both Euro and Sterling is capped by mixed PMI data. In the Eurozone, manufacturing showed a smaller contraction and even a bounce in output, signaling green shoots. Yet, service sector growth lost momentum, adding to the sense of an uneven recovery. In the UK, services surprised with strong growth, but manufacturing activity deteriorated sharply, dragging down the overall tone of the report.

    Meanwhile, Australia outperformed, with both sectors registering improvements and supporting Aussie’s strength today. On the other hand, Yen is under pressure as Japan’s services PMI fell into contraction territory, raising concerns about domestic demand and the broader economic outlook.

    Currency performance reflects this divergence. Aussie is currently the strongest performer for the day, followed by Sterling and Swiss Franc. At the bottom of the table, Yen leads losses, followed by Kiwi and Dollar. Loonie and Euro sit in the middle of the pack.

    Technically, Silver could have formed a short term top at 34.21, ahead of 34.84 resistance. Break of 55 D EMA (now at 32.07) will suggest that rebound from 28.74 has already completed. Further break of 30.78 support will indicate that corrective pattern from 34.84 has already started the third leg back to 28.74 support and possibly below.

    In Europe, at the time of writing, FTSE is down -0.22%. DAX is down -0.06%. CAC is down -0.12%. UK 10-year yield is up 0.001 at 4.723. Germany 10-year yield is up 0.028 at 2.797. Earlier in Asia, Nikkei fell -0.18%. Hong Kong HSI rose 0.91%. China Shanghai SSE rose 0.15%. Singapore Strait Times rose 0.25%. Japan 10-year JGB yield rose 0.028 to 1.545.

    UK PMI manufacturing falls to 44.6, while services rises to 53.2

    UK delivered a mixed set of PMI readings in March, with services providing a welcome surprise as the index rose from 51.0 to 53.2, a 7-month high. PMI Composite also improved from 50.5 to 52.0, suggesting modest expansion. However, the picture was clouded by a sharp deterioration in manufacturing, where the index slumped from 46.9 to 44.6 — its lowest level in 18 months.

    Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, cautioned against over-optimism, noting that “one good PMI doesn’t signal a recovery.”

    The data points to the economy barely expanding, with GDP growth tracking around 0.1% for the quarter. Employment continues to be trimmed as firms remain wary of rising costs and an uncertain economic outlook, with business confidence still hovering near January’s two-year low.

    Looking ahead, challenges appear to be mounting. Businesses are bracing for higher National Insurance contributions starting in April,. Additionally, the anticipated unveiling of US tariff policy on April 2 adds another uncertainty.

    ECB’s Cipollone: Case for rate cuts strengthens amid falling energy, rising Euro and trade risks

    ECB Executive Board member Piero Cipollone struck a dovish tone in an interview with Expansión, signaling that recent developments have reinforced the case for further interest rate cuts.

    Cipollone noted that at the time of the March meeting, ECB projections already showed inflation converging to the 2% target by early 2026—even under a rate path that included market expectations of cuts below 2%.

    Since then, “not only has this narrative been confirmed, but key issues have arisen that have strengthened the arguments in favour of continuing to lower rates”, he added.

    Cipollone noted that energy price pressures have already begun to reverse. Meanwhile, Euro appreciation and higher real interest rates are working in tandem to cool price growth.

    If US tariffs on European goods materialize, that would have a “negative impact on demand”, which would “further strengthen the downward trend in inflation”. Similarly, escalating U.S.-China trade conflict may push Chinese goods into Europe, adding to price suppression across the bloc.

    Notably, Cipollone suggested that inflation could reach target even sooner than the ECB’s latest projections anticipate.

    Eurozone PMI hints at green shoots, manufacturing leads the way

    Eurozone PMI data for March offered fresh signs of economic stabilization, with Composite index rising to a 7-month high of 50.4, supported by a notable rebound in manufacturing. The PMI Manufacturing rose from 47.6 to 48.7, its highest level in 26 months. Manufacturing output crossed into expansion territory at 50.7, a 34-month high. Services PMI slipped slightly from 50.6 to 50.4, but remained in growth territory.

    Cyrus de la Rubia of Hamburg Commercial Bank noted the possibility that “temporary tariff-related import boom” could be inflating manufacturing figures. But he also expressed optimism that with, Europe’s investment drive in defense and infrastructure, “hope for a more sustained recovery seems well founded”.

    Encouragingly for ECB, pricing pressures in the services sector are easing, with both input costs and output prices decelerating. In manufacturing, price pressures remain moderate as well, helped by falling energy costs.

    However, risks remain. Potential retaliation tariffs from the US, trade tensions with China, and higher food prices caused by extreme weather events are all sources of uncertainty that could cloud the outlook and “make some ECB members hesitant to cut rates too aggressively.”

    BoJ’s Ueda reaffirms commitment to rate hikes despite market and financial pressures

    BoJ Governor Kazuo Ueda told parliament today that the central bank remains committed to raise interest rate if underlying inflation is deemed to be approaching its 2% target.

    He emphasized that BoJ’s objectives remain squarely focused on price stability, and that its approach to policy “would not be disturbed by considerations for the BoJ’s finances.”

    Ueda’s remarks come as concerns mount over the BoJ’s balance sheet in light of interest rate hikes and volatility in equity markets.

    BoJ estimated in December that if short-term borrowing costs were to rise to 2%, it could incur losses of up to JPY 2 trillion.

    Additionally, Ueda noted that a 1000-point drop in the Nikkei 225 index would translate into a valuation loss of about JPY 1.8 trillion in its ETF holding.

    While these figures highlight the scale of financial risks, Ueda’s insistence on prioritizing price stability signals that BoJ is prepared to weather market volatility in pursuit of its monetary policy mandate.

    Japan PMI composite falls to 48.5, business confidence sinks to lowest since 2020

    Japan’s private sector saw a sharp loss in momentum at the end of Q1, with PMI Composite falling from 52.0 to 48.5, marking the first contraction in five months. PMI Manufacturing dropped from 49.0 to 48.3, its lowest in a year and ninth consecutive month in contraction. More concerning was the steep decline in PMI services, which fell from 53.7 to 49.5 — the weakest reading since mid-2024.

    According to Annabel Fiddes of S&P Global, the downturn was driven by a “fresh fall in service sector activity” and an accelerated decline in manufacturing. Firms pointed to “strong inflationary pressure had dampened sales”, with clients showing increasing hesitation to place orders.

    The broader picture is one of growing pessimism. Japanese firms cited a host of structural and cyclical challenges — from persistent inflation and labor shortages to an aging population and deepening global trade uncertainty. As a result, business confidence for future activity fell to its lowest level since August 2020.

    Australia’s PMI manufacturing jumps to 52.6, services rises to 51.2

    Australia’s PMI Manufacturing surged to 52.6 from 50.4—marking a 29-month high—while PMI Services ticked up to 51.2 from 50.8. PMI Composite , which combines both sectors, rose to a 7-month high at 51.3.

    Jingyi Pan of S&P Global Market Intelligence highlighted that the output growth was not only the strongest in seven months but also “broad-based” across both manufacturing and services. Despite a decline in export orders due to weather disruptions and weak global conditions, domestic demand rebounded impressively, pushing new orders to their highest growth rate in nearly three years.

    However, the report also highlighted a notable dip in business confidence. Suppressed price increases may have helped support near-term demand. But “tariff uncertainty may continue to cast a shadow on output growth in the year ahead”.

    USD/CHF Mid-Day Outlook

    Daily Pivots: (S1) 0.8805; (P) 0.8823; (R1) 0.8849; More…

    No change in USD/CHF’s outlook as consolidations continue in established range above 0.8757. In case of stronger recovery, upside should be limited by 0.8911 support turned resistance. On the downside, break of 0.8757 will resume the fall from 0.9200 to 61.8% retracement of 0.8374 to 0.9200 at 0.8690. Sustained break there will pave the way back to 0.8374 support.

    In the bigger picture, rejection by 0.9223 key resistance keep medium term outlook bearish. That is, larger fall from 1.0342 (2017 high) is not completed yet. Firm break of 0.8332 (2023 low) will confirm down trend resumption.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    22:00 AUD Manufacturing PMI Mar P 52.6 50.4
    22:00 AUD Services PMI Mar P 51.2 50.8
    00:30 JPY Manufacturing PMI Mar P 48.3 49.2 49
    00:30 JPY Services PMI Mar P 49.5 53.7
    08:15 EUR France Manufacturing PMI Mar P 48.9 46.2 45.8
    08:15 EUR France Services PMI Mar P 46.6 46.3 45.3
    08:30 EUR Germany Manufacturing PMI Mar P 48.3 47.7 46.5
    08:30 EUR Germany Services PMI Mar P 50.2 52.3 51.1
    09:00 EUR Eurozone Manufacturing PMI Mar P 48.7 48.3 47.6
    09:00 EUR Eurozone Services PMI Mar P 50.4 51.2 50.6
    09:30 GBP Manufacturing PMI Mar P 44.6 47.3 46.9
    09:30 GBP Services PMI Mar P 53.2 51.2 51
    13:45 USD Manufacturing PMI Mar P 51.9 52.7
    13:45 USD Services PMI Mar P 51.2 51

     



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  • Dollar Unfazed by Core Inflation Uptick, Loonie Muted on GDP Contraction

    Dollar Unfazed by Core Inflation Uptick, Loonie Muted on GDP Contraction


    Forex markets remain largely subdued today, with Canadian Dollar being the exception as volatility rises ahead of the implementation of US tariffs tomorrow. Canada is reportedly well prepared to respond with retaliatory measures on US imports worth up to CAD 150B. This comes at a time when Canada’s economy is already under pressure, with November’s GDP data showing a larger-than-expected contraction. However, despite the looming economic strain, Loonie’s selloff remains contained for now, as traders assess the full impact of trade retaliation.

    Meanwhile, Dollar shrugged off the latest PCE inflation data, which showed an uptick in the headline rate while core inflation remained at elevated levels. Fed Governor Michelle Bowman noted at an event that while rate cuts are still expected, their timing will depend on incoming data, given persistent inflation risks. The latest data reinforces Fed’s cautious approach, suggesting that policymakers are unlikely to act at least until Q2.

    For the week, the broader currency market picture remains unchanged. Yen continues to lead as the strongest performer, followed by Dollar and Swiss Franc. Aussie remains the weakest, followed by Kiwi and Euro. British Pound and Loonie sit in the middle.

    Technically, as Gold is extending its record run, Silver is also picking up momentum. Immediate focus is now on 32.30 resistance in Silver. Firm break there should confirm that corrective fall from 34.84 has completed with three waves down to 28.74. While it may be early to confirm larger up trend resumption, in this case, further rally should at least be seen to retest 34.84 high.

    US PCE inflation rises to 2.6% in Dec, core PCE unchanged at 2.8%

    In December in the US, headline PCE price index rose 0.3% mom while core PCE price index rose 0.2% mom, both matched expectations.

    In the 12-month period, PCE price index accelerated from 2.4% yoy to 2.6% yoy. Core PCE price index (Excluding food and energy) was unchanged at 2.8% yoy. Both matched expectations.

    Personal income rose 0.4% mom or USD 92.0B, matched expectations. Personal spending rose 0.7% mom or USD 133.6B, stronger than expected 0.5% mom.

    Canada’s GDP contracts -0.2% mom in Nov, but Dec outlook improves

    Canada’s economy shrank by -0.2% mom in November, marking the largest contraction since December 2023 and coming in weaker than expectations of -0.1% mom decline. The downturn was broad-based, with 13 of 20 sectors reporting declines, underscoring underlying weakness across multiple industries.

    Goods-producing industries led the slowdown, contracting by -0.6% after a strong 0.9% expansion in October. Services sector, which had posted steady gains in previous months, also slipped by -0.1%, marking its first decline in six months.

    Advance estimates suggest that real GDP expanded by 0.2% mom in December, pointing to a rebound. Growth was driven by gains in retail trade, manufacturing, and construction, though this was partially offset by weakness in transportation, real estate, and wholesale trade.

    Tokyo inflation accelerates, keeping BoJ hikes alive

    Japan’s inflationary pressures picked up in January, with Tokyo’s core CPI (excluding fresh food) rising to 2.5% yoy from 2.4%, marking its fastest pace in nearly a year. Core-core measure (excluding food and energy) also edged higher to 1.9% from 1.8%. Meanwhile, headline CPI surged to 3.4% from 3.0%, its highest level in nearly two years, largely driven by rising prices for vegetables and rice.

    The data reinforces expectations that inflation in Japan could continue rising toward 3% in the coming months, as persistently weak yen drives up import costs. Some analysts see room for one or two more rate hikes by BoJ this year, particularly if inflation remains sticky and real wage growth improves. However, with Tokyo services inflation slowing to 0.6% yoy from 1.0% yoy, concerns remain about the sustainability of domestic price pressures.

    On the production side, industrial output rose 0.3% mom in December, matching forecasts. The Ministry of Economy retained its cautious assessment, stating that production “fluctuates indecisively,” though manufacturers expect a 1.0% rise in January and a further 1.2% increase in February.

    Retail sales, however, showed resilience, climbing 3.7% yoy, exceeding expectations of 2.9%. This suggests that consumer demand remains strong despite higher living costs.

    BoJ’s Ueda reaffirms support for economy while keeping rate hikes on the table

    BoJ Governor Kazuo Ueda reiterated the central bank’s is aiming for “gradual pickup” in prices, supported by a “solid increase in wages.” He emphasized that maintaining easy monetary conditions remains necessary to “support economic activity” and ensure that underlying inflation continues rising toward the 2% target.

    However, he also made it clear that BoJ’s stance remains unchanged, noting that it will “continue raising interest rates” and adjust monetary support if the economy and prices “move in line with our forecasts.”

    At the same parliamentary session, Prime Minister Shigeru reinforced the government’s priority of achieving sustainable inflation alongside wage growth. He highlighted that while stable price increases are important, “we must aim for wage growth higher than inflation while prices rise stably.” He also warned against the perception that falling prices are beneficial, arguing that such views prolonged Japan’s deflationary struggles in the past.

    USD/CHF Mid-Day Outlook

    Daily Pivots: (S1) 0.9069; (P) 0.9087; (R1) 0.9114; More…

    Intraday bias in USD/CHF stays mildly on the upside for the moment. Correction from 0.9200 could have completed at 0.8964 already. Further rise should be seen to retest 0.9200 and then 0.9223 key resistance. On the downside, below 0.9058 minor support will turn intraday bias neutral first. Further break of 0.8964 will resume the fall from 0.9200 to 38.2% retracement of 0.8374 to 0.9200 at 0.8884 next.

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

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    23:30 JPY Tokyo CPI Y/Y Jan 3.40% 3.00%
    23:30 JPY Tokyo CPI Core Y/Y Jan 2.50% 2.50% 2.40%
    23:30 JPY Tokyo CPI Core-Core Y/Y Jan 1.90% 1.80%
    23:30 JPY Unemployment Rate Dec 2.40% 2.50% 2.50%
    23:50 JPY Industrial Production M/M Dec P 0.30% 0.30% -2.20%
    23:50 JPY Retail Trade Y/Y Dec 3.70% 2.90% 2.80%
    00:30 AUD PPI Q/Q Q4 0.80% 0.90% 1.00%
    00:30 AUD PPI Y/Y Q4 3.70% 3.90%
    05:00 JPY Housing Starts Y/Y Dec -2.50% -3.40% -1.80%
    07:00 EUR Germany Retail Sales M/M Dec -1.60% -0.20% -0.60% 0.00%
    07:30 CHF Real Retail Sales Y/Y Dec 2.60% 0.60% 0.80% 1.40%
    08:55 EUR Germany Unemployment Change Dec 11K 14K 10K
    08:55 EUR Germany Unemployment Rate Dec 6.20% 6.20% 6.10%
    13:00 EUR Germany CPI M/M Jan P -0.20% 0.10% 0.50%
    13:00 EUR Germany CPI Y/Y Jan P 2.30% 2.60% 2.60%
    13:30 CAD GDP M/M Nov -0.20% -0.10% 0.30%
    13:30 USD Personal Income M/M Dec 0.40% 0.40% 0.30%
    13:30 USD Personal Spending M/M Dec 0.70% 0.50% 0.40% 0.60%
    13:30 USD PCE Price Index M/M Dec 0.30% 0.30% 0.10%
    13:30 USD PCE Price Index Y/Y Dec 2.60% 2.60% 2.40%
    13:30 USD Core PCE Price Index M/M Dec 0.20% 0.20% 0.10%
    13:30 USD Core PCE Price Index Y/Y Dec 2.80% 2.80% 2.80%
    13:30 USD Employment Cost Index Q4 0.90% 1.00% 0.80%
    14:45 USD Chicago PMI Jan 39.9 36.9

     



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  • Markets Driven by PMI Data and Tariff Speculations, Silver at Risk of Reversal

    Dollar Softness Continues as Forex Markets Tread Calm Waters


    The forex markets remain unusually quiet today, with Dollar staying soft despite multiple attempts to rebound. The greenback has only managed meaningful gains against the weaker Yen and the struggling Canadian Dollar, while failing to build momentum against other major currencies. With little in the way of significant economic data on the calendar today, trading is expected to remain subdued. However, volatility could resurface, probably just temporarily, later in the week, with BoJ’s anticipated rate hike and key PMI releases from major economies slated for Friday.

    Loonie, nonetheless, could see movement today, with retail sales data due. BoC is widely expected to cut rates by 25 bps at its upcoming meeting next Wednesday, a view supported by a Reuters survey where 25 out of 31 economists forecast such a move. Additionally, median expectations point to another 25 bps cut in March, followed by a further reduction later in the year, bringing the overnight rate to 2.50%.

    For USD/CAD, however, the real driver for a decisive range breakout, beyond brief jitters, would lie in developments surrounding US-Canada trade relations. The market awaits details of tariffs expected to be announced on February 1, including their scope and which products will be affected.

    So far this week, Yen has been the weakest performer, followed by Dollar and Loonie. At the other end of the spectrum, the Kiwi remains the strongest, while Euro and Aussie. Sterling and Swiss are still stuck in middle positions.

    A key development this week has been the sharp decline in USD/CNH, which is viewed as a sign of a stabilizing risk sentiment toward global trade. Technically, a short term top should be formed at 7.3694, just ahead of 7.3745 key resistance (2022 high). More consolidative is expected in the near term with risk of deeper pull back. But downside should be contained by 38.2% retracement of 6.9709 to 7.3694 at 7.2172. Eventual upside break remains in favor.

    Gold surges on Dollar weakness, Silver lags

    Gold prices surged past 2750 mark this week, supported largely by a weaker Dollar. The overall market sentiment is on a relatively calmer backdrop, with US President Donald Trump’s decision to delay tariff implementations contributed to easing trade-related fears. Additionally, geopolitical tensions receded as a ceasefire between Israel and Hamas took hold earlier in the week.

    Hence, as whether Gold can break its record high of 2789 will depend largely on the depth of Dollar’s correction in the coming days.

    Technically, Gold’s rebound from 2536.67 is currently seen as the second leg of the corrective pattern from 2789.92 high. Strong resistance could be seen from this resistance to limit upside. Break of 2689.21 support will argue that the third leg of the pattern has started back towards 2536.67 support. Nevertheless, decisive break of 2789.92 will confirm up trend resumption.

    Silver’s performance, by comparison, has been relatively subdued. Its recovery from 28.74 remains weak and corrective in nature. For now, as long as 32.30 resistance holds, fall from 34.84 is still in favor to resume at a later stage, to 26.44 cluster support zone.

    Japan posts first trade surplus in six months

    Japan recorded a trade surplus of JPY 130.9B in December, the first surplus in six months, driven by a 2.8% yoy rise in exports to JPY 9.91T. Imports also jumped, rising 1.8% yoy to JPY 9.8T.

    However, exports to the two largest trading partners saw declines, with shipments to China falling by -3.0% yoy and to the US by 2.1% yoy.

    On a month-on-month seasonally adjusted basis, exports rose 6.3% mom to JPY 9.44T. Imports increased 2.2% mom to JPY 9.47T, resulting in a seasonally adjusted trade deficit of JPY 33B.

    For the entirety of 2024, Japan’s trade deficit narrowed significantly, shrinking by 44% from the previous year to JPY -5.33T. Exports reached a record high of JPY 107.09T, up 6.2%, bolstered by strong demand for vehicles and semiconductor-related products. Imports also rose by 1.8% to JPY 112.42T.

    USD/CAD Daily Outlook

    Daily Pivots: (S1) 1.4322; (P) 1.4357; (R1) 1.4412; More…

    Range trading continues in USD/CAD and intraday bias remains neutral. Further rise is expected as long as 1.4260 support holds. Break of 1.4516 will resume larger up trend to 1.4667/89 key resistance zone. Nevertheless, firm break of 1.4260 will turn bias to the downside for deeper pullback to 55 D EMA (now at 1.4205) and below.

    In the bigger picture, up trend from 1.2005 (2021) is in progress for retesting 1.4667/89 key resistance zone (2020/2015 highs). Decisive break there will confirm long term up trend resumption. Next target is 100% projection of 1.2401 to 1.3976 from 1.3418 at 1.4993. Medium term outlook will remain bullish as long as 1.3976 resistance turned holds (2022 high), even in case of deep pullback.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    23:50 JPY Trade Balance (JPY) Dec -0.03T -0.64T -0.38T -0.39T
    13:30 USD Initial Jobless Claims (Jan 17) 220K 217K
    13:30 CAD Retail Sales M/M Nov 0.20% 0.60%
    13:30 CAD Retail Sales ex Autos M/M Nov 0.10% 0.10%
    15:00 EUR Eurozone Consumer Confidence Jan P -14 -15
    15:30 USD Natural Gas Storage -270B -258B
    16:00 USD Crude Oil Inventories -0.1M -2.0M

     



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