HomeAction InsightMarket OverviewSwiss Franc and Yen Soft on Rising Yields and Metals

Swiss Franc and Yen Soft on Rising Yields and Metals

Benchmark treasury yields in US and Europe rise notably in a day of relatively slow news flow.  At the same time, Copper is extending recent up trend while Gold edged higher to new record. European stock indexes are seeing appreciable gains, and US futures indicate a positive start.

These development keeps Swiss Franc and Yen as the worst performers for the day so far. Australian Dollar is leading other commodity currencies higher. Dollar, Euro and Sterling are positioned in the middle with the greenback having a slight disadvantage.

Technically, AUD/JPY is currently the top mover for the month, up over 1.5%. Near term outlook will stay bullish as long as 98.15 support holds. Sustained trading above 61.8% projection of 86.04 to 97.66 from 93.00 at 100.18 could prompt further upside acceleration to 100% projection at 104.62 in the medium term.

In Europe, at the time of writing, FTSE is up 0.36%. DAX is up 0.80%. CAC is up 0.85%. UK 10-year yield is up 0.0344 at 4.108. Germany 10-year yield is up 0.038 at 2.445. Earlier in Asia, Nikkei rose 0.91%. Hong Kong HSI rose 0.05%. China Shanghai SSE fell -0.72%. Singapore Strait Times fell -0.07%. Japan 10-year JGB yield rose 0.0201 to 0.792.

Eurozone Sentix confidence rises to -5.9, yet momentum remains tepid

Eurozone Sentix Investor Confidence index surged from -10.5 to -5.9 in April, surpassing expectations of -8.3. This marks the sixth consecutive increase, reaching its highest since February 2022. Similarly, Current Situation Index climbed from -18.5 to -16.3, reflecting the highest point since June 2023 after six successive rises. Additionally, Expectations Index rose from -2.3 to 5.0, recording its seventh straight increase and the highest level since February 2022.

Sentix’s analysis suggests that despite the positive direction of economic momentum, the pace remains subdued. This sluggishness is attributed largely to the ongoing relative weakness of the German economy.

While the incremental economic improvement is a positive sign, it simultaneously tempers expectations for inflation reduction and subsequent central bank interest rate cuts.

Investors maintain anticipation for a more accommodative monetary policy stance within the Eurozone. Nevertheless, should the global economy sees a significant upturn, these aspirations for interest rate reductions may not materialize as expected.

Japan’s nominal wages rise 1.8% yoy in Feb, real wages down -1.3% yoy

Japan’s nominal labor cash earnings rose by 1.8% yoy in February, aligning with market expectations and marking a 26-month streak of increases. Monthly wages saw 2.0% yoy increase, with regular pay rising by 2.2% yoy. However, over-time pay decreased of -1.0% yoy, and special payments fell significantly by -5.5% yoy.

Real wages fell by 1.3% yoy, marking the 23rd consecutive month of decline. This trend underscores the continuing issue of rising living costs eroding purchasing power of Japanese workers,

A Ministry of Health, Labor, and Welfare official noted, “We will monitor how growth in nominal pay will develop while price gains are weighing down real wages.”

USD/CHF Mid-Day Outlook

Daily Pivots: (S1) 0.8988; (P) 0.9029; (R1) 0.9061; More….

USD/CHF recovers today but stays below 0.9094 resistance. Intraday bias remains neutral and more consolidations would be seen. Deeper decline cannot be ruled out, but outlook will stay bullish as long as 0.8884 resistance turned support holds. On the upside, break of 0.9094 will resume larger rise from 0.8332 to 0.9243 key resistance.

In the bigger picture, price actions from 0.8332 medium term bottom as tentatively seen as developing into a corrective pattern to the down trend from 1.0146 (2022 high). Further rise would be seen as long as 0.8728 support holds. But upside should be limited by 0.9243 resistance, at least on first attempt.

Economic Indicators Update

GMT Ccy Events Actual Forecast Previous Revised
23:30 JPY Labor Cash Earnings Y/Y Feb 1.80% 1.80% 2.00%
23:50 JPY Current Account (JPY) Feb 1.37T 1.99T 2.73T 2.75T
05:00 JPY Eco Watchers Survey: Current Mar 49.8 51.6 51.3
05:45 CHF Unemployment Rate Mar 2.30% 2.20% 2.20%
06:00 EUR Germany Industrial Production M/M Feb 2.10% 0.60% 1.00% 1.30%
06:00 EUR Germany Trade Balance (EUR) Feb 21.4B 25.1B 27.5B 27.6B
08:30 EUR Eurozone Sentix Investor Confidence Apr -5.9 -8.3 -10.5

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