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Daily Pivots: (S1) 1.6482; (P) 1.6578; (R1) 1.6652; More...

EUR/USD's break of 1.6444 resistance turned support indicates short term topping at 1.6785. Intraday bias is back on the downside for pull back to 1.6219 support. Firm break there will indicate that larger correction is on the way. Nevertheless, strong rebound from 1.6219 will maintain near term bullishness for another rise through 1.6785 at a later stage.

In the bigger picture, the solid break of 1.6434 resistance argues that whole down trend from 1.9799 (2020 high) has completed at 1.4281 (2022 low). Further rise should be seen to 61.8% retracement of 1.9799 to 1.4281 at 1.7691 next. For now, outlook will stay bullish as long as 1.5976 resistance turned support holds, even in case of deep pull back.

Daily Pivots: (S1) 0.9814; (P) 0.9835; (R1) 0.9851; More...

Intraday bias in EUR/CHF stays neutral and outlook is unchanged. Risk will stay on the upside as long as as long as 0.9774 short term bottom holds. Current development suggests that whole correction from 1.0095 has completed at 0.9704. Break of 0.9878, and sustained trading above 55 D EMA (now at 0.9873) will affirm this bullish case, and target 0.9995 resistance next.

In the bigger picture, prior rejection by 55 W EMA (now at 0.9972) and 38.2% retracement of 1.1149 to 0.9407 at 1.0072 suggests that medium term outlook is staying bearish. That is, down trend from 1.2004 is not completed yet and is in favor to resume through 0.9407 at a later stage. However, decisive break of 1.0095 resistance will raise the chance of bullish trend reversal. Rise from 0.9407 should then target 1.0505 cluster resistance (2020 low at 1.0505, 61.8% retracement of 1.1149 to 0.9407 at 1.1484).

Daily Pivots: (S1) 1.0949; (P) 1.0992; (R1) 1.1021; More...

Intraday bias in EUR/USD remains neutral for the moment as sideway consolidation continues. Further rally is expected as long as 1.0908 support holds. Break of 1.1094 will resume larger up trend to 1.1273 fibonacci level. Break there will target 61.8% projection of 0.9534 to 1.1032 from 1.0515 at 1.1441 However, considering bearish divergence condition in 4H MACD, break of 1.0908 support will indicate short term topping and turn bias back to the downside.

In the bigger picture, rise from 0.9534 (2022 low) is in progress for 61.8% retracement of 1.2348 (2021 high) to 0.9534 at 1.1273. Sustained break there will solidify the case of bullish trend reversal and target 1.2348 resistance next (2021 high). This will now remain the favored case as long as 1.0515 support holds, even in case of deeper pull back.

Daily Pivots: (S1) 1.2461; (P) 1.2516; (R1) 1.2551; More...

Intraday bias in GBP/USD is turned neutral with current retreat and some consolidations would be seen below 1.2582 first. Outlook will stay bullish as long as 1.2352 support holds. On the upside, above 1.2582 will target 1.2759 fibonacci level first. Firm break there will target 61.8% projection of 1.0351 to 1.2445 from 1.1801 at 1.3095.

In the bigger picture, the rise from 1.0351 medium term term bottom (2022 low) is in progress for 61.8% retracement of 1.4248 (2021 high) to 1.0351 at 1.2759. Sustained break there will add to the case of long term bullish trend reversal. Further break of 61.8% projection of 1.0351 to 1.2445 from 1.1801 at 1.3095 could prompt upside acceleration to 100% projection at 1.3895. For now, this will remain the favored case as long as 1.1801 support holds, even in case of deep pull back.

Daily Pivots: (S1) 0.8926; (P) 0.8946; (R1) 0.8977; More...

USD/CHF is still bounded in range of 0.8850/9001 and intraday bias stays neutral first. On the upside, decisive break of 0.9001 resistance should confirm short term bottoming at 0.8850. Intraday bias will be back on the upside 55 D EMA (now at 0.9102). Sustained break there will be a strong sign of bullish reversal. On the downside, break of 0.8850 will resume larger fall from 1.0146, to 61.8% projection of 1.0146 to 0.9058 from 0.9439 at 0.8767, which is close to 0.8756 long term support. Strong support is expected there to bring rebound, at least on first attempt.

In the bigger picture, fall from 1.1046 (2022 high) is in progress for 0.8756 support (2021 low). But overall, this fall is still seen as a leg in the long term range pattern from 1.0342 (2016 high). So, downside should be contained by 0.8756 to bring reversal. Sustained break of 0.9058 support turned resistance will be the first sign of medium term bottoming. However, decisive break of 0.8756 will carry larger bearish implications.

Daily Pivots: (S1) 136.57; (P) 137.05; (R1) 137.96; More...

Intraday bias in USD/JPY remains on the upside at this point. The break of near term channel resistance indicates upside acceleration. Firm break of 137.90 will resume whole rebound from 127.20, and target 100% projection of 127.20 to 137.90 from 129.62 at 140.32. On the downside, below 136.56 support will turn intraday bias remains neutral first. But further rally will remain in favor as long as 135.13 resistance turned support holds, in case of retreat.

In the bigger picture, price actions from 151.93 high are currently seen as a corrective pattern to the long term up trend. The first leg should have completed at 127.20. Rebound from there is seen as the second leg. Sustained break of 31.8% retracement of 151.93 to 127.20 at 136.34 will bring stronger rebound to 61.8% retracement at 142.48. Meanwhile, break of 129.62 will argue that the third leg is starting through 127.20 low.

Daily Pivots: (S1) 1.3522; (P) 1.3552; (R1) 1.3574; More....

USD/CAD is still holding above 1.3521 minor support and intraday bias remains neutral for the moment. Further rise is still mildly in favor. Corrective pattern from 1.3976 could have completed with three waves to 1.3299. On the upside, above 1.3668 will target 1.3860/3976 resistance zone. However, firm break of 1.3521 will dampen this bullish view and bring deeper fall back towards 1.3299 support instead.

In the bigger picture, the up trend from 1.2005 (2021 low) is still in progress. Break of 1.3976 will confirm resumption and target 61.8% projection of 1.2401 to 1.3976 from 1.3261 at 1.4234. Firm break there will pave the way to long term resistance zone at 1.4667/89 (2016, 2020 highs). On the downside, sustained break of 55 W EMA (now at 1.3302) is needed to confirm medium term topping. Otherwise, outlook will remain bullish even in case of deep pull back.

Daily Pivots: (S1) 0.6603; (P) 0.6635; (R1) 0.0.6663; More...

AUD/USD's extended rebound and break of 0.6664 minor resistance suggests that fall from 0.6804 has completed ahead of 0.6563 low. Intraday bias is back on the upside for stronger rise. Still, outlook remains bearish as long as 0.6804 resistance holds, and down trend resumption through 0.6563 low is in favor at a later stage. Nevertheless, sustained break of 0.6804 should indicate completion of whole fall from 0.7156, and turn near term outlook bullish for retesting this high instead.

In the bigger picture, as long as 61.8% retracement of 0.6169 to 0.7156 at 0.6546 holds, the decline from 0.7156 is seen as a correction to rally from 0.6169 (2022 low) only. Another rise should still be seen through 0.7156 at a later stage. However, sustained break of 0.6546 will raise the chance of long term down trend resumption through 0.6169 low.

Australian Dollar surges after RBA surprised the markets by resuming rate hike today. In addition, tightening bias is maintained even though the tone is softened. New Zealand and Canadian Dollars trail closely, boosted by a slightly positive risk sentiment. On the other hand, Japanese Yen continues to be the runaway loser in the market. Dollar is reversing some of this week's gains. European majors are mixed, with Sterling on the weaker side than Euro and Swiss Franc.

In terms of technical developments, Yen's performance will likely remain a focal point in the markets. CAD/JPY's break of 100.85 resistance suggests that the entire decline from 110.87 has concluded at 94.04, potentially leading to further rallies up to the 61.8% retracement of 110.87 to 94.04 at 110.62. A firm break above this level could prompt a retest of 110.87 high. Depending on the overall Yen selloff elsewhere, there is possibility of breaking through 110.87 as CAD/JPY aligns with the broader outlook of other Yen crosses.

In Asia, at the time of writing, Nikkei is up 0.24%. Hong Kong HSI is up 0.09%. China Shanghai SSE is up 1.14%. Singapore Strait Times is up 0.37%. Japan 10-year JGB yield is up 0.0202 at 0.423. Overnight DOW dropped -0.14%. S&P 500 dropped -0.04%. NASDAQ dropped -0.11%. 10-year yield rose 0.122 to 3.574.

RBA defies expectations with rate hike, may still require further tightening

In a surprising move, RBA raises cash rate target by 25bps to 3.85%, contrary to market expectations of a hold. Nevertheless, RBA softened its tightening bias, stating, "some further tightening of monetary policy may be required," depending on "how the economy and inflation evolve."

Despite acknowledging that Australian inflation "has passed its peak" and "recent data showed a welcome decline," the central bank still expects inflation to be at 4.25%, slowing to 3% in mid-2025. That is, "it takes a couple of years before inflation returns to the top of the target range". RBA added that services price inflation remains "still very high and broadly based" with upside risks, while goods inflation is decelerating.

RBA projects the economy to grow by 1.25% in 2023 and around 2% over the year to mid-2025. With anticipated below-trend economic growth, unemployment rate is forecast to gradually increase to around 4.5% in mid-2025.

RBNZ Hawkesby: Not currently seeing widespread financial distress amongst households or businesses

According to RBNZ Financial Stability Report, debt servicing costs for households with mortgages are expected to more than double by the end of the year. Despite this, household balance sheets remain resilient, with most having substantial equity buffers. Early-stage arrears have increased but remain low compared to post-Global Financial Crisis levels. Banks' strong capital positions allow them to support customers, and borrowers facing stress are encouraged to seek assistance from their banks.

"We are not currently seeing widespread financial distress amongst households or businesses, which reflects the strength in the economy and labour market to date. However, more borrowers may fall behind on their payments this year, given the ongoing repricing of mortgages and expected weakening in the labour market,"Deputy Governor Christian Hawkesby says.

"Recent profitability and strong capital positions puts banks in a good position to take a long-term view and support their customers. We encourage borrowers encountering stress to talk to their banks, as hardship programmes may be available, and some customers may be able to temporarily switch to interest-only payments or increase the remaining term of their loan."

IMF raises 2023 Asia growth forecasts on strong emerging markets

IMF raised its 2023 growth forecast for Asia by 0.3% to 4.6%, outpacing the 3.8% growth rate in 2022. For 2024, the growth projection has been slightly downgraded by -0.2% to 4.4%.

The growth forecast for advanced economies in the region was downgraded by -0.4% to 1.6% in 2023 and by -0.2% to 1.7% in 2024. Meanwhile, emerging markets and developing economies experienced an upgraded growth forecast of 0.3% to 5.3% in 2023, although their 2024 projections were downgraded by -0.1% to 5.1%.

IMF highlighted that "Asia's domestic demand has so far remained strong despite monetary tightening, while external appetite for technology products and other exports is weakening".

However, the organization warned that "Global growth is poised to decelerate as rising interest rates and Russia's war in Ukraine weigh on activity. Inflation remains stubbornly high, and banking strains in the United States and Europe have injected greater uncertainty into an already complex economic landscape."

Looking ahead

Germany retail sales, Swiss SEO consumer climate and PMI manufacturing; Eurozone PMI manufacturing final and CPI flash, and UK PMI manufacturing final will be released in European session. Later in the day, US will publish factory orders.

AUD/USD Daily Report

Daily Pivots: (S1) 0.6603; (P) 0.6635; (R1) 0.0.6663; More...

AUD/USD's extended rebound and break of 0.6664 minor resistance suggests that fall from 0.6804 has completed ahead of 0.6563 low. Intraday bias is back on the upside for stronger rise. Still, outlook remains bearish as long as 0.6804 resistance holds, and down trend resumption through 0.6563 low is in favor at a later stage. Nevertheless, sustained break of 0.6804 should indicate completion of whole fall from 0.7156, and turn near term outlook bullish for retesting this high instead.

In the bigger picture, as long as 61.8% retracement of 0.6169 to 0.7156 at 0.6546 holds, the decline from 0.7156 is seen as a correction to rally from 0.6169 (2022 low) only. Another rise should still be seen through 0.7156 at a later stage. However, sustained break of 0.6546 will raise the chance of long term down trend resumption through 0.6169 low.

Economic Indicators Update

In a surprising move, RBA raises cash rate target by 25bps to 3.85%, contrary to market expectations of a hold. Nevertheless, RBA softened its tightening bias, stating, "some further tightening of monetary policy may be required," depending on "how the economy and inflation evolve."

Despite acknowledging that Australian inflation "has passed its peak" and "recent data showed a welcome decline," the central bank still expects inflation to be at 4.25%, slowing to 3% in mid-2025. That is, "it takes a couple of years before inflation returns to the top of the target range". RBA added that services price inflation remains "still very high and broadly based" with upside risks, while goods inflation is decelerating.

RBA projects the economy to grow by 1.25% in 2023 and around 2% over the year to mid-2025. With anticipated below-trend economic growth, unemployment rate is forecast to gradually increase to around 4.5% in mid-2025.

Full RBA statement here.