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BoJ Deputy Governor Shinichi Uchida said today that while Japan’s underlying inflation and medium- to long-term inflation expectations may "temporarily stagnate", wage growth is expected to remain firm as "Japan's job market is very tight."

He added that companies are likely to continue "passing on rising labour and transportation costs by increasing prices".

Uchida also stressed that BoJ will assess the economic impact of US trade policy “without pre-conception,” acknowledging the high degree of uncertainty surrounding the global outlook.

Australia’s NAB Business Confidence Index edged up from -3 to -1 in April. However, the underlying Business Conditions Index slipped from 3 to 2. Trading conditions eased from 6 to 5, while profitability dropped sharply from 0 to -4, highlighting the ongoing strain on margins.

Purchase cost growth accelerated to 1.7% in quarterly equivalent terms, up from 1.4%. Labor cost growth remained elevated at 1.6%. Rising input costs appear to be eroding profitability, with businesses struggling to pass through the full extent of these increases. This was reflected in modest increases in final product and retail price growth, which rose to 0.8% and 1.4% respectively—still below the pace of input cost growth.

NAB Chief Economist Sally Auld noted that weaker profitability was at the core of the drop in business conditions, aligning with the uptick in purchase costs and softer trading performance.

Full Australia NAB business confidence release here.

Australia’s Westpac Consumer Sentiment Index rose 2.2% to 92.1 in May, partially recovering from April’s sharp decline triggered by trade-related uncertainty.

Westpac attributed the modest rebound to stronger financial markets and a decisive outcome in the Federal election. However, sentiment remains subdued, with the index still 3.9% below its March level and firmly in pessimistic territory.

With all key inflation measures now back within the 2–3% target range, Westpac expects RBA to cut the cash rate by another 25bps to 3.85%. The combination of soft domestic sentiment and a more "unsettled and threatening global backdrop" strengthens the case for further easing.

Full Australia Westpac consumer sentiment release here.

Key Highlights

• Bitcoin started a major increase above the $100,000 resistance before it faced hurdles.
• BTC/USD traded below a connecting bullish trend line with support at $104,000 on the 4-hour chart.
• Ethereum outperformed with a strong move above the $2,500 level.
• The US CPI could increase by 2.4% in April 2025 (YoY).

Bitcoin Price Technical Analysis

Bitcoin price started a fresh increase above the $95,000 zone against the US Dollar. BTC was able to surpass the $98,000 and $100,000 resistance levels.

Looking at the 4-hour chart, the price settled above the $100,000 level, the 100 simple moving average (red, 4-hour), and the 200 simple moving average (green, 4-hour). However, the bears seem to be active near the $105,500 and $106,000 levels.

Recently, there was a minor decline below the $104,000 level. BTC/USD traded below a connecting bullish trend line with support at $104,000 on the same chart.

Immediate support is near the $102,200 level. The next key support sits at $99,500 or the 50% Fib retracement level of the upward move from the $93,336 swing low to the $105,816 high.

A downside break below $99,500 might send Bitcoin toward the $98,000 support and the 61.8% Fib retracement level of the upward move from the $93,336 swing low to the $105,816 high. Any more losses might send the price toward the $95,500 support zone.

On the upside, the price could face resistance near the $105,000 level. The next key resistance is $106,000. The main resistance could be $107,500. A successful close above $107,500 might start another steady increase.

In the stated case, the price may perhaps rise toward the $112,000 level. Any more gains might call for a test of $115,000.

Looking at Ethereum, the bulls seem to be in control, and they were able to push the price above the $2,500 resistance zone.

Today’s Economic Releases

• US Consumer Price Index for April 2025 (MoM) – Forecast +0.3%, versus -0.1% previous.
• US Consumer Price Index for April 2025 (YoY) – Forecast +2.4%, versus +2.4% previous.
• US Consumer Price Index Ex Food & Energy for April 2025 (YoY) – Forecast +2.8%, versus +2.8% previous.

BoJ’s Summary of Opinions from its April 30–May 1 meeting revealed a generally cautious view on the impact of US tariffs, with board members acknowledging the potential economic damage but not seeing it as enough to derail the pursuit of the 2% inflation target.

One member noted that BoJ may enter a "temporary pause" in rate hikes due to weaker US growth. But it's emphasized that "it shouldn't be too pessimistic".

The member emphasized that rate hikes could resume if conditions improve or US policy shifts.

Other opinions highlighted the high level of uncertainty facing Japan’s economic and price outlook, driven largely by global trade tensions. One board member noted the policy path “may change at any time.”

Another reaffirmed that there has been "no change to the BoJ's rate-hike stance", as projections continue to show inflation reaching the 2% target and real interest rates remain deeply negative.

Full BoJ Summary of Opinions here.

Chicago Fed President Austan Goolsbee welcomed the weekend’s US-China tariff agreement as a step in the right direction but cautioned that its limited scope offers only modest relief.

In an interview with the New York Times, he said the temporary 90-day reduction in tariffs would be “less impactful stagflationarily than the path they were on.”

But that still represents a significant burden on the economy. With tariffs remaining three to five times higher than pre-trade war levels, Goolsbee warned the deal would still "make growth slower and make prices rise", hallmarks of a stagflationary environment.

Given the persistent uncertainty surrounding US trade policy, Goolsbee reiterated his support for a wait-and-see approach on interest rates. He noted that the Trump administration’s statements acknowledge the temporary nature of the current truce. "It’s going to be revisited in the near future,” he said.

Latvian ECB Governing Council member Martins Kazaks indicated overnight that a rate cut in June remains a “pretty possible step,” aligning with market expectations, provided upcoming data confirms progress toward anchoring inflation around the 2% target.

Kazaks added that "gradual cautious cuts could come upon the anchoring of inflation to around the 2% target."

Meanwhile, German and Spanish ECB members Joachim Nagel and Jose Luis Escriva added a note of caution in a joint interview, warning that US President Donald Trump’s aggressive tariff policies have clouded the economic outlook.

“Regarding monetary-policy decisions, it is important to be cautious and not to overreact by overemphasizing specific announcements that could change shortly afterwards,” Nagel emphasized

BoE MPC member Alan Taylor explained his decision to vote for a 50bps rate cut last week, warning that both global and domestic conditions have deteriorated significantly.

He pointed to a “quite perilous” international trade environment, driven in large part by broader-than-expected US tariffs. Also, "the erosion of confidence that we saw has continued", he added, with low readings in business surveys like the PMI and REC, along with signs of increased precautionary saving and delayed investment.

Taylor also called the recent UK-US trade deal “quite slender,” noting that most British exports will still face a 10% tariff, offering little near-term relief for exporters.

Taylor warned that waiting for complete confirmation that all inflation pressures had eased before easing policy further could leave BoE behind the curve.

Summary

The U.S. and China agreed to temporarily roll back tariff rates on each other this past weekend. “Temporary” defined as a trade truce for the next 90 days, which despite being provisional, is significant given the harsh escalation in tensions just a month ago. Trade developments between the U.S. and China have once again moved quickly, and while the thawing of tensions is far from permanent at this time, developments have now shifted U.S.-China relations under the Trump administration into our upside scenario. Should developments continue along this new trajectory we now believe China's economy may be able to achieve the government's 5% growth target and the renminbi may stabilize at a stronger level.

• Brent Oil surges 4% on US-China tariff reductions, boosting market optimism.
• Saudi Aramco and Russia's Central Bank express confidence in oil market stability.
• Technical analysis suggests potential resistance at 66.44 and 68.71 for Brent Crude.
• Client sentiment data shows a strong long position on WTI, signaling a possible price decline.

Oil prices surged 4% on Monday after the U.S. and China announced plans to ease some tariffs, sparking optimism about ending their trade war as the top two crude oil consumers.

Markets seem more at ease following the announcement and this was echoed by Saudi Aramco and Russia's Central Bank. Aramco stated in an earnings conference call that Oil fundamentals remain sound despite recent volatility with the Oil giant touting growth for Q2.

Similar sentiment has emerged from Russia Central Bank who said they expect Oil prices to stabilize above $60/barrel as trade tensions ease. This could be seen as a sign that sentiment has undoubtedly improved.

US-China trade developments

Markets are taking their cues from US-China developments, but what were the key takeaways from this weekend's meeting.

The US and China have agreed to lower tariffs on each other’s goods for 90 days to ease trade tensions. US tariffs on Chinese imports dropped from 145% to 30%, while Chinese tariffs on US goods were reduced from 125% to 10%.

President Trump has been commenting on the deal, stating that the agreement doesn't cover tariffs on cars, steel, aluminum or pharmaceuticals. The President will speak to China’s President Xi at the end of the week.

The President is hoping that China will open up markets to US businesses.

Looking below at the Fear and Greed chart and you can see that sentiment has turned positive and is now in greed territory. Another sign that markets are optimistic about the future after the weekend.

Source: FinalcialJuice

Technical Analysis - Brent Crude

From a technical analysis standpoint, Brent has pushed higher since bottoming out on May 5.

Looking at price action and market dynamics, the RSI period-14 has crossed above the 50 neutral handle. This is usually a sign of a shift in momentum from bears to bulls.

A bullish move from here may find resistance at 66.44 and 68.71 respectively.

A move lower high may find support at 64.00 and 62.81 may come into focus.

Brent Crude Oil Daily Chart, May 12, 2025

Source: TradingView (click to enlarge)

Client Sentiment Data

Looking at OANDA client sentiment data and market participants are net-long on WTI with 75% of traders holding long positions. I prefer to take a contrarian view toward crowd sentiment and thus the fact that so many traders are long means WTI prices could decline further.