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In focus today

From the US, both JOLTs labour turnover report for March as well as the Conference Board's April consumer confidence survey are due for release. The job openings data from the former is a key labour demand indicator for the Fed. The still stable number of daily job postings suggests that the level has likely remained relatively steady despite the tariff uncertainty.

In the euro area, focus turns to the Spanish inflation data for April, which we receive ahead of the euro area print on Friday. On Friday, we expect euro area HICP inflation to tick down to 2.1% y/y in April from 2.2% y/y in March.

Also in the euro area, we keep an eye on data on credit growth and business confidence indicators. The business confidence indicators cover the month of April, so they will likely reflect the impact of the US tariffs, which will be interesting to follow.

In China, we will receive manufacturing PMIs from both NBS as well as Caixin (private version) overnight. In line with consensus, we expect to see a decline in both indexes as effects from the trade war feeds through. The Emerging Industries PMI for April was released last week and showed a big drop from 59.6 to 49.4.

In Sweden, a bunch of interesting macro data is being released today. At 08.00 CET we will receive data on retail sales and household lending (both March), but the full GDP indicator for Q1 will also hit the wires. As the GDP indicator is notoriously volatile, we prefer NIER's Economic Tendency Indicator when it comes to forecasting Swedish growth, and we are lucky enough to see the April ETI released today at 09.00 CET. A continued decline in the ETI could well suggest a potential slowdown in GDP growth and is worth watching. Furthermore, the broader survey will provide valuable insights into households and firms' economic outlook, including firms' price plans.

In Norway, retail sales figures will be published today, but these are for March and will capture neither effects from the global turmoil nor the signals of less rate cuts sent by Norges Bank at its meeting in March. We still believe that retail sales growth slowed to 0.1% m/m in March, but the timing of Easter always makes the figures for March and April a bit uncertain.

Economic and market news

What happened overnight

In the Canadian election, Canadian PM Mark Carney's Liberals retained power. At the time of writing, parliamentary majority hangs in the balance, with the Liberals not yet having won enough seats to form a majority government. Trump's tariffs and annexation threats boosted Carney's patriotic support despite Conservative efforts focusing on cost of living and crime. Carney ran Canada's central bank during the 2008 financial crisis, and the Bank of England during Brexit, claiming he can use this experience as preparation for handling the economic turmoil caused by Trump. The result marked a recovery for the Liberals who were on track to lose power until the resignation of former PM Justin Trudeau helped consolidate left-of-centre votes.

What happened yesterday

In Denmark, retail sales in March surprised to the downside, coming in at 0.1% lower than in February (SA), mainly due to a 0.8% drop in sales of food and other everyday commodities. Clothing sales increased by 2.7%, while other consumer goods remained unchanged. Overall, retail sales in the first quarter of 2025 were 0.7% higher than in the fourth quarter of 2024.

In Sweden, the producer price index declined in March (-3,0% m/m and -0,3% y/y), marking a decrease for two consecutive months and supporting lower inflation expectations. This is good news for the Riksbank, and we will receive more information today with the release of the tendency indicator from NIER, which contains firms' pricing plans.

In Norway, the unemployment rate increased from 3.8 % to 4.4 % in March. These figures are volatile on a monthly basis, illustrated by the fact that the trend adjusted data was unchanged at 4.1%. And as always, we prefer the more updated unemployment data from the NAV, where we saw no weakness in March, and April figures are due on Friday.

In geopolitics, Russian President Vladimir Putin announced a three-day ceasefire from 8-10 May to commemorate the 80th anniversary of World War Two victory, inviting international leaders, including Xi Jinping, to celebrations. Ukraine criticised the truce, demanding immediate action and a lasting ceasefire, stating that a ceasefire should be "real, not just for a parade." In response to Putin's statement, the White House welcomed efforts to pause the conflict but emphasised that President Trump seeks a permanent ceasefire, not a temporary one, between Russia and Ukraine. Thus far, Russia has repeatedly violated the ceasefires it has imposed.

Equities: It was about time we had a dull session in equities! US equities were close to unchanged yesterday (with some intraday volatility). Europe outperformed, with Stoxx 600 up 0.5%. This was not a "buy the dip" session (needless to say, as most of the dip is gone). Investors did, however, take notice of the lower bond yields, sending yield-sensitive defensives higher (real estate, utilities, healthcare). It was not all hunky-dory: VIX broke the downward trajectory and stalled around 25. Perhaps VIX will not drop below 20 until we have more clarity on tariffs. If so, positioning support from risk parity funds will have to wait.

FI & FX: It was a relatively quiet start to the week, with US Treasury yields continuing to drift lower, following the trend from last week. The 2Y US Treasury yield declined by 6bp, the 10Y yield fell by 3bp, and the 30Y yield was down by 2bp, resulting in a modest steepening of the US yield curve. In contrast, yields in Europe were slightly firmer, with both 2Y and 10Y German government bond yields rising by 1bp. EUR/USD remains stable in the 1.13-1.14 range. Early this morning, Canada's Liberal Party secured a fourth consecutive term, with Carney elected Prime Minister, as widely expected. In the near term, we expect USD/CAD to tick down to 1.37, given stretched short CAD positioning. NOK FX did remarkably well during the latter part of yesterday's session.

Daily Pivots: (S1) 0.6389; (P) 0.6412; (R1) 0.6456; More...

Intraday bias in AUD/USD is back on the upside with breach of 0.6438. Rise from 0.5913 should be resuming for 61.8% retracement of 0.6941 to 0.5913 at 0.6548. However, firm break of 0.6343 support will confirm short term topping, and turn bias back to the downside for 55 D EMA (now at 0.6310) and below.

In the bigger picture, as long as 55 W EMA (now at 0.6440) holds, the down trend from 0.8006 (2021 high) should resume later to 61.8% projection of 0.8006 to 0.6169 from 0.6941 at 0.5806. However, sustained trading above 55 W EMA will argue that a medium term bottom was already formed, and set up further rebound to 0.6941 resistance instead.

Global trading remains subdued, with Japanese markets closed for Showa holiday and investors showing little urgency to take new positions. Canadian dollar saw some choppiness following election results, where the ruling Liberal Party retained power but fell short of a parliamentary majority. Despite the initial volatility, Loonie remained largely range-bound. Broader price action across currency markets has been lackluster, with traders largely holding off on bold moves ahead of major economic data releases later in the week.

Trade tensions continue to dominate headlines, though markets appear largely desensitized for now. Even news that the Trump administration is preparing to soften the impact of auto tariffs generated minimal reaction. According to reports, the White House plans to reduce the burden on domestic automakers by easing tariffs on imported parts and preventing overlapping duties on finished vehicles, particularly steel and aluminum. Refunds for tariffs already paid are also expected. A White House official confirmed the details, saying a formal announcement would come Tuesday.

The geopolitical side of trade is also evolving. Foreign ministers from the BRICS countries met to discuss a coordinated response to the latest wave of US tariffs. China, having faced the most severe hit with 145% tariffs on its exports to the US, pushed for a more confrontational stance. However, the final communique is expected to strike a critical yet restrained tone, signaling frustration without escalating tensions further.

Markets will keep an eye on today’s consumer sentiment releases from Germany and the US, although any impact may be fleeting. The next focus is on tomorrow’s releases of Eurozone and US GDP figures. With recession concerns resurfacing globally, these numbers could shape expectations for the next moves Fed and ECB.

In terms of currency performance so far this week, Yen leads the pack, followed by Sterling and Swiss Franc. At the other end, Kiwi has reversed to become the weakest performer, trailed by Loonie and Dollar. Euro and Aussie are holding to middle ground.

Technically, GBP/USD's breach of 1.3433 (2024 high) suggests that up trend from 1.0351 (2022 low) is trying to resume. Sustained trading above 1.3433 will confirm this bullish case. Next near term target will be 61.8% projection of 1.2706 to 1.3422 from 1.3232 at 1.3674. However, break of 1.3232 support will indicate rejection from 1.3433, and bring deeper decline back to 55 D EMA (now at 1.2978) and possibly below.

In Asia, Japan is on holiday. At the time of writing, Hong Kong HSI is up 0.11%. China Shanghai SSE is down -0.13%. Singapore Strait Times is up 0.20%. Overnight, DOW rose 0.28%. S&P 500 rose 0.06%. NASDAQ fell -0.10%. 10-year yield fell -0.050 to 4.216.

RBA’s Kent highlights surge in FX volatility, stresses importance of market standards

In a speech today, RBA Assistant Governor Christopher Kent noted that early April saw some of the most extreme movements outside of the global financial crisis. He highlighted that Australian Dollar fluctuated within a range of 4 US cents and at one point suffered a 4.5% daily decline against the greenback — an unusually large move.

Kent also pointed out that broader measures of FX volatility, such as those derived from options markets, spiked to levels last seen during the pandemic, with liquidity conditions deteriorating noticeably.

While market conditions have calmed somewhat in recent days, Kent emphasized that such episodes serve as a reminder of the crucial role played by the Foreign Exchange Global Code.

He stressed that in periods of heightened uncertainty, the Code’s standardized practices and commitment to transparency help maintain trust between participants and ensure smoother market functioning even amid significant economic shocks.

Canadian Dollar steady as Liberals projected to retain power, but lack majority

Canadian Dollar remained steady following the country’s general election, with only a brief uptick in volatility as early results began to unfold. The ruling Liberal Party, led by Prime Minister Mark Carney, is projected to retain power. But the lack of clarity over whether they will secure a majority quickly tempered any bullish reaction in the Loonie.

With the Liberals leading in 156 districts versus the Conservatives’ 145, the party still falls short of the 172 seats needed for a majority in the 343-seat House of Commons.

Carney’s leadership, a former head of both BoC and BoE, is seen as a sign of stability for the country, offering some reassurance to investors. However, his tougher stance toward the US over tariffs suggests that trade relationship could face renewed challenges in the months ahead, with more difficult negotiations expected.

Technically, USD/CAD is still extending the consolidations from 1.3780 short term bottom. Another bounce could be seen through 1.3903 minor resistance. But upside should be limited by 1.4150 support turned resistance (38.2% retracement of 1.4791 to 1.3780 at 1.4166). Fall from 1.4791 is expected to resume at a later stage.

AUD/USD Daily Report

Daily Pivots: (S1) 0.6389; (P) 0.6412; (R1) 0.6456; More...

Intraday bias in AUD/USD is back on the upside with breach of 0.6438. Rise from 0.5913 should be resuming for 61.8% retracement of 0.6941 to 0.5913 at 0.6548. However, firm break of 0.6343 support will confirm short term topping, and turn bias back to the downside for 55 D EMA (now at 0.6310) and below.

In the bigger picture, as long as 55 W EMA (now at 0.6440) holds, the down trend from 0.8006 (2021 high) should resume later to 61.8% projection of 0.8006 to 0.6169 from 0.6941 at 0.5806. However, sustained trading above 55 W EMA will argue that a medium term bottom was already formed, and set up further rebound to 0.6941 resistance instead.

Canadian Dollar remained steady following the country’s general election, with only a brief uptick in volatility as early results began to unfold. The ruling Liberal Party, led by Prime Minister Mark Carney, is projected to retain power. But the lack of clarity over whether they will secure a majority quickly tempered any bullish reaction in the Loonie.

With the Liberals leading in 156 districts versus the Conservatives’ 145, the party still falls short of the 172 seats needed for a majority in the 343-seat House of Commons.

Carney’s leadership, a former head of both BoC and BoE, is seen as a sign of stability for the country, offering some reassurance to investors. However, his tougher stance toward the US over tariffs suggests that trade relationship could face renewed challenges in the months ahead, with more difficult negotiations expected.

Technically, USD/CAD is still extending the consolidations from 1.3780 short term bottom. Another bounce could be seen through 1.3903 minor resistance. But upside should be limited by 1.4150 support turned resistance (38.2% retracement of 1.4791 to 1.3780 at 1.4166). Fall from 1.4791 is expected to resume at a later stage.

In a speech today, RBA Assistant Governor Christopher Kent noted that early April saw some of the most extreme movements outside of the global financial crisis. He highlighted that Australian Dollar fluctuated within a range of 4 US cents and at one point suffered a 4.5% daily decline against the greenback — an unusually large move.

Kent also pointed out that broader measures of FX volatility, such as those derived from options markets, spiked to levels last seen during the pandemic, with liquidity conditions deteriorating noticeably.

While market conditions have calmed somewhat in recent days, Kent emphasized that such episodes serve as a reminder of the crucial role played by the Foreign Exchange Global Code.

He stressed that in periods of heightened uncertainty, the Code’s standardized practices and commitment to transparency help maintain trust between participants and ensure smoother market functioning even amid significant economic shocks.

Full speech of RBA's Kent here.

Key Highlights

• GBP/USD started a fresh increase above the 1.3350 resistance.
• A connecting bullish trend line is forming with support at 1.3320 on the 4-hour chart.
• EUR/USD is consolidating gains above the 1.1350 level.
• Bitcoin could soon aim for a fresh move above the $95,000 resistance.

GBP/USD Technical Analysis

The British Pound remained stable above 1.3250 against the US Dollar. GBP/USD started a fresh increase above 1.3320 and 1.3330 to move into a positive zone.

Looking at the 4-hour chart, the pair settled well above the 1.3320 level, the 100 simple moving average (red, 4-hour), and the 200 simple moving average (green, 4-hour). The bulls even pumped the pair above the 1.3400 resistance zone.

The pair is now consolidating near 1.3440. It seems like the bulls could soon aim for a move above the 1.3450 zone. If there is a fresh increase, the pair could face resistance near the 1.3500 level.

The next major resistance is near the 1.3550 zone. A close above the 1.3550 level could set the tone for another increase. In the stated case, the pair could even clear the 1.3620 resistance.

On the downside, immediate support sits near the 1.3400 level. The next key support sits near the 1.3350 level. Any more losses could send the pair toward the 1.3330 level. There is also a connecting bullish trend line forming with support at 1.3320 on the same chart.

Looking at Bitcoin, the price remains in a positive zone and might soon aim for a move above the $96,500 resistance zone.

Upcoming Economic Events:

US Housing Price Index for Feb 2025 (MoM) - Forecast +0.3%, versus +0.2% previous.
S&P/Case-Shiller Home Price Indices for Feb 2025 (YoY) - Forecast +4.8%, versus +4.7% previous.

EURGBP: ⬇️ Sell

• EURGBP broke support area
• Likely to fall to support level 0.8450

EURGBP currency pair recently broke the support area between the key support level 0.8525 (which stopped the previous waves iv and A) and the 38.2% Fibonacci correction of the upward impulse from February.

The breakout of the support level 0.8525 accelerated the active impulse wave i, which belongs to the C-wave of the ABC correction B from the start of April.

Given the bearish euro sentiment seen today, EURGBP currency can be expected to fall toward the next support level 0.8450.

EURJPY: ⬇️ Sell

• EURJPY reversed from resistance area
• Likely to fall to support level 161.25

EURJPY currency pair recently reversed down from the resistance area between the resistance level 164.00 (which has been reversing the price from January), upper daily Bollinger Band and the 50% Fibonacci correction of the downward impulse from July.

The downward reversal from this resistance area stopped the previous short-term correction ii.

Given the clear daily downtrend and the overbought daily Stochastic, EURJPY currency can be expected to fall toward the next support level 161.25.

GBPNZD: ⬆️ Buy

• GBPNZD reversed from the support area
• Likely to rise to resistance level 2.2600

GBPNZD currency pair recently reversed from the support area between the support level 2.2220, lower daily Bollinger Band and the 61.8% Fibonacci correction of the upward impulse from January.

The upward reversal from this support area stopped the previous short-term correction A – which belongs to wave (4) from the start of April.

Given the clear daily uptrend and the oversold daily Stochastic, GBPNZD currency pair can be expected to rise toward the next resistance level 2.2600.