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New York Fed President John Williams said in a speech that US is "closing in on the longest economic expansion on record, unemployment is at historically low levels, and inflation is close to our 2 percent target ". And, from a "pure monetary policy perspective", this is a "healthy economy".

However, he also noted that Fed's monetary policy decisions " don't affect the kinds of jobs that are created or who benefits from growth."

William's full speech here.

In the parliament, Prime Minister Theresa May insisted that UK can still pass the Brexit Withdrawal Agreement by May 22 to avoid taking part in European parliament elections. And it can still leave EU by the end of next month. May also emphasized the important of cross-party negotiations with Labours and she hoped to reach an agreement in the coming days.

May urged MPs to "use the opportunity of the recess to reflect on the decisions that will have to be made swiftly on our return after Easter. And let us then resolve to find a way through this impasse."

$1,280 vulnerable if gold fails to break March peak

We’re seeing some profit taking in gold early in the day on Thursday, with the yellow metal coming on the back of four winning days in the last five. That’s an impressive run of form considering only a week ago we were seeing $1,280 – which is increasingly becoming an important support area – being tested by sellers only for it to be successfully defended once again.

Gold bulls should put the celebrations on hold though because we’ve now fallen short of the previous peak for a second time since it topped out in mid-February. That’s not to say we won’t see another run at it in the coming sessions but a failure to break through the March peak – around $1,325 – may reinvigorate the sellers and see $1,280 quickly come under pressure again.

Gold Daily Chart

Of course, the dollar could have a key role to play and at the moment it is trading close to multi-month highs. A break higher could put $1,280 under considerable pressure. How many tests will gold bulls hang around for?

That’s often the question that’s asked. If bulls are holding on and seeing repeated challenges, does it dent their confidence and what happens when some start to flee. To make matters worse, if the level is broken, could this trigger a bunch of stops – both real and intended – and exacerbate the move to the downside? We may soon see.

Of course, there is the train of thought that suggests each hold is a sign of strength and there is certainly a case for that. What can case doubt though is when rebounds are being sold into earlier and this looks to be happening in the case of gold. And today’s declines are doing little to alleviate such concerns.

Gold 4-Hour Chart

A look at the 4-hour chart may suggest that the area around $1,292-1,296 may offer some insight into whether we could see another run at $1,280. This area roughly covers the ground between the 50 and 61.8 Fibonacci retracement levels but also coincides with prior support and resistance. A break of this may be a bearish near-term signal.

Daily Pivots: (S1) 1.1241; (P) 1.1264; (R1) 1.1298; More.....

EUR/USD is staying in tight range and intraday bias remains neutral for the moment. On the upside, above 1.1286 will extend the rise from 1.1183 for 55 day EMA (now at 1.1308) first. Sustained break will target 1.1448 resistance next. For now, we'd expect strong resistance between 1.1448/1569 to limit upside. On the downside, below 1.1210 minor support will turn bias to the downside. Decisive break of 1.1176 will resume the down trend from 1.2555.

In the bigger picture, medium term weakness was revived as the weak rebound from 1.1176 was rejected well below 55 week EMA and failed to sustain above 55 day EMA. Focus is back on 1.1176 low, with 61.8% retracement of 1.0339 (2016 low) to 1.2555 (2018 high) at 1.1186. Decisive break there will resume whole down trend from 1.2555. Such decline target 1.0339 low next. On the upside, firm break of 1.1569 resistance is needed to be the first sign of medium term bottoming. Otherwise, downside breakout will be in favor.

Daily Pivots: (S1) 1.3043; (P) 1.3083; (R1) 1.3129; More....

Intraday bias in GBP/USD remains neutral as consolidation continues in range of 1.2960/3381. Further rally remains mildly in favor with 1.2960 support intact. On the upside, decisive break of 1.3381 will extend the rise from 1.2391 and target 61.8% retracement of 1.4376 to 1.2391 at 1.3618 next. However, on the downside, sustained break of 1.2960 will indicate that rebound from 1.2391 has completed earlier than expected. Deeper fall would then be seen to 1.2773 support for confirmation.

In the bigger picture, medium term decline from 1.4376 (2018 high) should have completed at 1.2391. Rise from 1.2391 is seen as the third leg of the corrective pattern from 1.1946 (2016 low). Further rise could be seen through 1.4376 in medium term. On the downside, though, break of 1.2773 support will dampen this view. Focus will be turned back to 1.2391 low and break will resume the fall from 1.4376 to 1.1946.

Daily Pivots: (S1) 110.81; (P) 111.04; (R1) 111.25; More...

USD/JPY's strong rebound and break of 111.28 minor resistance argues that pull back from 111.82 has completed at 110.84 already. Intraday bias is turned back to the upside for 111.82/112.13 resistance zone first. Firm break there will resume larger rise from 104.69. On the downside, break of 110.84 will turn bias back to the downside for 109.71, to extend the corrective pattern from 112.13.

In the bigger picture, medium term outlook in USD/JPY remains a bit mixed as it's staying inside falling channel from 118.65, but there are signs of bullish reversal. On the upside, break of 114.54 resistance will revive the case the corrective fall from 118.65 has completed with three waves down to 104.69. And whole rise from 98.97 (2016 low) is resuming for 118.65 and above. But before that, outlook stays neutral first.

GBPCAD is rising after it found strong support at the 38.2% Fibonacci retracement level of the upward movement from 1.6590 to 1.7795, around 1.7335. The technical indicators are trying to strengthen their momentum, mirroring the market’s behavior over the last days as the RSI is approaching the 50 level, while the MACD is still holding in the bearish area but is edging higher.

Additional increases may drive the price towards the 20- and 40-day simple moving averages (SMAs) currently around the 23.6% Fibonacci of 1.7510, and then could challenge the nine-month high of 1.7615. Above the latter, the nine-month peak of 1.7795, registered on March 12 comes into view.

In case the pair changes its short-term direction to the downside, the bears would probably challenge the 1.7350 support and the 38.2% Fibonacci of 1.7335, which has been a congested area over the last month. A break lower, could last until the 1.7270 barrier.

In the more medium-term picture, the slightly bullish correction shifted to a stronger positive tendency, however, it failed several times over the last sessions to post a higher high.

The main market theme of ‘kicking the can’ down the road continues. The likely Brexit delay will not be solving the underlying problem any time soon.

The UK and the EU have agreed a “flexible extension” of Brexit until 31 October. EC President Donald Tusk has urged the UK to “not waste this time” and said the extension could be terminated if a withdrawal deal is agreed. The PM said the UK would still aim to leave the EU as soon as possible.

Even central banks, too, are helping with this kicking the can solution with easing of monetary policy, from the dovish Fed to the ECB using a negative interest-rate policy and targeted longer-term refinancing operations to help.

Equities are waiting for earnings season to kick off in earnest Friday with JPMorgan Chase & Co. and Wells Fargo & Co. releasing Q1 results. It should give the market a first glimpse at how the Fed’s cautious shift on monetary policy affected the biggest U.S banks at the start of the year.

IMF downgrades 2019 growth forecast

In its latest World Economic Outlook report this week, the IMF trimmed its 2019 global growth forecast to +3.3% from +3.5% in its previous report in January. That would be the weakest growth rate in a decade and the most recent downgrade is the third in six-months.

Trump takes the trade war to Europe

In another of his tweets, US President Trump highlighted that the WTO found EU subsidies to Airbus have adversely impacted the US, to the tune of +$11B. As a result, he threatened to impose tariffs on +$11B worth of EU goods.

In Europe, an EU-China summit this week was meant to boost cooperation, especially against Trump’s controversial policies. Instead, it highlighted the differences, led by growing trade tensions. Europe pressed China on unfulfilled promises. China agreed with the EU to end forced technology transfers and strengthen international rules on industrial subsidies. But, will they deliver?

On the Sino-U.S trade front there has been “little change” with ongoing dialogue continuing in the background. However, the two countries have “pretty much” agreed to open enforcement offices that will ensure each party sticks to the terms of said deal, when it comes.

Central banks

As expected, the ECB left the 7-Day main refinancing rate unchanged at +0.00%, while maintaining its forward guidance on rates. It also left its Deposit Facility Rate at -0.40% (as expected) and left the Marginal Lending Facility at 0.25% (as expected).

In its following statement, it reiterated its forward guidance that interest rates to “remain at their present levels at least through end of 2019 and for as long as necessary to ensure sustained convergence of inflation towards target.” Also, reiterated to reinvest QE debt for extended time after first rate hike. They made no reference to TLTRO’s in their policy decision.

Hungary Central Bank (MNB) March minutes showed that the decision to raise deposit rate by +10 bps was unanimous and reiterated that future steps to depend on findings of CPI reports. They expect to adopt a cautious approach as inflation development are “ambivalent.”

US inflation data

U.S consumer prices rose last month, driven by a rise in volatile oil prices. The CPI increased +0.41% in March. Ex-food and energy categories, core-prices rose just +0.15% from February.

Fed Governor Powell said what he sees is “inflation that’s close to +2%, but that sort of keeps bumping up against +2% and then maybe moving back down a little bit.” He does not “feel that we have kind of convincingly achieved our +2% mandate in a symmetrical way.”

On the Economic Calendar, no releases are scheduled for this weekend.

Market concerns:

• New trade war fronts opening up US/EU, US/USMCA, US/MEXICO
• U.K/Brexit fallout
• US-China trade deal – details may emerge
• Trans-Atlantic trade tensions to intensify
• OPEC, Saudis, Venezuela & Trump
• Venezuela/Russia/U.S tension
• Geo-political concerns in Russia, Ukraine & France
• India/Pakistan – tension remains high amongst two nuclear nations
• U.S ramps up trade talks with India and Turkey
• ‘Twitter Trump’
• Spanish snap elections expected to be full of surprises April 28

Next week: CAD BoC business outlook index, AUD monetary policy minutes & CNY GDP (Apr 15), GBP average earnings & NZD CPI (Apr 16), GBP & CAD CPI, CAD Trade, AUD employment (Apr 17), GBP, CAD & USD retail sales, NZD & AUD Bank holiday & AUD parliamentary elections (Apr 18), Bank holiday CHF, EUR, GBP & CAD (Apr 19).

Daily Pivots: (S1) 0.9999; (P) 1.0017; (R1) 1.0042; More...

USD/CHF's rise from 0.9879 extends to as high as 1.0046 so far. Intraday bias stays on the upside for 1.0124/28 resistance zone. Decisive break will resume larger up trend from 0.9186. On the downside, though, below 0.9977 minor support will turn bias back to the downside for 0.9879 support instead.

In the bigger picture, USD/CHF is still holding above medium term trend line. Rise from 0.9186 could still be in progress. Decisive break of 1.0128 will resume this medium term rally to 1.0342 resistance next. Meanwhile, sustained break of the trend line (now at 0.9884) will argue that whole rise from 0.9186 has completed. Further break of 0.9716 will confirm reversal and target next support level at 0.9541.

Dollar strengthens notably in early US session with help from another set of solid job data. Initial claims is back trending down and hit another low since 1969. 10-year yield is also recovering and could head back to 2.5 handle. Meanwhile, Euro is following as a close second. Canadian Dollar is the weakest one, followed by New Zealand and then Australian Dollar. Sterling is mixed as Brexit enters into another boring, over-time.

Technically, USD/CHF's rally is building up momentum for 1.024/28 resistance zone. USD/JPY's break of 111.28 minor resistance now puts focus back to 111.82 resistance. However, there is no clear side of Dollar strength elsewhere yet. The forex markets remain rather mixed overall.

In Europe, currently, FTSE is down -0.03%. DAX is up 0.28%. CAC is up 0.69%. German 10-year yield is up 0.0101 at -0.013, still negative. Earlier in Asia, Nikkei rose 0.11%. Hong Kong HSI dropped -0.93%. China Shanghai SSE dropped -1.60%. Singapore Strait Times rose 0.10%. Japan 10-year JGB yield dropped -0.0037 to -0.06.

US initial jobless claims dropped to 196k, another lowest since 1969

US initial jobless claims dropped -8k to 196k in the week ending April 6, below expectation of 210k. It's also the lowest since October 4, 1969, which it was 193k. Four-week moving average of initial claims dropped -7k to 207k, lowest since December 6 1969. Continuing claims dropped -13k to 1.713M. Four-week moving average of continuing claims dropped -11k to 1.735M. Also from the US, headline PPI accelerated to 2.2% yoy in March, well above expectation of 1.9% yoy. Core PPI slowed to 2.4% yoy, matched expectations.

Released, elsewhere, Canada new housing price index rose 0.0% mom in February, matched expectation. German CPI was finalized at 0.4% mom, 1.3% yoy in March, no revision. UK RICS house price balance improved to -24 in March, above expectation of -29. Japan M2 rose 2.4% yoy in March, matched expectations. Australian consumer inflation expectation slowed to 3.9% in April, down from 4.1%. China CPI accelerated to 2.3% yoy in March, matched expectations. PPI also rose to 0.4% yoy, matched expectations.

US Mnuchin on China trade talks: Both sides agreed to set up enforcement offices

In a CNBC interview yesterday, US Treasury Secretary Steve Mnuchin talked about some concrete progress in US-China trade negotiations, including the core issue of enforcement.

Mnuchin said: "We've pretty much agreed on an enforcement mechanism. We've agreed that both sides will establish enforcement offices that will deal with the ongoing matters. This is something both sides are taking very seriously… We are really focused on the execution of the documents."

Nevertheless he refused to put a timeline of the talks. "We are hopeful we can do this quickly, but we are not going to set an arbitrary deadline," Mnuchin said. "If we can complete this agreement, this will be the most significant changes to the economic relationship between the U.S. and China in really the last 40 years. The opening of the Chinese economy will be a tremendous opportunity with structural changes that will benefit U.S. workers and U.S. companies."

Chinese commerce ministry confirmed today that senior trade negotiators from both countries held phone calls earlier this week. Gao Feng, the ministry's spokesman said "in the next step, both trade teams will keep in close communication, and work at full speed via all sorts of effective channels to proceed with negotiations."

CBI Fairbairn: Businesses not dancing in the streets for Brexit delay

CBI Director General Carolyn Fairbairn, criticized that the Brexit delay till October 31 only provides "brief relief" for businesses. And they wouldn't be "dancing in the streets". Instead, it will be quickly followed by " frustration, exasperation, we're still here."

She added that "our huge hope off the back of this six-month reprieve is that it's used to set up a process and it's not just people locked in a room on their own which we've seen in the last few days."

ECB SPF: Economists downgrade Eurozone growth and inflation forecasts for 2019 and 2020

In the latest ECB survey for Q2, professional forecasters revised down growth, inflation and core inflation forecasts for both 2019 and 2020. Inflation are projected to be below ECB's 2% target over the whole forecast horizon. Also, the reported noted that "probability distributions continued to indicate relatively high uncertainty around expected inflation in two years' time."

On growth, "respondents considered the current level of uncertainty to be very high and to be having an economic impact, mainly via companies' investment decisions." Also "risks to the forecasts for real GDP growth remained to the downside." The most cited downside risks was "potential impact of a hard Brexit. Many respondents refer to "further escalation of trade conflict between US and China, an the apparent slowdown in China". "Very few"mentioned upside risks.

HICP inflation forecasts (previous at Q1 2019): 2019 at 1.4% (down from 1.5%). 2020 at 1.5% (down from 1.6%). 2021 at 1.6% (down from 1.7%). Longer term at 1.8% (unchanged).

HICP core inflation forecast: 2019 at 1.2% (down from 1.3%). 2020 at 1.4% (down from 1.5%). 2021 at 1.6% (unchanged). Longer term at 1.7% (unchanged).

GDP growth forecast: 2019 at 1.2% (down from 1.5%). 2020 at 1.4% (down from 1.5%). 2021 at 1.4% (unchanged). Longer term at 1.4% (down from 1.5%).

USD/CHF Mid-Day Outlook

Daily Pivots: (S1) 0.9999; (P) 1.0017; (R1) 1.0042; More...

USD/CHF's rise from 0.9879 extends to as high as 1.0046 so far. Intraday bias stays on the upside for 1.0124/28 resistance zone. Decisive break will resume larger up trend from 0.9186. On the downside, though, below 0.9977 minor support will turn bias back to the downside for 0.9879 support instead.

In the bigger picture, USD/CHF is still holding above medium term trend line. Rise from 0.9186 could still be in progress. Decisive break of 1.0128 will resume this medium term rally to 1.0342 resistance next. Meanwhile, sustained break of the trend line (now at 0.9884) will argue that whole rise from 0.9186 has completed. Further break of 0.9716 will confirm reversal and target next support level at 0.9541.

Economic Indicators Update