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Daily Pivots: (S1) 155.38; (P) 155.65; (R1) 156.02; More...

USD/JPY continues to lose upside momentum as seen in 4H MACD, but further rise is still mildly in favor. Rebound from 151.86, as the second leg of the corrective pattern from 160.20, could extend towards 157.98 resistance. On the downside, break of 154.23 will suggest that the third leg has started, and turn bias back to the downside for 151.86 support.

In the bigger picture, a medium term top might be formed at 160.20. But as long as 150.87 resistance turned support holds, fall from there is seen as correcting rise from 150.25 only. However, decisive break of 150.87 will argue that larger correction is possibly underway, and target 146.47 support next.

Daily Pivots: (S1) 0.9048; (P) 0.9066; (R1) 0.9084; More....

USD/CHF is staying above 0.9005 support despite today's dip and intraday bias remains neutral. Further decline is in favor as long as 55 4H EMA (now at 0.9082) holds. On the downside, break of 0.9005 and sustained trading below 55 D EMA (now at 0.9006) will bring deeper fall to 38.2% retracement of 0.8332 to 0.9223 at 0.8883. However, firm break of 55 4H EMA will suggest that the pull back has completed, and bring stronger rebound to retest 0.9223 high.

In the bigger picture, price actions from 0.8332 medium term bottom are tentatively seen as developing into a corrective pattern to the down trend from 1.0146 (2022 high). Rejection by 0.9243 resistance, followed by sustained break of 38.2% retracement of 0.8332 to 0.9223 at 0.8883 will strengthen this case, and maintain medium term bearishness. However, decisive break of 0.9243 will argue that the trend has already reversed and turn medium term outlook bullish for 1.0146.

Daily Pivots: (S1) 1.2504; (P) 1.2523; (R1) 1.2543; More...

GBP/USD is staying below 1.2633 resistance despite today's rally. Intraday bias remains neutral for the moment. Further rise is mildly in favor with 1.2445 support intact. On the upside, break of 1.2633 will resume the rally from 1.2298 to 1.2708 resistance next. However, firm break of 1.2445 will indicate that this rebound has completed, and revive near term bearishness. Retest of 1.2298 should then be seen in this case.

In the bigger picture, price actions from 1.3141 medium term top are seen as a corrective pattern. Fall from 1.2892 is seen as the third leg which might have completed already. Break of 1.2892 resistance will argue that larger up trend from 1.0351(2022 low) is ready to resume through 1.3141. Meanwhile, break of 1.2298 support will extend the corrective pattern instead.

Daily Pivots: (S1) 1.0757; (P) 1.0773; (R1) 1.0787; More...

EUR/USD is staying below 1.0810 resistance despite today's rise. Intraday bias remains neutral at this point. Further rally is expected as long as 55 4H EMA (now at 1.0751) holds. On the upside, above 1.0810 will resume the rebound from 1.0601 to 1.0884 resistance next. However, firm break of 55 4H EMA will argue that the rebound has completed, and turn bias to the downside for 1.0648 support instead.

In the bigger picture, price actions from 1.1274 are viewed as a corrective pattern. Fall from 1.1138 is seen as the third leg and could have completed. Firm break of 1.1138 will argue that larger up trend from 0.9534 (2022 low) is ready to resume through 1.1274 high. On the downside, break of 1.0601 will extend the corrective pattern instead.

Fresh selling is seen in Yen and Dollar in early US session, as the markets are going through a quiet day. There is no immediate fundamental catalyst identified for these movements. Traders might be repositioning ahead of significant US economic data releases scheduled for later in the week. Producer Price Index on Tuesday will offer early insights into upstream inflation, but the primary focus remains on Wednesday's Consumer Price Index release.

Meanwhile, Australian Dollar is trading as the strongest performer, dismissing weak business conditions data. Aussie is set to face its own pivotal moment with the release of employment data on Thursday. Euro and Sterling follow as the second and third strongest currencies, respectively, with traders looking forward to German ZEW economic sentiment data and UK employment figures due tomorrow. New Zealand Dollar turn mixed, recovering from earlier selloff, while Canadian Dollar and Swiss Franc are mixed in the middle.

Technically, AUD/JPY's rebound continues today. Further rally is in favor as long as 102.45 minor support holds, despite loss of upside momentum as seen in 4H MACD. Rise from 99.89 is seen as the second leg of the corrective pattern from 104.91. Hence, upside should be capped by this resistance. On the downside, break of 102.45 will argue that the pattern has already started the third leg for 99.89 support.

In Europe, at the time of writing, FTSE is down -0.21%. DAX is down -0.25%. CAC is down -0.24%. UK 10-year yield is down -0.0335 at 4.140. Germany 10-year yield is down -0.302 at 2.494. Earlier in Asia, Nikkei fell -0.13%. Hong Kong HSI rose 0.80%. China Shanghai SSE fell -0.21%. Singapore Strait Times rose 0.39%. Japan 10-year JGB yield rose 0.0315 to 0.941.

China launches ultra-long bond sale

China's Ministry of Finance announced it will commence the sale of the first batch of a significant issuance of ultra-long special sovereign bonds this week, with plans to distribute CNY 1T across various tenors ranging from 20 to 50 years.

The ministry detailed that 30-year bonds would be issued in twelve tranches stretching from May 17 to November 15. Additionally, 20-year bonds will begin selling in seven phases starting May 24. 50-year bonds are scheduled for issuance in three parts, also commencing on May 17.

China's Premier Li Qiang has emphasized the importance of these bonds in supporting the execution of major national strategies and enhancing security capabilities in critical sectors, as reported by state media.

USD/CNH resumed the rebound from 7.1648 today, and the break of 55 D EMA argues that pull back from 7.2827 has completed already. Retest of 7.2827 will resume whole rise from 7.0870, as the second leg of the corrective pattern from 7.3679.

RBNZ survey shows moderating short-term inflation expectations

According to RBNZ Business Expectations Survey for Q2, respondents have lowered their expectations for CPI inflation in both the short-term and medium-term, while their long-term CPI inflation expectations have remained stable.

Specifically, one-year-ahead annual inflation expectations have notably decreased by 49 bps, moving from 3.22% to 2.73%. Two-year-ahead inflation expectations also saw a decline from 2.50% to 2.33%. Five-year-ahead inflation expectations are holding steady at 2.25%. Ten-year-ahead expectations edged up slightly by 3bps, from 2.16% to 2.19%.

Regarding the Official Cash Rate, survey respondents anticipate that it to 5.46% by the end Q2, similar to current rate at 5.50%. Looking further ahead, they forecast a reduction in OCR to 4.79% by the end of Q1 2025, marking a slight increase from last quarter's prediction of 4.74%. These expectations align with anticipation of approximately three rate cuts by the end of Q1 next year.

NZ BNZ services dips to 47.1, lowest since early 2022

New Zealand's BusinessNZ Performance of Services Index ticked down from 47.2 to 47.1 in April, marking the lowest level since January 2022.

Breaking down the components of the index reveals mixed signals: Activity and sales saw a modest improvement, rising from 44.8 to 46.5. However, employment took a downturn, dropping from 49.9 to 47.1, recording its lowest level since February 2022. New orders and business also declined slightly to 47.1, from 47.9. Stocks and inventories remained unchanged at 46.6, while supplier deliveries worsened, falling from 48.6 to 47.6—the lowest since November 2022.

The feedback from businesses has increasingly skewed negative, with 66.3% of comments in April being pessimistic, up from 63.0% in March and 57.3% in February. Many respondents highlighted the difficult economic environment and persistent inflationary pressures as significant concerns.

Doug Steel, a senior economist at BNZ, commented on the broader implications of these figures, stating, "combining today's weak PSI with last week's PMI yields a composite reading that would be consistent with GDP tracking below year earlier levels into the middle of this year." He further noted that the combined index suggests there could be "some downside risk" to their current economic forecasts.

Australia's NAB business confidence steady at 1, conditions normalize with slowing cost growth

Australia's NAB Business Confidence held steady at 1 in April. Business Conditions index fell from from 9 to 7. Notably, trading conditions declined from 15 to 12, while profitability was unchanged at 6. A significant reduction was observed in employment conditions, which dropped from 6 to 2.

NAB Chief Economist Alan Oster reflected on these figures: "All three components of business conditions were back at their long-run averages in April." He described this as a milestone, marking a normalization after the unusually high levels of 2022, "reflecting slowing economic growth."

Labour cost growth decreased to 1.5% from 1.7%, and purchase cost growth slowed to 1.2% from 1.5%. Meanwhile, product price growth rose slightly to 0.9% from 0.7%. Retail price growth moderated significantly to 0.9% from 1.4%.

Oster noted, "There was some further improvement in the pace of cost growth in April, and a step down in the pace of retail price growth." He suggested these changes could indicate easing in inflation in the second quarter, though further observation is needed to confirm this trend.

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.0757; (P) 1.0773; (R1) 1.0787; More...

EUR/USD is staying below 1.0810 resistance despite today's rise. Intraday bias remains neutral at this point. Further rally is expected as long as 55 4H EMA (now at 1.0751) holds. On the upside, above 1.0810 will resume the rebound from 1.0601 to 1.0884 resistance next. However, firm break of 55 4H EMA will argue that the rebound has completed, and turn bias to the downside for 1.0648 support instead.

In the bigger picture, price actions from 1.1274 are viewed as a corrective pattern. Fall from 1.1138 is seen as the third leg and could have completed. Firm break of 1.1138 will argue that larger up trend from 0.9534 (2022 low) is ready to resume through 1.1274 high. On the downside, break of 1.0601 will extend the corrective pattern instead.

Economic Indicators Update

The British pound is slightly higher on Monday. GBP/USD is up 0.20%, trading at 1.2549 in the European session at the time of writing.

UK job growth expected to slide

The UK labor market has held up well despite high interest rates but cracks have appeared and Tuesday’s job report is expected to be soft. Employment change is expected to slide by 215,000 in the three months to March, after declining by 156,000 in the previous release.UK wage growth including bonuses is forecast to fall to 5.3%, down from 5.6% and the unemployment rate is expected to creep up to 4.3%, up from 4.2%.

The Bank of England will be keeping a close eye on Tuesday’s employment report. A decline in employment and wage growth will indicate that the labor market continues to cool down which could complicate the BoE’s plans to lower interest rates.

The UK ended last week on a high note, as GDP grew 0.6% q/q in the first quarter, higher than the 0.4% market estimate. The stronger data still left a question mark about the central bank’s rate path, as the market pricing of a rate cut in June is around 48%. BoE Governor was non-committal about a June hike at his press conference at last week’s policy meeting. Still, Bailey didn’t rule out a June hike and said that he was “optimistic that things are moving in the right direction”.

In the US, the University of Michigan consumer confidence index fell to 67.4 in May, compared to 77.2 in April and shy of the market estimate of 76.2. One-year inflation expectations rose from 3.2% to 3.5%, which indicates that consumers are less confident about inflation receding.

GBP/USD Technical

• GBP/USD tested support at 1.2522 earlier. Below, there is support at 1.2449
• 1.2597 and 1.2680 are the next resistance lines

China's Ministry of Finance announced it will commence the sale of the first batch of a significant issuance of ultra-long special sovereign bonds this week, with plans to distribute CNY 1T across various tenors ranging from 20 to 50 years.

The ministry detailed that 30-year bonds would be issued in twelve tranches stretching from May 17 to November 15. Additionally, 20-year bonds will begin selling in seven phases starting May 24. 50-year bonds are scheduled for issuance in three parts, also commencing on May 17.

China's Premier Li Qiang has emphasized the importance of these bonds in supporting the execution of major national strategies and enhancing security capabilities in critical sectors, as reported by state media.

USD/CNH resumed the rebound from 7.1648 today, and the break of 55 D EMA argues that pull back from 7.2827 has completed already. Retest of 7.2827 will resume whole rise from 7.0870, as the second leg of the corrective pattern from 7.3679.

The New Zealand dollar has edged lower on Monday. NZD/USD is down 0.17% on the day, trading at 0.6009 in the European session at the time of writing.

NZ inflation expectations ease to 2.3%

New Zealand’s inflation expectations fell to 2.3% in the second quarter, its lowest point since Q3 2021. This marked a third straight deceleration and the New Zealand dollar responded with modest losses. The steady drop in inflation expectations is an encouraging sign for the Reserve Bank of New Zealand but won’t translate into a rate cut in the near-term.

The New Zealand economy is sputtering and inflation fell to 4% in the first quarter, down from 4.7% in the fourth-quarter of 2023. Inflation is expected to continue falling but it has been stickier than expected and remains above the upper range of the 1-3% target band.

The central bank has shown its willingness to continue a “higher for longer stance” and has maintained the cash rate at 5.25% for six successive times. RBNZ policy makers are reluctant to start lowering rates until there is evidence that inflation will remain sustainable around 2% and that goal may not be achieved until 2025. The money markets expect the RBNZ to start cutting in the fourth quarter. The RBNZ meets next on May 22nd.

Last week, The Organization for Economic Cooperation and Development (OECD) stated that New Zealand’s inflation is “likely to be persistent” and urged the RBNZ not to lower rates until there was “clear evidence that inflation will fall to the middle of the RBNZ’s target range”. The OECD report noted that it was “uncertain” when inflation would fall to the RBNZ’s target range and there was a risk of “further negative global shocks”.

NZD/USD Technical

• NZD/USD is testing support at 0.6014. Below, there is support at 0.5987
• 0.6046 and 0.6073 are the next resistance lines

• US 100 stock index eyes March all-time high
• But latest upleg may have run its course
• Is a correction on the way or is a record peak in sight?

The US 100 stock index (cash) has recovered by more than 7% from the April dip when it hit a three-month low of 16,970.00. But despite climbing on top of the Ichimoku cloud and surpassing the 18,000.00 level, the bullish prospects for the near term have started to fade.

The stochastics are negatively aligned and edging lower within the overbought territory, while the 20-day simple moving average (SMA) has only just started to turn upwards. However, the MACD continues to send positive signals as it’s still rising above zero and above its red signal line.

If the bulls stay in charge, there could be some resistance near 18,300.00, as this has been a congested area in the past. Overcoming it would boost the index’s chances of challenging its record high of 18,467.15 and open the way for the 123.6% Fibonacci extension of the March-April downtrend at 18,820.48.

However, if the price slips back inside the Ichimoku cloud, the 18,000.00 mark is likely to be tested again – a support region that is signified by the 50-day SMA lurking slightly below it. Lower down, there are further strong support zones consisting of the cloud bottom and Tenkan-sen line around 17,775.00, and the 20-day SMA and 50% Fibonacci retracement around 17,700.00.

Should these barriers fail, the US 100 would be at risk of revisiting the April trough and entering a new bearish phase. But to sum up, as long as the price holds above the cloud, the short-term prospects should remain bullish, as should the longer-term outlook.

Market picture

Crypto market cap on Monday stands at $2.2 trillion, down 5.2% over seven days, although it showed some growth over the weekend. Local market capitalisation peaked on March 14th, but the active decline began about a month ago, with a sequence of lower lows and lower highs.

During the previous week, the crypto market held near the upper boundary of the descending channel. Cryptocurrencies are being helped by increased risk traction in stock markets. Still, there is also internal pressure, likely related to asset sell-offs by miners and fears of tighter regulation of cryptocurrencies.

Bitcoin is largely negatively impacting the overall performance of the crypto market right now. However, it has been finding plenty of buyer interest over the past two months, on a decline towards $60K. A failure below it could trigger something of a panic sell-off. The positive scenario, in our opinion, will become the main one with a rise above $65K, fixing the price at the 50-day moving average and the reversal area in early May.

News background

US venture capital fund Pantera Capital said it has invested a record amount in TON, which has not yet been disclosed. Pantera attributed the decision to invest in TON to the project’s potential to become one of the largest crypto networks. Toncoin (TON) rose nearly 20 per cent over the week, showing the best growth in the top 100 cryptocurrencies.

Ethereum co-founder Joseph Lubin said the US SEC is deliberately hindering innovation, threatening the future of the country’s financial system. According to him, “It looks like the SEC has reclassified Ethereum into a security without telling anyone.”

ARK Invest and 21Shares have excluded staking from the application to launch a spot Ethereum-ETF. This situation may indicate an attempt to “tidy up the paperwork” based on SEC comments despite the lack of official statements, according to Bloomberg.

Factor’s CEO Peter Brandt suggested that cryptocurrency staking could soon be recognised as an illegal activity.

According to a report for the SEC, Susquehanna, a trading and technology behemoth with $481bn in assets under management, has invested $1.2bn in various spot bitcoin ETFs.