Sample Category Title

New Zealand Dollar dips mildly as the new week began on a quiet note. This comes in wake of New Zealand weaker services data and the decline in short-term inflation expectations, which may provide some relief to RBNZ about the persistence of high inflation. However, the key question remains on the pace at which inflation will decline. Slower-than-expected disinflation ahead would still limited scope for RBNZ to initiate rate cuts within this year.

Elsewhere in the currency markets, Australian and Canadian Dollars also softened, trailing Kiwi as the next weakest. In contrast, Euro and Sterling appeared stronger, followed by relatively steady Dollar, while Swiss Franc is mixed. But as side from the Aussie and Kiwi, most major currencies remained within Friday's range against each other.

Today's economic calendar appears light, suggesting that trading might remain quiet. However, upcoming reports such as tomorrow's UK employment data and Wednesday's US retail sales and CPI could significantly increase market volatility.

Technically, NZD/USD's rebound from 0.5851 is still in favor to continue as long as 55 4H EMA (now at 0.5984) holds. Break of 0.6044 will target near term channel resistance. Sustained break there will argue that whole fall from 0.6368 has completed with three waves down to 0.5851, and turn near term outlook bullish. However, firm break of 55 4H EMA will argue that rebound from 0.5851 has completed, and retain near term bearishness instead.

In Asia, at the time of writing, Nikkei is down -0.43%. Hong Kong HSI is up 0.47%. China Shanghai SSE is down -0.08%. Singapore Strait Times is up 0.23%. Japan 10-year JGB yield is up 0.038 at 0.947.

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.

US CPI and retail sales, UK jobs, and more

US CPI is a major highlight of the week while retail sales will also be released on the same day. Expectations are set for the headline CPI to fall back 3.5% to 3.4% in April. Core CPI is expected to resume its down trend and decrease from 3.8% to 3.6%.

If realized, these anticipated declines do represent modest progress. However, the broader concern remains that momentum in disinflation that was evident last year has largely diminished. This is attributed to a robust labor market that continues to fuel strong consumer spending despite elevated prices and borrowing costs.

Any upside surprises in inflation figures could revive speculations around the necessity for further rate hikes by Fed, with the current rate level of 5.25-5.50% deemed insufficiently restrictive. Currently, Fed funds futures indicate 61.2% probability of a rate cut in September, with 52.6% chance of two rate cuts within the year. These expectations could shift dramatically following the CPI release.

In the UK, job data will also be closely watched. BoE Governor Andrew Bailey has stated clearly that a June rate cut is "neither ruled out nor a fait accompli." For BoE to consider starting monetary easing, there will need to be additional loosening in the job market, and more substantial slowing in wage growth.

Additionally, other significant economic indicators due this week include Germany's ZEW economic sentiment, Japan's GDP, Australia's wage price index and employment figures, and a series of reports from China, including industrial production, retail sales, and fixed asset investment.

Here are some highlights for the week:

• Monday: New Zealand BNZ services, inflation expectations; Australia NAB business confidence; Swiss SECO consumer climate; Canada building permits.
• Tuesday: Japan PPI; UK employment; Swiss PPI; Germany CPI final, ZEW economic sentiment; Canada wholesale sales; US PPI.
• Wednesday: Australia wage price index; Eurozone GDP revision, industrial production; Canada housing starts, Manufacturing sales; US CPI, retail sales, Empire state manufacturing, business inventories, NAHB housing index.
• Thursday: Japan GDP; Australia employment; US jobless claims, building permits and housing starts, industrial production.
• Friday: New Zealand PPI; China industrial production, retail sales, fixed asset investment; Eurozone CPI final; US leading index.

USD/CAD Daily Outlook

Daily Pivots: (S1) 1.3641; (P) 1.3667; (R1) 1.3698; More...

Intraday bias in USD/CAD remains neutral for the moment. On the upside, break of 1.3761 resistance will argue that correction from 1.3845 has already completed. Intraday bias will be back to the upside to resume larger rally from 1.3176 through 1.3845. However, sustained trading below 55 D EMA (now at 1.3630) will argue that whole rise from 1.3176 has completed already, and bring deeper fall to 1.3477 support next.

.

In the bigger picture, price actions from 1.3976 (2022 high) are viewed as a corrective pattern. In case of another fall, strong support should emerge above 1.2947 resistance turned support to bring rebound. Firm break of 1.3976 will confirm up resumption of whole up trend from 1.2005 (2021 low). Next target is 61.8% projection of 1.2401 to 1.3976 from 1.3176 at 1.4149.

Economic Indicators Update

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.

Full RBNZ business expectations survey here.

Inflation expectations have continued to fall. That will help to quell the RBNZ concerns about the longer-term inflation outlook.

Inflation expectations

• One year ahead:  2.73% (Prev: 3.22%, down 49 points)
• Two years ahead:  2.33% (Prev: 2.50%, down 17 points)
• Five years ahead:  2.25% (Prev: 2.25%, unchanged)
• Ten years ahead:  2.19% (Prev: 2.16%%, up 3 points)

Expectations for inflation over the next few years have continued to drop back in the RBNZ’s latest Survey of Expectations. That follows the fall in actual inflation in recent months.

Looking at the detail of the June quarter report:

• Expectations for inflation one year ahead have fallen sharply for a second quarter, dropping to 2.7%, down from 3.2% in the previous survey.
• Similarly, the closely-watched 2 years ahead measure dropped to 2.33%, down from 2.50% last quarter. This measure is now back around the average seen since 2002 (when we shifted to a 1 to 3% target range for inflation).
• Expectations for inflation 5 and 10 years ahead held broadly steady a little above 2%.

The importance of this survey in the RBNZ’s policy deliberations has fallen over time, with the RBNZ instead preferring to look at a range of different measures of inflation pressures. Even so, today’s result will be welcome news for the RBNZ, and will help to reinforce expectations that inflation will continue to drop back over the course of this year.

The big question for the RBNZ is “how fast will inflation decline?” Over the past year we’ve seen that domestic inflation pressures are proving to be ‘sticky’ – lingering at higher levels than the RBNZ and other forecasters (including ourselves) have expected. Consistent with that, this morning’s monthly price update from Stats NZ pointed to continued upside pressure. While today’s fall in inflation expectations will help to quell concerns about the persistence of domestic inflation, we still think that inflation will fall more gradually than the RBNZ has assumed. Consistent with that, we’re not forecasting rate cuts until early next year.

Key Highlights

• EUR/USD started a decent increase and climbed above 1.0750.
• A key bullish trend line is forming with support at 1.0700 on the 4-hour chart.
• Gold prices cleared the $2,335 resistance to move into a positive zone.
• Oil prices are showing bearish signs below the $80.00 region.

EUR/USD Technical Analysis

The Euro started a decent increase above the 1.0685 resistance against the US Dollar. EUR/USD cleared the 1.0720 resistance to move into a positive zone.

Looking at the 4-hour chart, the pair surpassed the 50% Fib retracement level of the downward move from the 1.0885 swing high to the 1.0601 low. It also settled above the 100 simple moving average (red, 4-hour) and tested the 200 simple moving average (green, 4-hour).

The bears are now active near the 1.0800 level. The first major resistance is near 1.0820 or the 76.4% Fib retracement level of the downward move from the 1.0885 swing high to the 1.0601 low.

A clear move above the 1.0820 resistance might send it toward the 1.0865 level. Any more gains might call for a move toward the 1.0920 level in the near term.

Immediate support is near the 1.0740 level and the 200 simple moving average (green, 4-hour). The next major support is at 1.0720. There is also a key bullish trend line forming with support at 1.0700 on the same chart.

If there is a downside break below the 1.0720 support, the pair might test 1.0665. Any more losses might send the pair toward 1.0600.

Looking at Oil, the bears are active below the $80.00 resistance zone and they might aim for more losses in the near term.

Economic Releases

• Eurogroup Meeting.
• Fed's Jefferson speech.

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.

Full Australia NAB business confidence release here.

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.

Full NZ BNZ PSI release here.

Key themes: A sharp fall US consumer confidence added to evidence that the US economy is losing some momentum. However, an uptick in consumer inflation expectations complicated the picture, prompting suggestions of the risk of stagflation. A flurry of Fed speakers reinforced higher for longer messaging but backed up Jerome Powell in watering down the risk of further rate hikes.

US equities unwound early gains but finished in the green, posting a third consecutive weekly rise.

Treasury yields rose across the curve but remained broadly within the last week’s trading range.

The higher yield structure supported the US dollar which gained against the Yen, the euro, the Pound and the Aussie.

Share markets: US equities started strongly on Friday night but lost ground following the consumer sentiment report which showed expectations soured and inflation expectations rose. The S&P 500 rose 0.2% to close the week up 1.9%, the third consecutive weekly gain. The NASDAQ was flat on Friday but ended the week 1.1% higher.

The ASX 200 rose 0.4% on Friday. Futures traded lower, pointing to a soft start to the week.

Interest rates: US treasury yields rose across the curve, supported by higher consumer inflation expectations and further comments from Fed officials reinforcing higher for longer interest rates. The 2-year yield rose 5 basis points to 4.87%, while the 10-year yield increased 4 basis points to 4.50%. There remains one 25-basis point Fed rate cut fully priced by the end of the year. The implied probability of a second has pulled back to around 60%.

The Aussie 3-year futures yield rose 3 basis points to 3.99%, while the 10-year yield rose 4 basis points to 4.37%. Market pricing for interest rates suggests the RBA will leave rates unchanged for the remainder of 2024, with a very slight risk of a rate hike priced in.

Foreign exchange: The higher rates structure provided the US dollar with a mild tailwind. The DXY rose from a low of 105.14 to a high of 105.40 and is currently trading around 105.30. However, a clear downtrend since mid-April remains in-tact alongside increasing signs economic growth is fatiguing.

The Aussie dollar slipped from a high of 0.6623 to a low of 0.6596 but managed to regain some ground to finish above the 66-cent handle. The euro, Japanese Yen and British Pound all. The USD/JPY tested and failed resistence at the 156 level for a second consecutive session.

Commodities: The West Texas Intermediate (WTI) price of oil fell 1.3% to US$78.26 per barrel. Copper (1.2%) and gold (0.6%) both gained while iron ore (-0.3%) slipped.

Australia: There were no major economic data releases on Friday.

China: The consumer price index (CPI) rose just 0.3% over the year to April suggesting sluggish demand continues to weigh on the economy. However, the slim price increase was slightly stronger than expected and marked an improvement on March’s reading which narrowly skirted deflation.

The producer price index (PPI), which measures prices faced by businesses, recorded an annual fall for a 19th consecutive month, dropping 2.5% over the year to April. The weak PPI is a sign that deflationary risks remain and that the economy likely requires further policy support for the tentative economic recovery to gain additional momentum.

The current account surplus narrowed to US$39.2bn in the March quarter, down from a $56.2bn surplus in the December quarter.

Japan: The current account surplus widened to a record ¥3.4tr in March from ¥2.6tr in February.

United Kingdom: Activity bounced back solidly from a shallow recession at the end of last year. GDP rose 0.6% in the March quarter, beating expectations for a 0.4% quarterly gain and marking the strongest quarter gain in over two years. In annual terms, GDP growth swung form a 0.2% decline to a 0.2% increase.

Business investment and industrial production surprised to the upside, while there was a smaller than expected drag from imports. This helped offset weakness in private consumption, government spending and in construction activity.

United States: Consumer sentiment soured in March falling to its weakest level in six months. The University of Michigan consumer sentiment index fell to 67.4 in May, falling short of expectations of 76.2 and representing a sharp fall on April’s reading of 77.2. Perceptions of both current future economic conditions deteriorated, while both short and long-term inflation expectations ticked up marginally to 3.5% and 3.1%, respectively. The rise in inflation expectations likely reflects stalling disinflation progress and will do little to help cool price pressures.

Several Fed members spoke on Friday, echoing the higher-for-longer messaging from Jerome Powell and reinforcing the expectations that further rate hikes are unlikely to be necessary.

Chicago Fed President Austan Goolsbee said he doesn’t see much evidence inflation I stuck above the Fed’s target but was reluctant to say when rate cuts might be appropriate. Lorie Logan, Dallas Fed Chief, said “it’s just too early to think about cutting rates” while Fed Governor Michelle Bowman said she doesn’t expect it will be appropriate for the Fed to cut interest rates in 2024, pointing to persistent inflation in the first several month of the year.

Gold and silver have been enjoying a return to demand since early May, and buyers have stepped up in the last couple of days, bringing gold back above $2370 and silver back above $28.5.

Silver has recovered to the $28.0-28.8 area from where it reversed down in April after a few days of consolidation. This week’s upward momentum revives the idea that the decline in the second half of April was a corrective pullback. The area of local lows in early May roughly coincides with the 61.8% pullback from the upside momentum from late February to the upper boundary of the consolidation area we discussed above.

This bullish scenario will be confirmed if the price consolidates above $28.8, which would open the way to the $33 area as a potential first stop. However, we need to remember that Silver has failed to do so for the past 11 years, with three significant episodes in 2020 and 2021 before the April test.

Gold is about half as far behind silver in terms of relative recovery momentum and has not yet been able to recoup all the losses from the 22 April price hit. However, we should consider that gold quotes have been periodically updating historical highs since February.

In gold, we can also consider the April retreat as a correction to the area of 76.4% of the growth impulse from the minimum close of the day in February to the maximum close in April. In this case, the growth target becomes the area of $2640 (161.8% of the initial rally).

At the same time, a further rise in the price of gold with high bond yields in developed countries, huge budget deficits in many countries and the need to support the economy makes one think that the upside potential is limited. Until gold and silver reach a new level, we doubt the success of a new attack on the highs and see the potential for a renewed decline.

EUR/USD: Medium-Term Outlook Favours the Dollar

Throughout the past week, EUR/USD exhibited mixed dynamics, primarily driven by expectations concerning potential interest rate cuts by the US Federal Reserve (Fed) and the European Central Bank (ECB). Statements by officials from both central banks, as well as economic macro-statistics, either heightened or lowered these expectations.

The EUR/USD bullish rally commenced on 16 April from the 1.0600 mark, reaching a peak of 1.0811 on 3 May, after which growth stalled, starting the past week at 1.0762. On Monday, 6 May, statistics from the Eurozone provided some support to the common European currency. In April, the Services Purchasing Managers' Index (PMI) rose from 52.9 to 53.3, exceeding the forecast of 52.9. The Composite PMI, which includes the manufacturing sector and services, increased from 51.4 to 51.7. Germany's Composite PMI also showed positive dynamics, rising from 50.5 to 50.6. Consequently, business activity in the Eurozone reached its highest level in almost a year. Moreover, retail sales in the region showed significant growth, rising from -0.5% to +0.7% year-on-year.

This news backdrop suggests potential inflation growth, which in theory could deter the ECB from initiating a monetary policy easing. However, ECB Chief Economist Philip Lane stated that the Executive Board of the bank has compelling arguments for a rate cut at the 6 June meeting. Another ECB representative, Lithuanian Central Bank head Gediminas Simkus, indicated that rate cuts should not be limited to June, suggesting it could happen thrice by the end of the year. However, while the likelihood of easing (QE) in June is near 100%, there is some uncertainty regarding further steps. ECB Vice President Luis de Guindos admitted that the regulator is cautiously forecasting any trends beyond June.

In addition to ECB officials' statements supporting easing, statistics released on Tuesday, 7 May, also contributed. They showed that manufacturing orders in Germany, the locomotive of the European economy, decreased by 0.4% in March after a 0.8% decline in February. As a result, the EUR/USD pair's growth halted, pulling back to 1.0723.

The pair made another attempt to break through the strong resistance zone of 1.0790-1.0800 on Thursday, 9 May, when US initial jobless claims data was unexpectedly reported at 231K, much worse than the expected 210K. This coincided with a widespread negative session for US yields along the curve. The situation worsened as the unemployment data confirmed concerning statistics released on 3 May. According to the US Bureau of Labor Statistics (BLS), non-farm payrolls (NFP) rose by just 175K in April, significantly below the March figure of 315K and market expectations of 238K. The employment report also showed an increase in unemployment from 3.8% to 3.9%.

Besides combating inflation, the Fed's other declared main goal is maximum employment. "If inflation remains stable and the labor market strong, it would be appropriate to delay rate cuts," stated Fed Chair Jerome Powell. Now, the strength of the labour market is in question. However, the Fed is likely to focus on fighting inflation, which is still far from the 2.0% target.

A key inflation indicator tracked by the Fed, the Personal Consumption Expenditures (PCE) Price Index, rose from 2.5% to 2.7% in March. However, the ISM Manufacturing PMI fell below the key 50.0 mark, dropping from 50.3 to 49.2 points. Remember, a level of 50.0 separates economic growth from contraction. In such a situation, raising the interest rate is inadvisable, but lowering it is also not an option. This is exactly what the FOMC (Federal Open Market Committee) of the Fed did. At its meeting on Wednesday, 1 May, its members unanimously left the rate unchanged at 5.50%. This is the highest rate in 23 years, and the US central bank has kept it unchanged for six consecutive meetings.

The main scenario foresees the Fed beginning to review the rate towards a decrease no earlier than autumn, likely in September, with another cut by year-end. However, if US inflation does not decline or, worse, continues to rise, the regulator may abandon monetary policy easing until early 2025. Thus, considering the above, many analysts believe the medium-term advantage remains with the dollar, and EUR/USD is still attractive for sales with a horizon of several months.

The final point of the week for EUR/USD was at 1.0770, making the weekly result almost zero. Regarding the forecast for the near term, as of the evening of 10 May, it is maximally neutral: 50% expect dollar strengthening, and 50% expect its weakening. Trend indicators on D1 are equally divided: half are on the side of the reds, and half are on the side of the greens. Among oscillators, only 10% voted for the reds, another 10% remained neutral, and 80% voted for the greens (although a quarter of them are already signalling overbought conditions). The nearest support for the pair is located in the 1.0710-1.0725 zone, followed by 1.0650, 1.0600-1.0620, 1.0560, 1.0495-1.0515, 1.0450, 1.0375, 1.0255, 1.0130, and 1.0000. Resistance zones are in the regions of 1.0795-1.0810, 1.0865, 1.0895-1.0925, 1.0965-1.0980, 1.1015, 1.1050, and 1.1100-1.1140.

In the coming week, on Tuesday, 14 May, consumer inflation data (CPI) in Germany and the Producer Price Index (PPI) in the US will be released. Also scheduled for this day is a speech by Fed Chair Jerome Powell. The next day, Wednesday, 15 May, important indicators such as Consumer Price Index (CPI) and retail sales volumes in the United States will be published. On Thursday, 16 May, the traditional number of initial jobless claims in the US will be announced. And at the very end of the working week, on Friday, 17 May, we will learn the Eurozone CPI as a whole, which may influence the ECB's decision regarding the euro interest rate.

GBP/USD: Pound Remains Under Pressure but Holds On

At its meeting on Thursday, 9 May, the Bank of England's (BoE) Monetary Policy Committee maintained the interest rate at 5.25%, the highest in 16 years. Economists polled by Reuters mostly expected borrowing costs to remain unchanged, with a committee vote ratio of 8 to 1. However, the vote was 7 to 2. During discussions, two committee members supported a rate cut to 5.0%, which market participants interpreted as a step towards the beginning of a policy easing cycle.

At the post-meeting press conference, BoE Governor Andrew Bailey expressed optimism, stating that the UK economy is moving in the right direction. Bailey also noted that "a rate cut next month is quite possible," but he intends to wait for data on inflation, activity, and the labour market before making a decision. Chief Economist Huw Pill, although he joined the majority in voting to keep the rate unchanged, also expressed growing confidence that the time for a reduction is approaching. He added that "focusing only on the next Bank of England meeting [20 June] is somewhat unreasonable" and that "medium-term inflation forecasts do not necessarily signal rate movements at the next or subsequent meetings."

Overall, the movement of the GBP/USD pair last week resembled that of the EUR/USD pair. The chart shows a distinct surge on Thursday, 9 May, triggered by data indicating a cooling US labour market. The pound was also supported by optimistic GDP data for the UK for Q1 2024 and manufacturing sector data for March.

GDP (quarter-on-quarter) rose by +0.6% after a decline of -0.3% in the previous quarter (forecast +0.4%). Additionally, the GDP grew by +0.2% year-on-year, recovering from a fall of -0.2%.

As with the euro, the pound is under pressure from the prospect of earlier monetary policy easing by the BoE compared to the Fed. However, the British currency ended the past week above the key 1.2500 level, at 1.2523. Moreover, 65% of analysts expect the pair not only to hold above this horizon but also to continue its growth. The remaining 35% voted for the pair's movement south. As for technical analysis, trend indicators on D1 are split 50-50. Among oscillators, only 10% recommend selling, 40% took a neutral position, and 50% recommend buying (10% of them signal overbought conditions). If the pair rises, it will encounter resistance at levels 1.2575-1.2610, 1.2695-1.2710, 1.2755-1.2775, 1.2800-1.2820, and 1.2885-1.2900. In case of a fall, it will face support levels and zones at 1.2490-1.2500, 1.2450, 1.2400-1.2410, 1.2300-1.2330, 1.2185-1.2210, and 1.2070-1.2110, 1.2035.

The upcoming week's calendar highlights Tuesday, 14 May, when data from the UK labour market will be released. Also of interest is the Inflation Report hearing scheduled for Wednesday, 15 May.

USD/JPY: $50 Billion Interventions Wasted?

It seems that until the Bank of Japan (BoJ) takes confident and clear steps to tighten its monetary policy, nothing will help the yen. At its meeting on 26 April, the board members of this regulator unanimously decided to leave the key rate and QE program parameters unchanged. Expectedly tough comments on the outlook were also absent. This inaction increased pressure on the national currency, sending the USD/JPY pair to new heights. It continued its cosmic saga, reaching a new 34-year high of 160.22. Following this, Japan's financial authorities finally decided on a double currency intervention. Although there was no official confirmation, experts estimate its total volume at $50 billion.

Did it help? Judging by the USD/JPY chart, not really. The pair headed north again last week. Unlike the euro and the British pound, the yen barely reacted even to weak US labour market data on Thursday, 9 May, only slowing its decline.

All this occurs amid endless statements from the Japanese Central Bank and Ministry of Finance about their readiness to take necessary measures to reduce speculative pressure on the national currency. The published minutes of the BoJ meeting show that most board members took a "hawkish" stance, calling for a rate hike. However, many analysts believe that the Bank of Japan will take only one such step in the second half of the year.

The last chord of the past five days sounded at 155.75. Economists at Singapore's United Overseas Bank Limited (UOB) expect the USD/JPY pair to trade in the 154.00-157.20 range in the next 1-3 weeks. UOB also believes that the chances of it falling to 151.55 have significantly diminished. Overall, most experts (70%) simply shrug their shoulders in uncertainty. The remaining 30% persistently expect the yen to strengthen. As for technical analysis, 100% of trend indicators on D1 look north. Among oscillators, 50% are such, 15% point south, and 35% point east. Regarding support/resistance levels, traders should note that with such volatility, the slippage can reach many tens of points. The nearest support level is around 155.25, followed by 154.70, 153.90, 153.10, 151.85-152.25, 151.00, 150.00, after which come 146.50-146.90, 143.30-143.75, and 140.25-141.00. Resistance levels are 156.25, 157.00, 157.80-158.00, 158.60, 159.40, and 160.00-160.25.

Events of the upcoming week include the release on Thursday, 16 May, of preliminary GDP data for Japan for Q1 2024. No other significant publications regarding the Japanese economy are expected in the coming week.

CRYPTOCURRENCIES: A Week of Reflection and Uncertainty

What will happen to bitcoin in the foreseeable future? It seems there is no clear answer to this question. Experts and influencers often point in opposite directions: some shoot for the stars, while others keep their eyes on the ground.

For instance, according to the founder of Pomp Investments, Anthony Pompliano, bitcoin is "stronger than ever." He concluded this based on the 200-day moving average (200 DMA) reaching its ATH (All-Time High) of $57,000. Michael Saylor, CEO of MicroStrategy, is also optimistic. In his latest message, he urged investors to "run with the bulls." (It should be noted here that MicroStrategy holds 205,000 BTC on its balance sheet, so Saylor's bullish calls are quite understandable. He simply has to do this for his company to profit rather than incur losses).

However, analysts note that bitcoin's fate depends not only on the rosy calls of the MicroStrategy CEO. And if buyer support weakens, BTC could break through the key support level of $61,000, falling to the $56,000 zone, where significant liquidity is concentrated. MN Trading founder Michael Van De Poppe does not rule out another correction to around $55,000. However, the specialist quickly reassures investors, stating that this is quite acceptable as long as bitcoin holds above $60,000. Anthony Pompliano believes that the price will not fall below $50,000, and another expert, Alan Santana, does not rule out a drop to $30,000.

Trader and analyst Rekt Capital believes that the first cryptocurrency has exited the post-halving "danger zone" and entered the initial phase of re-accumulation. According to this expert, in 2016, BTC demonstrated a long red candle after the halving, falling by 17%. This time, the pattern repeated, with the difference between the post-halving maximum and minimum being 16%. The price reached a local bottom at around $56,566 but then rose to $65,508, on which Rekt Capital concluded that it re-entered the "re-accumulation range." However, there is one "but" - after this, we again observed a drop to $60,175. Overall, it seems that BTC/USD is in a descending channel, which increases investor concern.

In general, the forecasts are quite diverse. Information on the activity of various categories of traders and investors also varies. Analyst and CMCC Crest co-founder Willy Woo noted the activity of so-called crypto dolphins and sharks. "There has never been such a rapid purchase of coins by wealthy holders as in the last two months when the price fluctuated between $60,000-70,000. We are talking about those who hold from 100 BTC to 1000 BTC or approximately $6.5-65 million," he explained. On the other hand, according to CryptoQuant analysts, whales holding from 1000 to 10000 BTC, unlike dolphins and sharks, have behaved quite passively. Michael Van De Poppe, for his part, notes the absence of retail investors.

All this suggests that we may not see new all-time highs for BTC in the coming months. We wrote about this in the previous review, citing, among other things, the opinion of such a Wall Street legend as Factor LLC head Peter Brandt. With a 25% probability, he assumed that bitcoin had already formed another ATH within the current cycle.

As for long-term forecasts, nothing has changed here - most of them predict a powerful bull rally for bitcoin. Anthony Pompliano writes about this. Willy Woo expects bitcoin to continue increasing its penetration into various spheres of everyday life, meaning the number of users will grow. "By 2035, we expect bitcoin's fair value to reach $1 million. This forecast is based on the user growth curve. And I'm talking about fair value, not a peak during a bull market frenzy," the analyst notes.

The author of the bestseller "Rich Dad Poor Dad," entrepreneur Robert Kiyosaki, once again included bitcoin in the TOP-3 ways to save and increase capital. "Bad news: the [currency market] crash has already begun. It will be severe. Good news: a crash is the best time to get rich," he wrote, offering several recommendations on how to act in a crisis. Let's note two of them. The first reads: "Find an additional source of income. Artificial Intelligence will destroy millions of jobs. Start a small business and become an entrepreneur, not an employee afraid of losing a job." "Don't hoard fake money (US dollar, euro, yen, peso) that is losing value. Hoard gold, silver, and bitcoin - real money whose value increases, especially in a market crash," is Kiyosaki's second recommendation.

Regarding bitcoin's growth, Kiyosaki is absolutely right; it's even pointless to argue. According to a study by Colin Wu, better known as WuBlockchain, over the past decade, the price of the leading cryptocurrency has grown by an astonishing 12,464%, outpacing giants like Amazon, Apple, Google, Meta, Tesla, and Netflix. BTC was second only to Nvidia (+17,797%). But the fact that bitcoin took second place, being a representative of a relatively new and volatile market, is a real achievement. BTC's impressive growth trajectory over the past decade demonstrates its resilience and potential as an essential component in investors' portfolios.

At the time of writing this review, on the evening of Friday, 10 May, the BTC/USD pair is trading at $60,470. The total market capitalization of the crypto market is $2.24 trillion ($2.33 trillion a week ago). The Crypto Fear & Greed Index has risen from the Neutral zone (48 points a week ago) to the Greed zone, now standing at 66 points.