Sample Category Title

Daily Pivots: (S1) 0.9043; (P) 0.9056; (R1) 0.9076; More....

Intraday bias in USD/CHF is turned neutral with current recovery and some consolidations could be seen. But risk will remain on the downside as long as 0.9223 resistance holds. Sustained break of 55 D EMA (now at 0.8996) will bring deeper fall to 38.2% retracement of 0.8332 to 0.9223 at 0.8883.

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) 153.12; (P) 153.57; (R1) 154.34; More...

No change in USD/JPY's outlook and intraday bias stays neutral. On the upside, firm break of 55 4H EMA (now at 154.81) will bring stronger rebound towards 157.98 resistance. On the downside, below 151.86 will resume the fall from 160.20. But strong support should be seen from 150.87 resistance turned support to bring rebound.

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) 1.3643; (P) 1.3670; (R1) 1.3692; More...

Intraday bias in USD/CAD stays neutral at this point. Further break of 1.3845 will resume larger rise from 1.3176 towards 1.3976 key resistance next. However, sustained trading below 55 D EMA (now at 1.3618) will argue that whole rise from 1.3176 has completed already, and target 1.3477 support next.

In the bigger picture, price actions from 1.3976 (2022 high) are viewed as a corrective pattern only. 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.

Daily Pivots: (S1) 0.6608; (P) 0.6623; (R1) 0.6642; More...

Intraday bias in AUD/USD is turned neutral with current retreat. Some consolidations could be seen but further rally is expected as long as 0.6464 support holds. As noted before, fall from 0.6870 could have completed with three waves down to 0.6361. Above 0.6645 will target 100% projection of 0.6361 to 0.6585 from 0.6464 at 0.6688 next.

In the bigger picture, price actions from 0.6169 (2022 low) are seen as a medium term corrective pattern to the down trend from 0.8006 (2021 high). Fall from 0.7156 (2023 high) is seen as the second leg, which could still be in progress. Overall, sideway trading could continue in range of 0.6169/7156 for some more time. But as long as 0.7156 holds, an eventual downside breakout would be mildly in favor.

In the aftermath of RBA's decision to maintain interest rates unchanged and the absence of explicit hawkish signals, Australian Dollar weakens mildly. Despite notable upgrades in inflation forecasts, the central bank opted for a cautious approach, refraining from signaling imminent rate hikes and maintaining a stance of "not ruling anything in or out." Recent stronger-than-expected inflation data did not push RBA closer to resume monetary tightening, at least for the time being.

Meanwhile, Japanese Yen displayed continued weakness, retracing last week's strong gains. Japan's top currency diplomat, Masato Kanda, chose not to comment US Treasury Secretary Janet Yellen's recent assertion that currency intervention is permissible only in exceptional circumstances. Kanda's posture led markets to believe that last week's alleged intervention may have been unilateral rather than coordinated.

Overall in the currency markets, Dollar is the strongest one for today at this point, followed by Euro and Kiwi. Canadian Dollar and Swiss Franc are on the softer side while Sterling is mixed.

Technically, EUR/JPY's break of 55 4H EMA suggests that fall from 171.68 could have completed at 164.01 already. Rise from there is seen as the second leg of the corrective pattern from 171.68 and could extend towards 168.64 resistance. Attention is now on whether USD/JPY and GBP/JPY would break through their respective 55 4H EMA to align and solidify this outlook.

In Asia, at the time of writing, Nikkei is up 1.29%. Hong Kong HSI is down -0.74%. China Shanghai SSE is up 0.01%. Singapore Strait Times is up 0.08%. Japan 10-year JGB yield is down -0.0311 at 0.875. Overnight, DOW rose 0.46%. S&P 500 rose 1.03%. NASDAQ rose 1.19%. 10-year yield fell -0.0110 to 4.489.

RBA stands pat, upgrades inflation forecasts, not ruling anything in or out

RBA left cash rate target unchanged at 4.35% as widely expected. The central bank maintained that it's "not ruling anything in or out" regarding the next move in monetary policy because of uncertainty surround inflation outlook.

In the new economic forecasts, both headline and core inflation forecasts for 2024 are upgraded substantially. Meanwhile, growth forecasts were downgraded slightly for both 2024 and 2025.

Year-average GDP growth:

• For 2024 downgraded from 1.5% to 1.3%
• For 2025 downgraded from 2.2% to 2.1%.

Year-ended CPI inflation:

• For Dec 2024 upgraded from 3.2% to 3.8%.
• For Dec 2025 unchanged at 2.8%.
• For June 2026 at 2.6% (new).

Year-ended trimmed mean inflation:

• For Dec 2024 upgraded from 3.1% to 3.4%.
• For Dec 2025 unchanged at 2.8%.
• For June 2026 at 2.6% (new)

Japan's PMI services finalized at 54.3, strong demand and rising costs

Japan's PMI Services for April finalized at 54.3, slightly up from March's 54.1. PMI Composite also saw an uptick, reaching 52.3, the highest level since August 2023.

According to Tim Moore, Economics Director at S&P Global Market Intelligence, April showcased "another strong month" for the service sector, driven by increasing business and consumer spending. This momentum resulted in the fastest upturn in business activity since August 2023. Despite challenges such as shortages of candidates hindering recruitment, positivity regarding the longer-term business outlook contributed to solid employment growth.

However, rising wage costs have emerged as a significant concern, leading to the sharpest increase in average cost burdens in eight months. Service providers are responding to elevated cost pressures by seeking higher prices from clients, with the latest survey indicating the fastest pace of price increases since the sales tax hike in April 2014.

Fed's Barkin: More demand moderation needed

Richmond Fed President Thomas Barkin's said overnight that the pace of disinflation has possibly stalled. "We're going to need a little more edge off of demand to get all the way" back to target, he added. Despite these challenges, he expressed optimism regarding the current level of the benchmark policy rate, indicating confidence that it will effectively address inflation.

"I still have the weight going toward inflation," Barkin said. "It's a stubborn road back...It doesn't mean you won't get it back. It just means it takes a while...to corral price setters into believing they don't really have a chance" for aggressive increases.

Separately, New York Fed President John Williams affirmed that "eventually we'll have rate cuts". But for now, monetary policy is in a "very good place." He refrained from providing a specific timetable for rate adjustments but noted that the economy is gradually returning to better balance amid a shift to a slower rate of growth. He anticipates GDP growth in the range of 2-2.5% for the year.

Looking ahead

Swiss unemployment rate and foreign currency reserves, Germany factor orders and trade balance, France trade balance, UK PMI construction, and Eurozone retail sales will be released in European session. Later in the day, Canada will release Ivey PMI.

AUD/USD Daily Report

Daily Pivots: (S1) 0.6608; (P) 0.6623; (R1) 0.6642; More...

Intraday bias in AUD/USD is turned neutral with current retreat. Some consolidations could be seen but further rally is expected as long as 0.6464 support holds. As noted before, fall from 0.6870 could have completed with three waves down to 0.6361. Above 0.6645 will target 100% projection of 0.6361 to 0.6585 from 0.6464 at 0.6688 next.

In the bigger picture, price actions from 0.6169 (2022 low) are seen as a medium term corrective pattern to the down trend from 0.8006 (2021 high). Fall from 0.7156 (2023 high) is seen as the second leg, which could still be in progress. Overall, sideway trading could continue in range of 0.6169/7156 for some more time. But as long as 0.7156 holds, an eventual downside breakout would be mildly in favor.

Economic Indicators Update

RBA left cash rate target unchanged at 4.35% as widely expected. The central bank maintained that it's "not ruling anything in or out" regarding the next move in monetary policy because of uncertainty surround inflation outlook.

In the new economic forecasts, both headline and core inflation forecasts for 2024 are upgraded substantially. Meanwhile, growth forecasts were downgraded slightly for both 2024 and 2025.

Year-average GDP growth:

• For 2024 downgraded from 1.5% to 1.3%
• For 2025 downgraded from 2.2% to 2.1%.

Year-ended CPI inflation:

• For Dec 2024 upgraded from 3.2% to 3.8%.
• For Dec 2025 unchanged at 2.8%.
• For June 2026 at 2.6% (new).

Year-ended trimmed mean inflation:

• For Dec 2024 upgraded from 3.1% to 3.4%.
• For Dec 2025 unchanged at 2.8%.
• For June 2026 at 2.6% (new)

Full RBA statement and SoMP here.

At its meeting today, the Board decided to leave the cash rate target unchanged at 4.35 per cent and the interest rate paid on Exchange Settlement balances unchanged at 4.25 per cent.

Inflation remains high and is falling more gradually than expected.

Recent information indicates that inflation continues to moderate, but is declining more slowly than expected. The CPI grew by 3.6 per cent over the year to the March quarter, down from 4.1 per cent over the year to December. Underlying inflation was higher than headline inflation and declined by less. This was due in large part to services inflation, which remains high and is moderating only gradually.

Higher interest rates have been working to bring aggregate demand and supply somewhat closer towards balance. But the data indicate continuing excess demand in the economy, coupled with strong domestic cost pressures, both for labour and non-labour inputs. Conditions in the labour market have eased over the past year, but remain tighter than is consistent with sustained full employment and inflation at target. Wages growth appears to have peaked but is still above the level that can be sustained given trend productivity growth. Meanwhile, inflation is still weighing on people's real incomes and output growth has been subdued, reflecting weak household consumption growth.

The outlook remains highly uncertain.

The economic outlook remains uncertain and recent data have demonstrated that the process of returning inflation to target is unlikely to be smooth.

The central forecasts, based on the assumption that the cash rate follows market expectations, are for inflation to return to the target range of 2–3 per cent in the second half of 2025, and to the midpoint in 2026. In the near term, inflation is forecast to be higher because of the recent rise in domestic petrol prices, and higher than expected services price inflation, which is now forecast to decline more slowly over the rest of the year. Inflation is, however, expected to decline over 2025 and 2026.

The persistence of services inflation is a key uncertainty. It is expected to ease more slowly than previously forecast, reflecting stronger labour market conditions including a more gradual increase in the unemployment rate and the broader underutilisation rate. Growth in unit labour costs also remains very high. It has begun to moderate slightly as measured productivity growth picked up in the second half of last year. This trend needs to be sustained over time if inflation is to continue to decline.

At the same time, household consumption growth has been particularly weak as high inflation and the earlier rises in interest rates have affected real disposable income. In response, households have been curbing discretionary spending and maintaining their saving. Real incomes have now stabilised and are expected to grow later in the year, supporting growth in consumption. But there is a risk that household consumption picks up more slowly than expected, resulting in continued subdued output growth and a noticeable deterioration in the labour market.

More broadly, there are uncertainties regarding the lags in the effect of monetary policy and how firms' pricing decisions and wages will respond to the slower growth in the economy at a time of excess demand, and while the labour market remains tight.

There also remains a high level of uncertainty about the overseas outlook. While there has been improvement in the outlook for the Chinese and US economies, and many global commodity prices have picked up, geopolitical uncertainties, including those related to the conflicts in the Middle East and Ukraine, remain elevated.

Returning inflation to target is the priority.

Returning inflation to target within a reasonable timeframe remains the Board's highest priority. This is consistent with the RBA's mandate for price stability and full employment. The Board needs to be confident that inflation is moving sustainably towards the target range. To date, medium-term inflation expectations have been consistent with the inflation target and it is important that this remains the case.

Recent data indicate that, while inflation is easing, it is doing so more slowly than previously expected and it remains high. The Board expects that it will be some time yet before inflation is sustainably in the target range and will remain vigilant to upside risks. The path of interest rates that will best ensure that inflation returns to target in a reasonable timeframe remains uncertain and the Board is not ruling anything in or out. The Board will rely upon the data and the evolving assessment of risks. In doing so, it will continue to pay close attention to developments in the global economy, trends in domestic demand, and the outlook for inflation and the labour market. The Board remains resolute in its determination to return inflation to target.

Key Highlights

• GBP/USD started a recovery wave above the 1.2500 resistance.
• A connecting bullish trend line is forming with support at 1.2500 on the 4-hour chart.
• Gold prices are attempting a fresh increase above the $2,300 resistance.
• Bitcoin recovered losses and was able to retest the $65,000 resistance zone.

GBP/USD Technical Analysis

The British Pound found support near 1.2300 against the US Dollar. GBP/USD started a decent increase and was able to clear the 1.2450 resistance.

Looking at the 4-hour chart, the pair climbed above the 50% Fib retracement level of the downward move from the 1.2708 swing high to the 1.2299 low. It also settled above the 100 simple moving average (red, 4-hour) and tested the 200 simple moving average (green, 4-hour).

However, the bears were active near the 1.2620 resistance. They prevented a close above the 76.4% Fib retracement level of the downward move from the 1.2708 swing high to the 1.2299 low.

A clear move above the 1.2620 resistance might send it toward the 1.2700 level. Any more gains might call for a move toward the 1.2800 level in the near term.

Immediate support is near the 1.2550 level and the 200 simple moving average (green, 4-hour). The next major support is at 1.2520. There is also a connecting bullish trend line forming with support at 1.2500 on the same chart.

If there is a downside break below the 1.2520 support, the pair might test 1.2465 and the 100 simple moving average (red, 4-hour). Any more losses might send the pair toward 1.2420.

Looking at Bitcoin, the price gained bullish momentum and was able to test the key resistance at $65,000 and $65,200.

Economic Releases

• UK’s Construction PMI for April 2024 – Forecast 50.4, versus 50.2 previous.
• Euro Zone Retail Sales for April 2024 (MoM) - Forecast +0.6%, versus -0.5% previous.

Japan's PMI Services for April finalized at 54.3, slightly up from March's 54.1. PMI Composite also saw an uptick, reaching 52.3, the highest level since August 2023.

According to Tim Moore, Economics Director at S&P Global Market Intelligence, April showcased "another strong month" for the service sector, driven by increasing business and consumer spending. This momentum resulted in the fastest upturn in business activity since August 2023. Despite challenges such as shortages of candidates hindering recruitment, positivity regarding the longer-term business outlook contributed to solid employment growth.

However, rising wage costs have emerged as a significant concern, leading to the sharpest increase in average cost burdens in eight months. Service providers are responding to elevated cost pressures by seeking higher prices from clients, with the latest survey indicating the fastest pace of price increases since the sales tax hike in April 2014.

Full Japan PMI services final release here.

Richmond Fed President Thomas Barkin's said overnight that the pace of disinflation has possibly stalled. "We're going to need a little more edge off of demand to get all the way" back to target, he added. Despite these challenges, he expressed optimism regarding the current level of the benchmark policy rate, indicating confidence that it will effectively address inflation.

"I still have the weight going toward inflation," Barkin said. "It's a stubborn road back...It doesn't mean you won't get it back. It just means it takes a while...to corral price setters into believing they don't really have a chance" for aggressive increases.

Separately, New York Fed President John Williams affirmed that "eventually we'll have rate cuts". But for now, monetary policy is in a "very good place." He refrained from providing a specific timetable for rate adjustments but noted that the economy is gradually returning to better balance amid a shift to a slower rate of growth. He anticipates GDP growth in the range of 2-2.5% for the year.