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The forex markets are still generally staying in consolidative mode today, showing minimal reaction to the latest economic data and comments from central bank officials. Commodity currencies, along with Swiss Franc, are displaying relative strength. Meanwhile, Euro, Dollar, and Yen are on the weaker side.

In the broader financial markets, the recent selloff in global equities seems to have found some temporary stability, though downside risks persist. Gold hovering just below 2400 mark, with prospect for an rising leg towards the critical 2500 resistance level, before forming a major bottom. WTI crude oil is retreating this week, but market participants remaining vigilant for any geopolitical escalations, particularly any retaliatory actions by Israel against Iran.

Technically, buying appeared to be emerging in Nikkei today as it approached 38.2% retracement of 30487.67 to 41087.75 at 37038.51. Firm break of 55 D EMA (now at 38058.00) will argue that the pull back from 41087.75 has completed, and bring stronger rebound. The upcoming CPI data from Japan could be crucial in determining the Nikkei's next moves.

In Europe, at the time of writing, FTSE is up 0.14%. DAX is down -0.10%. CAC is up 0.16%. UK 10-year yield is down -0.002 at 4.262. Germany 10-year yield is up 0.009 at 2.478. Earlier in Asia, Nikkei rose 0.31%. Hong Kong HSI rose 0.82%. China Shanghai SSE rose 0.09%. Singapore Strait Times rose 1.05%. Japan 10-year JGB yield is down -0.0165 at 0.871.

US initial jobless claims unchanged at 212k, vs exp 214k

US initial claims was unchanged at 212k in April 13, slightly below expectation of 214k. Four-week moving average of initial claims was also unchanged at 214.5k.

Continuing claims rose 2k to 1812k in the week ending April 6. Four-week moving average of continuing claims rose 4k to 1805k.

Bundesbank highlights modest improvement in German economy with ongoing risks

Bundesbank, in its latest monthly report, suggested some improvement in the German economy though underlying weaknesses remain. The report notes, "Germany's economic situation has brightened somewhat, but it remains weak at its core," signaling uncertainty about the sustainability of economic growth into the second quarter.

Despite these challenges, there has been a noticeable rise in optimism among consumers, businesses, and investors, potentially setting the stage for a stronger economic recovery than previously anticipated. The Bundesbank highlights, "If this improvement continues, the economy could also pick up more significantly than was expected a month ago."

However, the report also points out several areas of concern. Industry continues to struggle, and the construction sector might see a downturn following a temporary boost from a mild winter. Furthermore, high interest rates are suppressing investment activities, and while export demand shows weakness, consumer spending remains restrained despite favorable conditions in the labor market, such as rising wages and slowing inflation.

ECB's de Guindos: We have been crystal clear on June rate cut

During a European Parliament hearing today, ECB Vice President Luis de Guindos stated that ECB has been "crystal clear" on its conditional guidance regarding interest rate cut.

"If things continue as they have been evolving lately, in June we'll be ready to reduce the restriction of our monetary policy stance," he said.

While financial markets anticipate a total of 75bps in rate cuts for the year, de Guindos remained non-committal about specific future rate levels.

He pointed out several risks to inflation outlook, including wage dynamics, productivity, unit labor costs, profit margins, and geopolitical tensions.

BoJ's Noguchi: Poicy rate adjustment expected to be slow

BoJ Board Member Asahi Noguchi highlighted in a speech today the unique economic conditions facing Japan compared to other major economies. He pointed out that any changes to the policy rate are expected to occur at a slower pace than those seen in recent actions by other major central banks.

"With regard to the pace of policy rate adjustment, it is expected to be slow, at a pace that cannot be compared to that of other major central banks in recent years," Noguchi stated. This approach reflects the central bank's assessment that it will take considerable time for Japan to consistently achieve its price stability target of 2% inflation.

Noguchi also noted the recent significant wage increases in Japan, describing them as unprecedented. However, he cautioned that these wage hikes alone are not yet sufficient to drive up prices to the level needed for trend inflation to stabilize at the 2% target.

"It is essential for the BoJ to maintain its ultra-loose monetary policy to seek an appropriate balance in the labour supply-demand," he added.

Australia's employment contracts -6.6k in Mar, labor market still relatively tight

Australia's employment figures for March revealed a slight contraction of -6.6k, worse than expectation of 7.2k growth. This downturn was primarily due to drop in part-time employment by -34.5k, partially offset by rise in full-time by 27.9k.

Unemployment rate rose from 3.7% to 3.8%, below expectation of 3.9%. Participation rate fell from 66.7% to 66.6%. Monthly hours worked rose 0.9% mom.

Bjorn Jarvis, Head of Labour Statistics at ABS, noted, "The labour market remained relatively tight in March, with an employment-to-population ratio and participation rate still close to their record highs in November 2023." He pointed out that although there has been a modest decline of 0.4 percentage points since the highs of last November, the metrics remain substantially above pre-pandemic levels.

Australia NAB business confidence rises to -2 in Q1, cost pressures ease slightly

Australia NAB Quarterly Business Confidence rose from -6 to -2 in Q1. Business Conditions was unchanged at 10. In terms of forward-looking expectations, businesses anticipate a slight downturn in conditions over the next three months, with expectations dipping from 14 to 12. However, the outlook for the next 12 months improved, rising from 16 to 17.

According to NAB Chief Economist Alan Oster, "Consistent with our monthly business survey, today's release shows business conditions remained resilient at above-average levels through the start of the year. Confidence remained weak but showed some improvement relative to the tail end of 2023."

The report also highlighted easing cost pressures, although the reduction was minimal. Labor costs grew at a slightly reduced rate of 1.2%, down from 1.3% in the previous quarter, and purchase costs increased by 1.1%, down from 1.2%. Meanwhile, final product price growth remained steady at 0.7%, and retail price growth decreased marginally to 0.8% from 0.9%.

Oster noted, "There continue to be some positive signs of easing cost pressures for businesses but progress was more incremental through Q1. Importantly, forward-looking indicators of firms' expectations for price growth suggest firms expect some further moderation."

USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 154.11; (P) 154.43; (R1) 154.71; More...

Intraday bias in USD/JPY remains neutral for the moment. Considering bearish divergence condition in 4H MACD, in case of another rise, upside should be limited by 155.20 fibonacci projection level. On the downside, break of 153.89 minor support will turn bias back to the downside for 55 4H EMA (now at 153.41) and possibly below.

In the bigger picture, current rise from 140.25 is seen as the third leg of the up trend from 127.20 (2023 low). Next target is 61.8% projection of 127.20 to 151.89 from 140.25 at 155.20. Outlook will now remain bullish as long as 146.47 support holds, even in case of deep pullback.

Economic Indicators Update

US initial claims was unchanged at 212k in April 13, slightly below expectation of 214k. Four-week moving average of initial claims was also unchanged at 214.5k.

Continuing claims rose 2k to 1812k in the week ending April 6. Four-week moving average of continuing claims rose 4k to 1805k.

Full US jobless claims release here.

Bundesbank, in its latest monthly report, suggested some improvement in the German economy though underlying weaknesses remain. The report notes, "Germany's economic situation has brightened somewhat, but it remains weak at its core," signaling uncertainty about the sustainability of economic growth into the second quarter.

Despite these challenges, there has been a noticeable rise in optimism among consumers, businesses, and investors, potentially setting the stage for a stronger economic recovery than previously anticipated. The Bundesbank highlights, "If this improvement continues, the economy could also pick up more significantly than was expected a month ago."

However, the report also points out several areas of concern. Industry continues to struggle, and the construction sector might see a downturn following a temporary boost from a mild winter. Furthermore, high interest rates are suppressing investment activities, and while export demand shows weakness, consumer spending remains restrained despite favorable conditions in the labor market, such as rising wages and slowing inflation.

• BTCUSD falls temporarily below 60,000 ahead of halving
• Momentum indicators point to intensifying downside pressures

BTCUSD (Bitcoin) experienced a strong pullback following the formation of a triple top pattern, sliding below its 50-day simple moving average (SMA). Meanwhile, the price dropped to a fresh six-week low a tad beneath the 60,000 psychological mark, just a couple of days ahead of the crucial halving event.

Given that the momentum indicators are heavily tilted to the downside, Bitcoin could revisit its March bottom of 59,313. In case of a downside violation, there is no prominent support until the February resistance zone of 52,850. Even lower, the February support of 50,600 could prevent further declines.

On the flipside, bullish actions could propel the price towards the April support of 64,500, which could serve as resistance in the future. Conquering that region, the bulls might attack 69,000, a level that acted both as support and resistance in recent months. A break above that region could pave the way for the March resistance of 71,750.

In brief, BTCUSD has fallen towards the lower boundary of its range in place since March after a formation of a triple top pattern. The impending halving event decide the price’s next move.

• AUDJPY prints higher highs and higher lows above uptrend line
• MACD and RSI detect positive momentum
• A break above 100.80 will confirm a higher high
• For the outlook to change, a break below 95.80 may be needed

AUDJPY pulled back lately, after it hit resistance at around 100.80 on April 9. However, the pair remains above all three of the plotted exponential moving averages (EMAs) and above an uptrend line drawn from the low of July 28, which means that the chances of the bulls recharging again soon are very high.

The MACD and the RSI support this notion. Although the former is still below its trigger line, it is running above zero and shows signs of bottoming, while the latter has already bottomed after finding support at its 50 equilibrium level.

If the bulls take the reins again soon, then they may decide to aim for another test at 100.80. A break above that zone will confirm a higher high and could see scope for extensions towards the 102.85 barrier, defined as resistance by the high of November 21, 2014.

For the near-term outlook to turn negative, the bears may need to take the upper hand and drive the action below the 95.80 zone. Such a move will take AUDJPY below all the EMAs and below the aforementioned uptrend line. The next zone to consider as support may be at around 93.75, near the low of December 7.

To sum everything up, AUDJPY retreated during the last week or so, but the price structure on the daily chart continues to suggest a healthy uptrend. If the bulls recharge soon, we may see the price breaking above 100.80 and confirming a higher high.

EURGBP dips in early Thursday’s trading, after a double upside failure at falling 100DMA (0.8572), the lower boundary of strong resistances at 0.8580 zone (including Fibo 38.2% of 0.8714/0.8498 downtrend and a multiple spike highs).

Sterling regained ground after being deflated by UK CPI data and dovish steer from BoE chief Bailey on Wednesday, though more evidence about near-term direction is still needed, as daily studies are mixed.

Solid support lays at 0.8550 (converged 5/55DMA’s, on track to form a bull-cross) with ability to hold above here to keep near-term bias with bulls for fresh attempt through 0.8580 pivots, which would open way for extension towards next key barriers at 0.8600 zone (50% retracement / 200DMA).

Conversely, loss of 0.8550 handle would weaken near-term structure and risk renewed attacks at key 0.8520/00 support zone.

Res: 0.8572; 0.8604; 0.8620.
Sup: 0.8550; 0.8520; 0.8499.

The Euro remains constructive and ticks higher in early Thursday after Wednesday’s 0.5% bounce from new multi-month low, but initial reversal signal still needs more evidence to be validated, as daily studies are predominantly bearish.

Another strong bullish daily close is needed to keep in play hopes of stronger recovery, with close above pivots at 1.0710/25 (Fibo 38.2% of 1.0885/1.0601 / falling 10DMA) to confirm signal.

Conversely, failure to register a clear break higher would generate initial signal of recovery stall and keep the downside vulnerable of fresh drop towards key 1.0600 support zone.

Res: 1.0690; 1.0710; 1.0725; 1.0743.
Sup: 1.0663; 1.0645; 1.0602; 1.0516.

The British pound sterling is showing signs of recovery, bouncing back from a five-month low, with GBP/USD stabilising around the 1.2470 mark on Thursday. This rebound is attributed to the release of UK inflation data, suggesting a possible monetary policy easing by the Bank of England (BoE).

The UK's consumer price index (CPI) slowed to 3.2% year-on-year in March, down from 3.4% in February, marking the lowest inflation rate in two and a half years. This slowdown has raised investor optimism regarding potential policy easing by the BoE, particularly since core inflation has also dropped to its lowest since mid-2021. However, persistent inflation in the services sector may lead to cautious deliberation among certain members of the monetary committee.

Meanwhile, representatives from the US Federal Reserve have reiterated that US interest rates are likely to remain high for an extended period. In contrast, the BoE is perceived as relatively stable, potentially initiating monetary policy easing by summer.

The first quarter saw significant pressures from the tight employment market and shocks from rising energy prices, which initially suggested that the BoE might follow the European Central Bank (ECB) and the Fed in lowering interest rates. However, market conditions have shifted considerably. Exchange analysts now anticipate that the ECB might cut interest rates by June, the BoE by September, and the Fed only in Q4.

Technical analysis of GBP/USD

The H4 chart for GBP/USD indicates that after forming a consolidation range of around 1.2547, the pair has reached the target of 1.2450 with a downward exit. A new consolidation range is currently forming above this level. A break below this range may drive prices lower to 1.2380, with a subsequent correction to retest 1.2547 (testing from below) before a possible continuation to 1.2200. This bearish scenario is supported by the MACD oscillator, whose signal line is below zero and is trending downwards.

On the H1 chart, the GBP/USD has completed a decline to 1.2406 and is currently undergoing a correction to 1.2491. Following this correction, a new decline to 1.2381 is anticipated. The Stochastic oscillator, currently above 80, is poised for a sharp decline to the 20 mark, reinforcing the likelihood of further downward movement in the short term.

The Australian dollar is steady on Thursday. In the European session, AUD/USD is trading at 0.6442, up 0.12%.

Australia’s employment declines

Australia’s job growth hit the breaks in March and fell by 6,600. This missed the market estimate of a gain of 7,700 and follows a blowout gain of 116,500 in February. Still, the drop was not all that concerning as full time employment increased by 27,900 (part-time roles fell by 34,500). The unemployment rate ticked higher to 3.8%, up from 3.7% in March.

Although the job numbers were not flattering, the labor market remains tight. An unemployment level below 4% is close to capacity and the participation rate of 66.6% is indicative of a healthy labor market. The labour market is, however, expected to cool down as elevated interest rates continue to filter through the economy.

The Reserve Bank of Australia meets next month and will provide quarterly updates of its economic forecasts. The central bank will base its rate decision on the strength of the data and today’s employment report will support the RBA continuing to remain patient before cutting rates. Next week brings CPI for the first quarter, which is expected to fall to 3.4%, down from 4.1% in Q4 2023. If inflation does drop significantly, the RBA will be under increased pressure to lower rates.

In the US, the Federal Reserve is watching inflation move the wrong way, and that has alarm bells ringing. Fed Chair Powell said this week that higher-than-expected inflation readings meant that rate cuts would have to wait until the inflation picture improved.

The robust US economy and high inflation has put under question whether the Fed will be able to lower rates this year. The markets have slashed expectations for rate cuts but a September cut remains a strong possibility, with a 69% probability, according to the CME FedWatch tool.

AUD/USD Technical

• AUD/USD continues to test resistance at 0.6437. Above, there is resistance at 0.6472
• 0.6413 and 0.6378 are the next support levels

During a European Parliament hearing today, ECB Vice President Luis de Guindos stated that ECB has been "crystal clear" on its conditional guidance regarding interest rate cut.

"If things continue as they have been evolving lately, in June we'll be ready to reduce the restriction of our monetary policy stance," he said.

While financial markets anticipate a total of 75bps in rate cuts for the year, de Guindos remained non-committal about specific future rate levels.

He pointed out several risks to inflation outlook, including wage dynamics, productivity, unit labor costs, profit margins, and geopolitical tensions.