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Daily Pivots: (S1) 0.7853; (P) 0.7888; (R1) 0.7913; More….

Intraday bias in USD/CHF remains neutral for consolidations below 0.7921 temporary top. Further rally is still expected as long as 0.7746 support holds. Rise from 0.7603 is seen as correcting whole down trend from 0.9200. Break of 0.7921 will target 38.2% retracement of 0.9200 to 0.7603 at 0.8213.

In the bigger picture, a medium term bottom should be in place at 0.7603 on bullish convergence condition in D MACD. Rebound from there is seen as correcting the fall from 0.9200 only. However, decisive break of 55 W EMA (now at 0.8091) will suggest that it's probably correcting the larger scale down trend from 1.0146 (2022 high). On the other hand, rejection by the 55 W EMA will setup down trend resumption to 100% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382 at a later stage.

Daily Pivots: (S1) 1.1436; (P) 1.1482; (R1) 1.1549; More….

Intraday bias in EUR/USD remains neutral for the moment, and more consolidations could be seen above 1.1408 temporary low. But further decline is expected as long as 1.1666 resistance holds. Below 1.1408 will resume the fall from 1.2081 to 38.2% retracement of 1.0176 to 1.2081 at 1.1353. Firm break there will target 61.8% projection at 1.0904 next.

In the bigger picture, the break of 55 W EMA (now at 1.1495) confirms rejection by 1.2 key cluster resistance level. The whole up trend from 0.9534 (2022 low) might have completed as a three wave corrective rise too. In either case, deeper fall is now expected to long term channel support (now at 1.0528. Risk will stay on the downside as long as 1.2081 holds, in case of recovery.

RBA hikes cash rate to 4.1% in a 5:4 vote. Perceived capacity pressures and inflationary impacts of the Middle East conflict were key concerns.

• As was widely expected, the RBA Monetary Policy Board (MPB) raised the cash rate 25bps to 4.1% following its March meeting. We flagged the possibility that it could be a split decision, but the 5:4 vote was an even finer majority than we thought might occur.
• The main reasons for the decision were the existing assessment that Australia is experiencing capacity pressures, coupled with the increase in inflation expectations that has already occurred in response to the Middle East conflict and associated spike in petrol prices.
• With the Board already split, a follow-up hike in May looks less certain. But (as revealed in the media conference) all members agreed that a hike was needed and the question was more about timing. We therefore retain a May hike as our base case. Whether the conflict in the Middle East is still ongoing and how it evolves from here will be crucial.
• The Board are also still concerned about domestic capacity pressures keeping inflation above target. This will mean rate hikes will remain on the table until inflation risks have clearly subsided.

Private sector demand growth was stronger than the RBA expected in late 2025, though consumption and unit labour costs were softer. The Board still assesses that part of the increase in inflation late last year reflected temporary factors. However, it is has taken signal from the recent strength in labour market data and now believes that capacity pressures are slightly greater than previously assessed. (This, incidentally, was the information value in the Deputy Governor’s podcast: that data revisions in the national accounts released earlier in the month did not dislodge the RBA’s view that trend growth in supply capacity is still only around 2%. It is well-understood that the internal Board members cannot front-run the whole Board, the way central banks with entirely internal members can.)

That “slightly” might point to one area where Board members’ views differ. Also noteworthy is the addition of the word “material” in a sentence that also appeared in the February post-meeting statement without that qualifier: “There are material uncertainties about the outlook for domestic economic activity and inflation and the extent to which monetary policy is restrictive.”

The other key reason for the decision centred on concerns about the inflationary impact of the Middle East conflict. The traditional thinking around the appropriate monetary response to a temporary supply shock such as a lift in oil prices was to look through it, so long as inflation expectations remained anchored. Near-term inflation expectations have already increased in response to the spike in fuel prices. However, the sparse evidence on more medium-term expectations of financial market participants suggests that these remain well-behaved, in Australia at least.

Yet the post-meeting statement highlighted the implications for (headline) inflation globally and domestically. In addition to the channel through inflation expectations, the post-meeting statement highlighted the possibility that an extended period of high energy prices and uncertainty would degrade supply capacity and thus be inflationary. Most other observers would see that scenario as a global recession risk with rather different policy implications. At the least, we struggle to imagine a scenario where the Strait of Hormuz remains closed for many months without sentiment and financial markets weakening considerably. The consequences for global growth in that scenario would be far from trivial, and not solely on the supply side.

It is possible that the RBA’s assessment of the implications of the Middle East conflict will evolve once it has done modelling of the impact. The Governor revealed in the media conference that the RBA staff have not yet done this modelling. In the meantime, Westpac Economics’ modelling and forecasts may provide a guide to possible outcomes.

The overall tone of the RBA’s post-meeting (and indeed pre-meeting) communication remains broadly as it was in February. The RBA remains concerned that the domestic economy is too tight and demand growing too quickly. As we have highlighted in the past, their assessment rests heavily on a view that the Australian economy can only grow around 2% before hitting capacity constraints. This view, in turn, rests on relatively pessimistic assumptions about population and productivity. While this remains the RBA’s view and inflation above target, rate hikes will remain on the table and our base case remains for a May rate hike.

The early spike in oil prices faded throughout yesterday’s trading session, pulling both US and Brent crude below the $100pb mark on news that a few tankers could transit through the Strait of Hormuz. There were also reports that flows could resume beyond the US, Israel and their allies. Scott Bessent told CNBC that the US is “letting Iran” ship its oil to ease pressure on global oil prices.

But of course, continued tensions are keeping oil bulls well awake. WTI crude is slightly higher above $95pb in Asia this Tuesday morning, while Brent crude is attempting to return above the $100pb psychological mark. The geopolitical outlook remains fragile, making oil prices more prone to further upside than a sustained decline.

On the geopolitical front, Donald Trump’s call for international help received a chilly response from once-reliable allies. And what to say? It’s been more than a year that allies have been threatened with softer military support. Earlier this year, Europeans had tensions around Greenland, and the Trump administration imposed massive trade tariffs on partners around the world — shaking economies to such a degree that sending warships to the Strait of Hormuz alongside the US has become a monstrously complicated political decision.

Make no mistake: Europeans also want a resolution and are exploring options, but they want a solution outside the context of NATO, some of which include rerouting trade through the Red Sea. But nothing is clear yet.

What’s clear is that global uncertainty persists, opinions diverge, oil infrastructure is being targeted in the Middle East, and Russia continues to benefit from strong oil revenues thanks to easing sanctions. There are now rising calls in Europe to normalize relations with Russia — as the gas refill season approaches and Qatar’s LNG supply remains uncertain. No wonder European defence stocks gained 1.79% on Monday.

Could it get worse? Add to this private credit stress weighing on big banks, AI-related concerns, the SaaS-pocalypse, the hawkish shift in global central bank expectations and weakening international trade and military trust — it doesn’t set the stage for euphoria.

There will be a trigger to bring dip buyers back in — remember the post-tariff rebound. All parties were worse off after the tariffs, yet markets rallied to fresh records. Easing Middle East tensions could trigger similar optimism, but headlines will decide when and how.

Today, the news remains far from ideal. The Reserve Bank of Australia (RBA) raised its cash rate by 25bp, as expected, to counter renewed inflationary pressures that could worsen with rising energy prices. The AUDUSD rebounded from the 50-DMA yesterday on the back of a broad-based USD retreat and approached the 0.71 mark today.

Elsewhere, the US dollar’s retreat yesterday supported major currencies: the EURUSD rebounded from 1.1414, while the USDJPY met resistance near the 160 level. But ongoing Middle East tensions, higher energy prices and the hawkish shift in Federal Reserve (Fed) expectations remain supportive of the US dollar in the short term. Expensive energy, combined with a stronger US dollar, will also force other major central banks to maintain a hawkish stance — which is not supportive for risk appetite.

The Fed starts its two-day policy meeting today, and investors can’t wait to see how policymakers assess the latest developments. Fed members have been leaned toward supporting a softening labour market despite inflation remaining above target. But now, inflation is not only expected to stay above target, it could also pick up again, while labour market softness remains a concern. Activity in Fed funds futures stopped pricing in a full 25bp cut this year, meaning the hawkish shift is largely priced in. That leaves us wondering whether the Fed’s decision will be more or less hawkish than expected. The answer: tomorrow evening.

Across equities, European and US markets had a positive Monday session, helped by a pullback in oil prices and gains in technology stocks.

Jensen Huang opened Nvidia’s GTC conference by saying he expects the company to reap “at least” $1 trillion in revenue from its newest AI chips through 2027, adding that he is certain ‘computing demand will be much higher than that’.

The next big thing in AI will be the shift to agentic work — models that don’t just answer questions but actually perform tasks. This will drive even more demand for powerful chips, Huang says. But it also increases competition among chipmakers aiming to make inference cheaper — think Google’s TPUs. That may explain why Nvidia consolidated earlier gains and closed the session 1.65% higher, still within its 50- and 200-DMA range. Nvidia has been trading relatively range-bound since November, hovering between $170 and $200, as investors remain confident in long-term demand but more cautious about the scale of Big Tech’s AI spending.

As for the SaaS-pocalypse — where AI models threaten traditional software businesses — Huang predicts a shift toward what he calls “Aas” – agentic AI as a service. In this model, companies would sell AI agents to clients so they can build their own software. The iShares Expanded Tech-Software ETF gained 0.90% yesterday on hopes that companies can adapt — though some will, and some will not.

In focus today

Focus remains on tensions in the Middle East and its impact on energy markets.

In Germany, we will receive the ZEW survey data for March. Recent months have shown an improvement in the assessment of the current economic situation, though expectations for the future slightly declined in February. It will be interesting to observe how ongoing conflict in the Middle East impact the survey results, amidst the narrative of a recovering German economy.

This morning at 9:30-10:15 CET, we are hosting a 45-minute webinar on the Trump-Xi summit in Beijing. We discuss the path ahead for the two countries, implications for Nordic businesses as well as USD and CNY.

Economic and market news

What happened overnight

Overnight, the Reserve Bank of Australia raised its cash rate as expected by 25bp to 4.1%. Markets had priced in roughly a 75% probability of a hike ahead of the meeting. This was RBA's second rate hike in a row, but unlike the previous decision (which was unanimous), this morning's hike was made with the smallest possible vote majority (5-4). The statement and Governor Bullock's comments both underscored that while higher oil prices and consequently higher short-term inflation expectations played a role in the decision, it was primarily motivated by growing domestic capacity pressures.

Between the US and China, Trump requested to delay his planned 31 March-2 April trip to China by about a month due to the ongoing Iran war. The delay risks increasing tensions between the US and China, already strained by trade, Taiwan, and the Middle East crisis.
What happened yesterday

The conflict in the Middle East continues, with Iran successfully targeting oil and gas production facilities. In the UAE, Iran hit the Shah gas field in a drone attack, while they caused a fire in the Fujairah Oil Industry Zone. Additionally, a tanker near the port of Fujairah was reported struck whilst at anchor at sea. Meanwhile, Israel announced on Monday that it has detailed plans for at least three more weeks of war, continuing its strikes on sites across Iran and Lebanon.

The oil price has traded above the USD100/bbl level so far this week. Iran hit a UAE gas field as its retaliation seems to target energy infrastructure to a greater extent. That increases the risk that energy prices will rise more and stay high even if traffic through Strait of Hormuz resumes.

In geopolitics, European nations responded to President Trump's threats of a "very bad" future for NATO if members failed to aid the US in the Strait of Hormuz. While nations supported diplomatic efforts, they rejected military involvement. The UK, Germany, Japan and France ruled out sending vessels, with German Chancellor Friedrich Merz emphasising that NATO is "not an intervention alliance".

In Canada, CPI increased 1.8% y/y in February, slightly below expectations and an easing from January (cons: 1.9%, Jan: 2.3%). Energy prices were a key drag, with gasoline falling 14.2% y/y and natural gas down 17.1% y/y. The slowdown may also be attributed to base effects, as February 2025 experienced elevated price increases due to the mid-month expiration of the goods and services tax and harmonised sales tax holiday. The low inflation figures mark a six-month low and may support the Bank of Canada in keeping rates steady on Wednesday.

In Switzerland, recent sight deposit data showed no indication of intervention by the Swiss National Bank (SNB). EUR/CHF reached its lowest level since 2015 last week, breaking firmly below 0.90 as verbal intervention failed to meaningfully support the cross. We look ahead to the SNB meeting on Thursday, where we expect the policy rate unchanged at 0%, in line with consensus and market expectation.

In the US, industrial production increased 0.2% m/m in February, a decrease from January (0.7% m/m). On a yearly basis industrial production increased 1.4% y/y (Jan: 2.3% y/y). Manufacturing makes up the largest share of industrial production and surveys have shown signs of improving sentiment, but the ongoing US-Israeli conflict with Iran, resulting in higher oil prices, poses a risk to recovery.

Equities: Global equities had a solid session yesterday, rising about 0.9%. S&P500 rose 1%, with all 11 sectors in green, led by IT and consumer discretionary. 11 sectors being up on the same day has happened only three times the past six month, most recently in the aftermath of the Greenland situation. This tells us that part of the move is to be explained in the 'reversal' pattern. Unsurprisingly, cyclicals outperformed defensives in this risk-on tone. Nasdaq rose 1.2%, Russell 2000 0.9% and Stoxx600 0.4%. Overnight, Asian stocks are in green rising, while US futures are about 0.2% lower.

FI and FX: Overnight, the RBA delivered a rate hike from 3.85% to 4.10%, in a 5-4 split vote. The market interpreted the decision as dovish with falling yields, while the AUD has pared initial losses. Oil prices declined during yesterday's session, but prices are higher overnight with Brent oil around 103 USD per barrel as Iran has stepped up attacks on energy infrastructure. Japan's finance minister Katayama said the recent JPY weakening, where USD/JPY on Friday was at the highest level since 2024, is not in line with fundamentals and hinted at possible intervention. With the Scandinavian macro calendar empty today, Scandinavian markets will take their cues from global developments.

Daily Pivots: (S1) 1.3249; (P) 1.3295; (R1) 1.3365; More...

GBP/USD dips mildly as recovery from 1.3216 lost momentum, but holds well above this support. Intraday bias stays neutral and more consolidations could be seen. Risk will stay on the downside as long as 1.3482 resistance holds. Below 1.3216 will resume the fall from 1.3867 to 1.3008 structural support. Firm break there will carry larger bearish implication and target 1.2524 fibonacci level.

In the bigger picture, considering bearish divergence condition in both D and W MACD, a medium term top should be in place from 1.3867. Firm break of 1.3008 support will argue that fall from 1.3867 is at least correcting the rise from 1.0351 (2022 low) with risk of bearish reversal. That would open up further decline to 38.2% retracement of 1.0351 to 1.3867 at 1.2524. For now, medium term outlook will be neutral at best as long as 1.3867 resistance holds, or under further development.

Dollar edged higher today as fresh Iranian strikes on UAE energy infrastructure revived concerns over global oil supply, tempering the cautious optimism seen earlier in the week. While the move has not triggered a full risk-off shift, markets are clearly reassessing the durability of the recent stabilization in energy prices.

Oil benchmarks reversed from Monday’s pullback as the geopolitical risk premium returned. The renewed escalation, including drone and missile attacks on critical infrastructure, has reinforced the view that supply disruptions are not only persistent but potentially worsening. Traders are once again pricing in a more prolonged energy shock.

The broader conflict continues to intensify. Iran launched further missile strikes on Israel overnight, demonstrating its sustained long-range capabilities despite weeks of military pressure. In response, Israel expanded operations targeting infrastructure in Tehran and Hezbollah-linked sites in Beirut, signaling that the conflict is remains in an entrenched phase.

The situation in the Strait of Hormuz remains a central concern. The key shipping corridor is still effectively paralyzed, with roughly 20% of global oil supply hindered. While isolated vessels are attempting transit, most shippers are avoiding the route, forcing Gulf producers to rely on alternative pipeline exports that are insufficient to fully replace lost volumes.

This constraint is increasingly visible in market pricing. The Brent–WTI spread has widened back above its typical $2–$5 range. A sustained break above $10 would signal a shift from general market anxiety to concerns over physical supply shortages, marking a more dangerous phase of the energy shock.

Despite these developments, market reaction remains measured. Equities have not seen broad liquidation, and FX moves suggest caution rather than panic. This reflects lingering hopes that supply disruptions can still be partially managed, as well as expectations that coordinated reserve releases may help stabilize markets in the near term.

In currency markets, Dollar is the strongest performer of the day so far, supported by its safe-haven appeal and the renewed rise in yields tied to energy-driven inflation risks. However, gains have been modest, reinforcing the view that markets are not yet pricing in a worst-case scenario.

Australian Dollar is the second-best performer, benefiting from the RBA’s reaffirmed tightening bias despite the split vote. Canadian Dollar is also firm, supported by higher oil prices, though domestic weakness continue to cap its upside.

On the weaker side, New Zealand Dollar is under pressure, particularly against the Aussie, while Sterling and Euro also lag. The Swiss Franc and Yen are trading in the middle of the pack, suggesting that traditional safe havens are not attracting the same flows as Dollar in the current environment.

Looking ahead, markets remain highly sensitive to further developments in the Middle East. The key question is whether the current disruption remains contained or escalates into a broader supply shock. For now, the return of the oil risk premium is enough to keep Dollar supported, but a decisive break in energy markets—particularly via the Brent–WTI spread—would be needed to trigger a more pronounced global risk-off move.

In Asia, Nikkei fell -0.09%. Hong Kong HSI is up 0.20%. China Shanghai SSE is down -0.66%. Singapore Strait Times is up 1.02%. Japan 10-year JGB yield is down -0.003 at 2.227. Overnight, DOW rose 0.83%. S&P 500 rose 1.01%. NASDAQ rose 1.22%. 10-year yield fell -0.065 to 4.220.

RBA rate hike to 4.10% lacks conviction as board splits 5–4

RBA raised the cash rate to 4.10%, but the narrow 5–4 vote revealed a divided board and limited conviction behind the move. While policymakers cited rising fuel costs and inflation risks, the split highlights growing uncertainty over the outlook as energy shocks threaten both inflation and growth. Read more.

RBA united on further tightening despite split vote, Bullock says

RBA Governor Michele Bullock said the board remains united on further tightening despite the 5–4 split, with disagreement centered on timing rather than direction. She emphasized that inflation remains too high and driven by excess demand, while warning that policy may need to stay restrictive to prevent more persistent price pressures. Read more.

AUD/NZD breaks higher on RBA boost, targets 1.2467 as uptrend accelerates

AUD/NZD surged after breaking above 1.2118 as Bullock’s clarification reinforced RBA’s tightening bias. The breakout suggests upside acceleration, with focus on the 1.2467 target while 1.1867 support holds. Read more.

Bitcoin rebounds above 75k on short squeeze, 80–85k zone to cap upside

Bitcoin climbed back above 75k as a short squeeze drove a sharp rebound after sellers failed to push prices toward 60k earlier this month. Momentum has improved with a break above the 55-day EMA, but gains may be capped in the 80–85k resistance zone. A break below 70k would signal the recovery has run its course. Read more.

GBP/USD Daily Outlook

Daily Pivots: (S1) 1.3249; (P) 1.3295; (R1) 1.3365; More...

GBP/USD dips mildly as recovery from 1.3216 lost momentum, but holds well above this support. Intraday bias stays neutral and more consolidations could be seen. Risk will stay on the downside as long as 1.3482 resistance holds. Below 1.3216 will resume the fall from 1.3867 to 1.3008 structural support. Firm break there will carry larger bearish implication and target 1.2524 fibonacci level.

In the bigger picture, considering bearish divergence condition in both D and W MACD, a medium term top should be in place from 1.3867. Firm break of 1.3008 support will argue that fall from 1.3867 is at least correcting the rise from 1.0351 (2022 low) with risk of bearish reversal. That would open up further decline to 38.2% retracement of 1.0351 to 1.3867 at 1.2524. For now, medium term outlook will be neutral at best as long as 1.3867 resistance holds, or under further development.

AUD/NZD broke higher today as Aussie strength accelerated following Governor Michele Bullock’s clarification that the RBA’s split decision was about timing rather than direction. The pair initially dipped after the surprise 5–4 vote, but sentiment quickly reversed as markets reassessed the outcome as a “hawkish hold” rather than a dovish shift.

Bullock’s comments helped restore confidence in the RBA’s tightening path, emphasizing that all members agreed further policy tightening would be needed to address inflation. That shift in interpretation drove broad-based AUD buying, with AUD/NZD leading gains as the Kiwi lagged amid weaker domestic momentum.

Technically, the break above 1.2118 temporary top confirms resumption of the rally from 1.1412. More importantly, price has pushed through the near-term rising channel ceiling, suggesting that the uptrend is not just continuing but accelerating. The structure supports the view that the current move represents the fifth leg of the broader rally from 1.0649 (2025 low).

Looking ahead, the next key target comes at 100% projection of 1.0759 to 1.1634 from 1.1412 at 1.2467. The bullish outlook will stay intact as long as 1.1867 support holds. Any retreat above that level is likely to be seen as brief rather than a reversal.

RBA Governor Michele Bullock pushed back against the market’s initial interpretation of a divided board, emphasizing that the 5–4 split in the decision on today's 25bps hike reflects a debate over "timing" rather than "direction". She stressed that all members agree inflation remains too high and that further policy tightening will be required, with those voting to hold doing so in what she described as a “hawkish” sense.

Bullock highlighted that underlying inflation pressures remain firmly rooted in domestic "excess demand". Additionally, she made clear that while rising fuel costs from the Middle East conflict will add to inflation, they were "not the reason for today's decision". Instead, the decision was driven by persistent demand-driven price pressures.

The governor also indicated that the RBA would act to prevent inflation from becoming entrenched, even at the risk of recession. "We don't want to have a recession, but if it's hard to get inflation down, then you know we're going to have to deal with that, possibly," she said.

Meanwhile, she stopped short of explicitly endorsing further hikes in the near term. "I can't say whether or not this has just ended up being a front loading or the first of many [rate hikes]."

But, with policymakers focused on bringing demand back into balance, the path ahead remains data-dependent, the message is clear: the RBA is united in its inflation fight, even if divided on how quickly to proceed.

RBA delivered a widely expected 25bps hike to 4.10%, but the real surprise lay in the 5–4 split decision, exposing a deeply divided board. The narrow margin suggests that while policymakers are concerned about inflation, there is no strong consensus that further tightening is clearly warranted.

At the center of the debate is the energy-driven inflation shock stemming from the Middle East conflict. RBA noted that sharply higher fuel prices are already lifting inflation expectations and could keep inflation above target for" longer than previously anticipated. This risk appears to have tipped the balance in favor of a rate increase.

Yet the statement also highlighted the growing concern that the same shock could undermine growth. Policymakers noted substantial uncertainty around both domestic activity and global conditions. "Higher prices and prolonged uncertainty may cause growth to be lower in Australia’s major trading partners and also in Australia," RBA warned.

Taken together, the decision reflects reluctant tightening rather than a confident hawkish shift. The narrow vote signals that the bar for further hikes is rising, with future policy likely to depend heavily on incoming inflation data. Markets may still price additional tightening, but the internal division suggests RBA could be approaching the limits of its current cycle.

Full RBA statement here.