• USD/JPY traders cogitate on dive following a likely 1990 high MoF defense

• The 160.245-154.40 plunge came amid thin holiday and overbought conditions

• Japan FX policy diplomat Kanda all but confirmed the intervention

• He said more could come any time in "speculative, rapid and abnormal" mkt

• The 156.88 recovery high ran into resistance by the daily tenkan

• Another brief slide was seen from there in a nervous market pre-month-end

• And before ADP, JOLTS and Fed on Wed and Friday's employment report

• Though intervention could cap extremely O/B prices by 1990's 160.35 peak

• A sustained selloff would need softening US data and renewed Fed cut pricing

• The BoJ punted last week, putting supporting yen firmly on the MoF's back

• Q3, Q4 2023 corrections were caught by 55-DMA, weekly cloud top

• Those supports are currently at 146.08/25 and a bit out of reached

• At least w/o more interventions and or a huge dovish NFP miss on Friday

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• Cable through its 200-DMA (1.2556) emboldening bulls

• Daily close sets up potential move to 1.27 (pre-US CPI level)

• EUR/GBP heavy, but 0.85 likely to put a floor under the cross

• Slew of U.S. data to drive price action (QRA, Fed, NFP)

• COMMENT-Sterling's rebound faces key test as Fed, NFP awaits nL1N3H21QC

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• NY opened near 1.0720, selling took hold as US$ was bid in early NY

• 1.06905 traded on EBS, buyers emerged, pair neared 1.0725 late

• Lower US yields US10YT=RR, USD/CNH drop to 7.2350 (D3) helped buoy

• Equity ESv1 gains & gold XAU= turning positive helped weigh on US$

• EUR/USD held below the 21-DMA, 50% Fib of 1.0885-1.0602 late in the day

• Techs are mixed; daily RSI rising but monthly RSI is falling

• China April NBS mfg, non-mfg & Caixin mfg PMIs are data risk in Asia

• EZ April HICP, Q1 GDP & US Q1 employment costs a risks in Europe, NY

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Synopsis:

ANZ projects potential downside risks for the upcoming U.S. Nonfarm Payrolls (NFP) based on recent employment trends and weak April PMI data. Meanwhile, the upcoming Federal Open Market Committee (FOMC) meeting could provide modest support for the USD, though much of the hawkish sentiment may already be priced in.

Key Points:

• Weakening Employment Indicators: ANZ points out discrepancies in U.S. employment data, with the household survey suggesting weaker conditions than the headline nonfarm payrolls figures. The April Flash PMIs employment composite index dipped below 50, marking the lowest point since June 2020 and indicating significant softening in employment, which could foreshadow broader economic slowdowns.

• PMIs and Payroll Trajectory: While PMIs have not consistently predicted monthly payroll outcomes, ANZ notes that they generally track the broader trends in employment changes. The recent sharp decline in the employment index is particularly concerning as it might signal a forthcoming downturn in payroll numbers.

• Upcoming Employment Data: Further insights will be required to confirm these trends, with additional data points such as the Conference Board’s job differential gauge anticipated this week. These metrics will be crucial in solidifying expectations for the labor market ahead of the official payroll report.

• FOMC Meeting Outlook: The FOMC's stance appears modestly supportive for the USD, driven by a shift toward more hawkish commentary from Fed officials during the pre-meeting blackout period. However, ANZ suggests that market pricing likely already reflects expectations for any hawkish statements from Chair Powell.

• USD Strategy: Given the potential for weaker payroll data and the anticipated impact of the FOMC meeting, ANZ leans towards a softer USD outlook heading into next week’s labor market update.

Conclusion:

With key employment data on the horizon and the FOMC meeting set to take place, ANZ advises caution regarding the USD's position. Investors should prepare for potential volatility in the currency markets, particularly if employment indicators continue to show weakening and if the FOMC's support does not exceed market expectations.

• AUD/USD fell below the 55- & 200-DMAs, buyers emerged, pair turned positive

• The thinning daily cloud was pierced and a 13-session high was set

• Rally off the April 19 daily low has helped generate bullish tech signals

• Monthly RSI diverged on the 5-month low set on April 19 & is now rising

• Daily RSI is rising & not overbought; RSIs imply upward momentum

• Hold above a slew of daily moving averages reinforces bullish signals

• US employment reports, Fed policy meeting are major looming risks

• Should risks be US$ negative AUD/USD longs may target December's high

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Synopsis:

ING analyzes the recent sharp movements in USD/JPY, suggesting strong indications of Japanese intervention in the FX market. The bank highlights the rapid market response and the strategic implications for traders, particularly in light of upcoming U.S. economic events.

Key Points:

• Potential Intervention: Early morning trading saw USD/JPY hit the 160.0 mark before experiencing significant volatility, characterized by sharp declines followed by partial recoveries. This pattern, combined with the timing and magnitude of the moves, suggests potential intervention by Japanese authorities.

• Market Response: After touching 160.0, USD/JPY faced a substantial drop to 157.20, with movements exhibiting classic signs of currency intervention such as sudden large shifts and increased trading volume. The timing on a Japanese public holiday may have also amplified the effects due to thinner liquidity.

• Official Comments: Japan's top currency official, Masato Kanda, has not confirmed the intervention, maintaining a stance of "no comment for now." This lack of official confirmation keeps the market on alert for any further clarifications.

• Historical Context and Market Dynamics: The situation mirrors actions from September 2022 when Japan intervened in the market with an estimated $20bn. Following the initial intervention last year, USD/JPY eventually stabilized at levels moderately below those pre-intervention. ING anticipates a similar trajectory could unfold, setting a near-term resistance level for USD/JPY around 156.50 based on past patterns.

• Future Outlook and U.S. Economic Events: With a week full of significant U.S. economic events, including potential signals from the Federal Reserve, the yen could face renewed pressure. Traders may be cautious about driving USD/JPY back to the 160 level, mindful of Japan's possible ongoing intervention strategy and the risks of re-testing the authorities' resolve.

Conclusion:

ING's assessment suggests that the recent volatility in USD/JPY likely indicates an intervention by Japanese authorities, though official confirmation is still pending. Traders are advised to be cautious, particularly given the likelihood of additional U.S. economic developments that could impact the currency pair. The situation remains fluid, with market participants keenly awaiting further signals from Japanese officials and upcoming U.S. data that could influence future movements and intervention strategies in the FX market.

EUR/USD erased most of its gains Monday as longs seem to lack conviction ahead of a slew of U.S. data and Fed risks, which could set the stage for a move below 1.0500.

EUR/USD neared the 50% Fibo of the 1.0885-1.0602 decline then began sliding despite April German CPI indicating inflation remains sticky, which could fuel doubts the ECB will begin a sustained rate cutting cycle.

German-U.S.
2-year yield spreads US2DE2=RR, which EUR/USD is correlated with, actually widened on the session and neared key -202/-205bps support, a break of which could bring out EUR/USD sellers.

Erosion of EUR/USD gains Monday should concern longs as suspected intervention driving USD/JPY sharply lower failed to fuel EUR/USD gains, a potential sign that rally sellers hold the reins.

EUR/USD's rally off the April 16 low might not bolster bulls' confidence since it appears corrective in nature and a bear flag continuation pattern formed on daily charts.
The flag reinforces bearish signs from Friday's daily doji, falling monthly RSI and the pair's inability to hold above the aforementioned Fibo.

Investors are now focused on U.S. employment reports and Fed risks.

Should robust jobs data emerge and the Fed take a hawkish lean, U.S. yields and the dollar may rally, heralding a fresh leg lower for EUR/USD.

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Synopsis:

MUFG analyzes the recent sharp movements in the yen, suggesting that the overnight volatility may indicate unofficial intervention by Japan to support its currency. This potential intervention comes after significant weakening of the yen, especially following the Bank of Japan's (BoJ) recent policy meeting.

Key Points:

• Yen Volatility and Potential Intervention: The USD/JPY experienced extreme volatility overnight, spiking to a high of 160.17 before dropping back to 155.06. This pattern is reminiscent of the market behavior observed during Japan's last intervention in the foreign exchange market in the autumn of 2022. Japan's top currency official's non-committal response to intervention queries further fuels speculation of government action.

• Lack of Official Confirmation: While there has been no official confirmation of intervention from Japanese authorities, the significant escalation in yen weakening post-BoJ meeting provides a plausible justification for such measures.

• BoJ's Recent Policy Stance: The BoJ's latest policy meeting did not strongly counter the trend of yen weakening, with Governor Ueda not signaling imminent rate hikes nor expressing significant concern over the yen's recent declines. This stance likely contributed to the market's continued bearish outlook on the yen.

• Impact of Yen Weakness on Inflation: The current level of yen depreciation is not deemed sufficient by the BoJ to significantly influence the underlying inflation trend, which would necessitate a shift in monetary tightening strategies.

• Effectiveness of Intervention: According to MUFG, direct intervention in the FX market may at best slow the pace of yen weakening but is unlikely to reverse the trend. The intervention, if confirmed, is seen as a temporary measure to buy time for potential shifts in economic fundamentals that could more sustainably support the yen.

Conclusion:

MUFG posits that recent actions suggestive of FX intervention by Japan are likely aimed at temporarily stemming the yen's decline rather than initiating a long-term reversal. The effectiveness of such measures may be limited unless accompanied by significant changes in Japan's economic fundamentals or monetary policy adjustments.

• AUD/USD hit 0.6522 in Asia, buyers emerged, 0.6587 traded, a 13-session high

• NY opened near 0.6565, pair traded up +0.47% with help from upbeat risk

• USD/CNH fell to 7.2483 (D3), stocks ESv1 & commodities HGv1XAU= gained

• USD/JPY drop to 154.40 (EBS) & US yield US2YT=RR slide helped buoy AUD/USD

• Pair rallied above 55- & 200-DMAs, pierced the daily cloud then pulled back

• Techs are bullish; RSIs rising & long lower wick in place on April candle

• US ADP, JOLTS, weekly claims, payrolls & ISM mfg are data risks this week

• Fed statement, Powell's presser are major event risks for Wednesday

• For more click on FXBUZ

• 1.2509 is low water-mark for cable since its 1.2548 Asian session peak

• 1.2548 is highest level since April 12 (1.2558 was high that day)

• BHP adviser canvassing investor views on improved Anglo bid, sources say

• News of BHP's 31 billion pound offer for Anglo lifted GBP/USD last week

• CFTC data showed net GBP position recently flipped from long to short

• Flip accompanied cable drop to 5-month low of 1.2299 at start of last week

What matters is how long USD/JPY stays down in the wake of suspected FX intervention that has seen the pair dive from 160.24 to 154.20 before rallying toward 156.

How far USD/JPY falls is less important than where the pair ends up, as an inability to hold the pair down will fuel greater demand.
Should USD/JPY exceed the level where BOJ was first suspected to have sold, a big rise could follow that the central bank cannot stop easily, and may fail to hold altogether without help.

The less time USD/JPY stays down, the greater the bullish reaction.
So once intervention begins it must continue, and perhaps grow in intensity if the central bank wishes to suppress USD/JPY at a lower level.

The influence of intervention when USD/JPY is high - as it was above 160 - is much greater than it will be once USD/JPY has dropped.

The bets against the yen will be reduced in the wake of this big drop.
The less wagered against the yen, the less the restraint on its drop.

While Japan's central bank maintains bond purchases, it's effectively fighting without itself for control of the yen.
Because bond buys are bigger, and are being sustained over a much longer period than intervention, their negative influence is greater, driving the yen to a record low in February this year.

For more click on FXBUZ

• Traders have wagered $14.5 billion that yen drops

• This is a much bigger bet than when BOJ intervened in 2022

• USD/JPY dropped from 151.94 in Oct 2022 to 127.22 EBS in Jan 2023

• Many of those short yen are making money

• There is never a bad time to book a profit, this may be a better one

• April 29 action certainly looks like intervention nL1N3H20EQ

• Friday's drop to 1.2549 freed up room for the pound to push higher again

• However, a long upper candle shadow so far today warns of demand fade

• The flat lining 200-day MA provides resistance at 1.2556

• A key 50% Fibo retracement above at 1.2596: taken off 1.2893-1.2299

• Fourteen day momentum is negative but RSI is rising

• On balance still a market but consolidation below 1.2600 likely

  For more click on FXBUZ

• AUD/USD spikes as high as 0.6587 from opening 0.6524

• Briefly peeked above 0.6586 top of Ichimoku cloud resistance

• Mon close above that will clear a path higher to 0.6600

• Sharp downmove in USD/JPY seen as a broader USD trigger

• FX intervention suspected after USD/JPY crossed 160.00

• Market have been eyeing psych barrier as a line-in-the-sand

• For more click on FXBUZ

• USD/JPY trades at the base of a 156.55-160.24 range today with Tokyo closed

• The move from 158.66 to 160.24 and back to 1.5930 took less than 10 minutes

• Stops and option structures around 160.00 were triggered by the jump

• USD/JPY has fallen from 159.60 to touch 156.24 in the last 15 minutes

• At this point there has been no confirmed Bank of Japan activity

• The moves are exaggerated by the Tokyo holiday, so liquidity is at a premium

• Initial support at 155.248 10-day moving average then Friday's 154.97 base

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• AUD/USD opened +0.23% at 0.6533 as AUD best performing major currency Friday

• Rally extended in Asia as carry demand and broad USD weakness underpinned

• Asian equity markets upbeat and helped to encourage AUD carry trade buying nL1N3H203A

• AUD/USD traded above the 38.2 of the Dec-April fall at 0.6556

• The high in Asia so far has been 0.65698 and its around 0.6560/65

• Support is at the 200-day MA at 0.6525 and 21-day MA at 0.6505

• FOMC decision on Wednesday may limit large directional move in meantime

• For more click on FXBUZ

• USD/CNH slips to 7.2633 from opening 7.2690; last 7.2668

• Bullish inside Bollinger uptrend channel if 7.2647 holds

• PBOC fix at 7.1066, around -1500 pips from neutral

• Stronger dampening applied following Friday's DXY surge

• Chinese FX authorities are still tightly controlling yuan

• Japan's yen hitting new 34-yr low helps support USD/CNH

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• AUD/USD moving higher and is trading @ 0.6545 after closing Friday @ 0.6533

• USD starting off week on a soft note and is broadly lower in early trading

• Risk assets firm with the E-minis up 0.18% and the Australia ASX up 0.6%

• AUD/USD resistance is at the 38.2 of Dec-April fall at 0.6556

• Friday's high was at 0.6554 where selling is tipped

• Support is at 200-day MA at 0.6525 after it closed above that reading Friday

• For more click on FXBUZ

• USD/CNH ended Fri just above key resistance around 7.2680

• But fades slightly early Mon to last trade 7.2675

• Bullish momentum building with target set on 7.3000 barrier

• USD/JPY scaling new 34-year highs on Fri spurs USD/AXJ

• US core inflation rose as expected in Mar nL2N3GY39R

• China Apr PMIs due Tues; slower expansion expected

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• USD/JPY recovers from minor dip in Asia after a 1.8% surge on Friday

• Opens at 158.00 from 158.33 New York close; Asia range 158.43-157.80

• Traders wary of BOJ intervention as rise "too far, too quick"

• Sticky U.S. inflation, yawning U.S.-Japan yield differentials underpin

• Benign Japanese inflation data, BOJ's dovish hold Friday undermine JPY

• Japan frets over relentless yen slide as BOJ keeps ultra-low rates

• Fri range 154.97-158.44; traders now eye 160.00 with support at 155.00

• FOMC meeting, US payrolls to set directionthis week

• For more click on FXBUZ

• AUD/USD managed to rise 0.23% Friday as AUD was best performing currency

• Rising commodities helping to broadly underpin AUD nL5N3GZ3G1nL2N3GZ0H9

• AUD/JPY carry trade demand - as market prices in chance of another RBA hike

• AUD/USD closed above the 200-day MA (0.6525) to conform bullish bias

• Resistance is at the 38.2 of the December-April fall at 0.6556

• A break above 0.6560 targets the 50% of that move at 0.6616

• Support is at the 21-day MA at 0.6505 where buying is tipped

• Key today will be AUD/JPY flows out of Tokyo after it rose 2.0% Friday

• For more click on FXBUZ

Repeats with no changes

• EUR net spec position swings to short of 9,989 contracts as of Tuesday

• Previous week, EUR had long of 12,224

• First EUR short since September 2022

• JPY short 179,919 -- biggest since mid-2007 -- vs 165,619 contracts the previous week

• GBP short 26,233 -- first short since November 2023 -- vs long of 8,619 contracts

• AUD short 96,239 contracts vs 101,083

• CHF short jumps to 42,562 contracts -- biggest short since September 2018 -- vs 36,212

• Dollar bounce back keeps pressure on cable, now sub-1.25

• U.S. PCE causes little stir on better than feared beat nL2N3GZ2A6

• 200-HMA and 23.6% fib of YTD range at 1.2430 offers support for now

• Focus turns to plethora of event risk - includes Fed, QRA and NFP

• COMMENT-Fedspeak round-up: More confidence needed to cut nL2N3GZ0OC

• Resistance: 1.25, 1.2515-25 (Feb low, 38.2% fib), 1.2555 (200-DMA)

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• AUD/USD opened NY near 0.6535, pair rallied to 0.65545 after US March PCE

• Sellers emerged however as US yields US2YT=RR, US$ started rallying

• USD/JPY hit a fresh 34-year high, USD/CNH rallied to 7.2680 on D3

• AUD/USD fell to 0.65175, slide stalled & buyers then took over

• Yields softened, gold XAU= rallied & equities ESv1 saw big gains

• AUD/USD neared 0.6535, pair traded up +0.21% late in the session

• Techs lean bullish; RSIs rising, pair traded above the 10- & 21-DMAs

• US ADP, JOLTS, claims, payroll reports will be in focus next week

• For more click on FXBUZ