• USD net spec G10 long -$3.6bn in Apr 24-30 period; USD index +0.6% in period

• Take IMM data w/grain of salt, was prior to USD dip post-Fed hold Wednesday

• EUR$ -0.36%, specs +3,212 contracts, now -6,777; low ECB rates key driver

• $JPY +1.93%, specs +11,531 now -168,388 contracts; rise pre-intervention

• GBP$ +0.34%, specs -2,757 contracts now -28,990; US-UK rate spreads in focus

• $CAD +0.85% in period; specs +13,249 now -63,201 contracts

• AUD$ +1.19%; specs +13,004 contracts now -83,235; AUD, CAD shorts lightening

• BTC -9.78% in period; specs +6 contracts; lower Fed rate view steadies

• NY opened near 0.6585 after 0.6565 traded overnight, rally then extended

• US April payroll report indicated the jobs market is cooling a bit

• US yields US2YT=RR, US$ fell sharply and risk assets rallied

• USD/CNH fell to 7.1652 (D3) while stocks Esv1, copper Hgv1 rallied

• AUD/USD rallied to 0.6650 then pulled back after April ISM non-mfg report

• 0.6601 traded but risk remained buoyant, pair sat near 0.6615 late

• Techs are bullish; RSIs rising, pair above slew of daily MAs & daily cloud

• Rally following the March monthly doji reinforces bullish signals

• For more click on FXBUZ

• GBP$ ekes out slight gain, +0.06% at 1.2545; Friday range 1.2634-1.2530

• Pair climbed to 3-week high 1.2630 after soft U.S. payroll data

• Sterling bulls feast after soft payroll data affirms dovish Fed tack

• Data initially sank UST yields dragging USD broadly lower, then USD sank

• GBP$ supported ahead of minor Fib at 1.2526 as bottom-fishers entered mkt

• Below 1.2525 supt at 10-DMA 1.2504, Apr 26 low 1.2449, lwr 30-d Bolli 1.2359

• Res at 1.2596, bruised 50% Fib of 1.2894-1.2299 and 1.2630 Friday high

• With Fed tipped to less-hawkish path, focus shifts to BoE Presser May 9

Synopsis:

HSBC's proprietary commodity cycle model, COCCLES, indicates that the commodity market is currently in a "Weak Bull" phase. This stage, characterized by moderate upward momentum, is likely to persist based on historical trends and the model's current outputs.

Key Points:

• Model Insights: COCCLES assesses the probability of various commodity market cycles. The transition to a Weak Bull phase has been confirmed over the past month, suggesting sustained but moderate growth in commodity prices.

• Cycle Duration: Historical data from COCCLES suggest that Weak Bull phases typically last at least six months. This indicates that the current cycle could continue to influence market conditions well into the future.

• Current Probabilities: Although the confidence in the Weak Bull cycle has slightly decreased from near 100% to approximately 90%, this level of probability is still strong and aligns with previous periods where the cycle has maintained its influence over an extended time.

• "We expect this Weak Bull phase to continue. First, from a modelling point of view there are a broad array of drivers pushing the probability of a Weak Bull cycle higher...Second, from a fundamental point of view we see signs that the global growth cycle has troughed and that commodity supply generally remains tight.," HSBC notes.

Conclusion:

The insights from HSBC's COCCLES model provide valuable foresight into the commodity markets, suggesting a continuation of the Weak Bull phase. 

GBP/USD rallied on Friday to a flash intra-day high at 1.2634 after unexpectedly soft U.S. payrolls data shifted Fed rate-cut expectations back to September, which could put cable's early April peak of 1.2709 on the agenda.

The surprisingly large fall in payrolls growth highlighted Fed Chair Jerome Powell's comment on Wednesday that it is unlikely the next policy move would be a hike, which could leave traders inclined to buy sterling and unwind recent shorts.

However, it also puts the BoE's rate announcement on May 9 in focus as well as Monday's UK retail sales.

The Reuters consensus forecast is for another BoE 8-1 vote to hold rates steady.

However, Reuters forecast data does have three respondents, out of 14 sampled, forecasting a second vote to cut.

If the BoE were to follow the Fed's lead and drifts toward a more dovish rate outlook of its own, recent sterling gains are likely to unravel.

For more click on FXBUZ

Synopsis:

Credit Agricole suggests that recent interventions by Japan's Ministry of Finance (MoF) and Bank of Japan (BoJ) have successfully created asymmetric risks around the USD/JPY exchange rate. Estimated expenditures nearing those of previous interventions in 2022 have effectively influenced market expectations and risk assessments.

Key Points:

• Intervention Estimates: Preliminary data indicates that the BoJ may have spent approximately USD 55 billion on interventions to support the yen, with significant purchases occurring on specific days last week.

• Comparison with Previous Interventions: This level of intervention is close to the USD 60 billion spent during the last major intervention effort in September and October 2022, which resulted in a notable depreciation of USD/JPY.

• Market Impact: The actions by the MoF and BoJ have likely set a temporary ceiling on USD/JPY, deterring traders from pushing the pair significantly higher. This effect is complemented by the recent dovish signals from the Federal Reserve, which curb expectations of a rapidly strengthening USD.

Conclusion:

The concerted efforts by Japan's financial authorities appear to have tempered the bullish momentum in USD/JPY, establishing a cautious trading environment. Investors may be hesitant to challenge these levels soon, given the aggressive stance of the MoF and supportive rhetoric from the Fed.

EUR/USD may be set to enter a range-bound period as Fed and ECB rate paths appear to be converging a bit following the U.S. jobs report on Friday.

Following the downside surprise to payrolls, EUR/USD spiked up, piercing the 55- and 200-DMAs on its way to a near one-month high.

The April payroll data showed unemployment climbed to 3.9%, above the 3.8% estimate, while payrolls printed 175k versus estimates for 243k and average hourly earnings fell to 0.2% from 0.3% in March.

U.S.
Treasury yieldsUS2YT=RR spiked lower and short-term rates markets priced in more than 50bps of Fed cuts for 2024, an increase from near 35bps on Thursday.

The dollar's yield advantage over the euro eroded as German-U.S.
spreads US2DE2=RR hit their tightest since April 2.

EUR/USD's rally may not have much further to run, however, and the broader 1.0500-1.1100 range could hold as investors may now see rate-cutting paths for the ECB and Fed converge after their recent divergence.

Should future jobs reports indicate softening labor markets U.S. rates and yields could sink further and investors price in more Fed cuts, which would bring its policy path more into alignment with investors' expectations for ECB easing.

For more click on FXBUZ

Synopsis:

Bank of America advises investors to exhibit patience in buying dips in USD/JPY, highlighting recent large-scale interventions by Japanese authorities and recommending waiting for more favorable risk-reward levels closer to the low 150s.

Key Points:

• Intervention Size: Market speculation suggests significant intervention by the Ministry of Finance (MoF) on April 29 and May 1, which may approximate the total intervention scale seen in 2022. Exact figures will be confirmed by the end of May.

• Structural Outflows: BofA notes that ongoing structural outflows from Japan are expected to keep the yen weaker over an extended period, suggesting a long-term downtrend in JPY despite recent interventions.

• Investment Strategy: While the temptation to buy dips might be strong, BofA recommends investors wait for USD/JPY to approach lower levels around the 150s for a better risk-reward scenario. This cautious approach accounts for potential further interventions that could affect short-term price movements.

Conclusion:

In light of recent substantial interventions in the currency market by Japanese authorities, and the underlying structural pressures expected to weaken the yen, Bank of America advises a strategic wait for more advantageous buying opportunities in USD/JPY

Synopsis:

CIBC notes a cooling in the US labor market for April, with job gains and wage growth both falling short of expectations. This report may align with the Federal Reserve's preference for a slowdown to address inflation, while still indicating overall labor market resilience.

Key Points:

• April Job Gains: The US added 175,000 jobs in April, below the anticipated 240,000, and a decrease from March's 315,000 gain. Revisions from the previous two months resulted in a net decrease of 22,000 jobs.

• Unemployment and Participation Rates: The unemployment rate ticked up to 3.9%, higher than the expected 3.8%, while the labor force participation rate remained stable at 62.7%.

• Wage Growth: Average hourly earnings rose by 0.2% month-over-month, slower than previous trends, which could ease some inflationary pressures.

• Federal Reserve's Response: The Federal Reserve might view this report favorably as it shows signs of cooling in the labor market without a drastic downturn, supporting a gradual approach to inflation management. The steady participation rate and moderated wage growth are particularly aligned with the Fed's current policy goals.

Conclusion:

Although the US labor market has shown signs of cooling in April, it remains robust by historical standards. This moderation in job gains and wage growth could help temper inflation without undermining the overall employment landscape, offering the Fed more leeway in its policy decisions. CIBC suggests that the Federal Reserve will maintain its current policy stance while continuing to monitor economic indicators closely to assess the persistence of Q1's price pressures

• Cable meets headwind by 1.2569 after rising from 1.2541 (early London low)

• 1.2569 was Monday's peak (high since April 11). 1.2472 was Thursday's low

• US jobs report due 1230 GMT: April NFP f/c at 243k; jobless rate f/c at 3.8%

• NFP miss might inflate GBP/USD to 1.26 (1.2596 is 50% of 1.2893-1.2299)

• Another BoE rate hold expected next week (May 9); will cut follow in June?

• UK public sector productivity goes from bad to worse, ONS data shows

• With no tier-one EZ data the focus is U.S. jobs and ISM services

• Dollar softer vs its basket: 0.4% drop in USD/JPY to blame

• EUR/USD steady to firmer and another recovery high, 1.0747-EBS

• EUR just nudging above the key 50% 1.0744 Fibo off of 1.0885-1.0602

• Apr. 26 1.0753 high the initial resistance then 1.0772 61.8% Fibo

• A May 7 cloud twist above market at 1.0837-43 could have some influence

• Sizeable shift down in EUR/JPY dragging on EUR/USD gains

• EUR/USD support at 1.0724 session low

  For more click on FXBUZ

• Just over EUR 11 billion of expiries between 1.0600-1.0815 for Friday's cut

• Close to a yard of 0.5950s kiwi expiries in the diary

• The AUD also busy with 8-billion worth of deals between 0.6450 and 0.6600

For more click on FXBUZ

• AUD/USD has respected its 0.6565-0.6585 Asia range since the European open

• 0.6585 is two pips shy of Monday's peak (highest level since April 10)

• US jobs report due at 1230 GMT: April NFP f/c at 243k; jobless rate f/c 3.8%

• NFP miss might inflate AUD/USD through 0.6600 (0.6644 was April high)

• Support points below 0.6565 include 0.6540 (Wednesday's high) and 0.6500

• 36 of 37 economists expect RBA rate hold on May 7; one forecasts 25 bps hike

• Cable consolidates gains from 1.2472 (Thursday's low) pre-US jobs report

• Pound supported by word Glencore studying an approach for Anglo American

• Anglo rejected 31 billion pound offer from BHP last week nL1N3H3140

• 1.2557 was GBP/USD high in Asia (1.2569 was two-and-a-half week high Monday)

• Thursday's low was five pips shy of Wednesday's pre-Fed event risk low

• Labour make gains at the expense of PM Sunak's Tories in UK local elections

• USD/JPY has scope for a break above Monday's 160.24 new multi-year high

• Medium-term outlook bullish since spot overcame major 152.60 Fibo in April

• 152.60 Fibo, a 38.2% retrace of major 277.65 to 75.31 (1982 to 2011) drop

• Those that are bullish need another weekly close above 152.60 Fibo

• Recall spot managed to register three weekly closes in a row above 152.60

• We remain long at 155.25 for 165.00, meanwhile our stop is just below 150.00

• EUR/JPY 164.02-164.46 EBS range on Friday. USD/JPY Trader TGM2336

• EUR/USD's failure, in April, under the 1.0611 Fibo led to a recovery moves

• 1.0611 Fibo is a 76.4% retrace of the 1.0448-1.1139 (Oct-Dec) EBS rise

• The negative alignment of the tenkan and kijun lines still points to a drop

• We are short at 1.0725 for a slump to our 1.0525 target

• However, 14-day momentum turned positive on Thursday, highlights upside risk

• EUR/USD Trader TGM2334. Previous update nL1N3H50HG

• AUD/USD +0.1% in Asia after trading a relatively narrow 0.6565-0.6585 range

• Opened at 0.6568, moved higher as JPY rallied above 103.00, CNH above 7.2000

• Failed to break 0.6587 Mon high, settles at 0.6572 ahead of Europe open

• Fed indicating that it is still leaning toward a dovish stance weighs on USD

• Expectations of a hawkish shift in RBA rate stance on Tue underpins AUD

• POLL-RBA to hold rates in May, only cut once by end-year

• Focus turns to U.S. payrolls data Friday, forecast is for 243,000 new jobs

• Resistance 0.6585-90, 0.6610-15, support 0.6545-50, 0.6520-25

• For more click on FXBUZ

Synopsis:

Danske Bank holds a negative outlook on the Swiss Franc (CHF), anticipating a potential larger-than-expected rate cut by the Swiss National Bank (SNB) in June due to lower inflation expectations and easing geopolitical tensions.

Key Points:

• EUR/CHF Movement: The currency pair saw significant movement, breaking above the 0.98 level. This was influenced by a decrease in geopolitical risks and an improving market sentiment towards the Euro against the Swiss Franc.

• Inflation Expectations: April’s inflation data is anticipated with the consensus expecting a slight rise in headline inflation but a drop in core inflation below 1.0% year-on-year. This data is crucial as it will shape expectations for the SNB's monetary policy decisions in June.

• SNB Rate Cut Outlook: Danske Bank has consistently forecasted a 25 basis point cut from the SNB in June. However, they now see a possibility for a more aggressive 50 basis point reduction if inflation figures trend significantly below target, highlighting an underappreciated risk of deeper cuts.

• Global Monetary Policy Context: The expected easing cycle across global central banks might be delayed, which reinforces the bearish view on CHF, particularly if other central banks delay easing or adjust their paths less aggressively than anticipated.

Conclusion:

Danske Bank advises investors to maintain a cautious stance on the Swiss Franc in the near term, especially in light of potential aggressive monetary easing by the SNB and the broader context of global monetary policies. The bank suggests that the upcoming inflation data will be pivotal in solidifying the SNB's policy trajectory, potentially leading to significant currency movements in EUR/CHF.

• AUD/USD up 0.2% in Asia as dovish leaning Fed weighs broadly on USD

• Boosted by stronger JPY and Asian currencies; CNH rises above 7.2000

• Japan interventions undermine dollar, traders wary of more MOF action

• Expectations of a hawkish shift in RBA rate stance on Tue underpins AUD

• POLL-RBA to hold rates in May, only cut once by end-year

• Some analysts hawkish, Rabobank expects RBA rate hikes in August and Nov

• Focus shifts to U.S. payrolls data due Fri, forecast is for 243,000 new jobs

• Resistance 0.6585-90, 0.6610-15, support 0.6545-50, 0.6520-25

• For more click on FXBUZ

• USD/JPY recovers some ground as some demand surfaces below 153.00 in Asia

• Rallies from 152.88 low as shorts square positions ahead of U.S. NFP Fri

• Dollar upside limited as Japan interventions saps confidence of yen shorts

• Fed indicating that it is still leaning towards a dovish stance weighs

• Japan holiday Fri, Mon; markets thin, traders remain on intervention watch

• Wide U.S.-Japan yield differential, BOJ's still-easy policy limit JPY rise

• Support 152.61, 38.2% Fibo of Dec-April rally; resistance 153.90-154.00

• For more click on FXBUZ

• USD/JPY down 0.45% in Asia as 153.00 support yields on third attempt

• Unwinding of short-yen positions weighs as Japan intervention takes a toll

• BOJ data suggests Japanese officials may have spent almost $60 bln in 2 days

• Japan holidays May 3 and May 6 add to trader unease as markets illiquid

• Dovish leaning Fed, lower U.S. yields undermine USD

• Support at 152.61, the 38.2% Fibo of December-April rally

• Resistance 153.50, 153.90-154.00; Asia range Fri 153.75-152.88

• For more click on FXBUZ

• +0.05% early after closing up 0.1%, recovering earlier losses in Europe

• EZ manufacturing activity fell in April, led by weak German PMI

• Yield spreads widened a touch, 10yr bund -3bp 2.553%, 10yr UST -2bp 4.571%

• Tight range likely in Asia ahead of the often volatile U.S. jobs data

• Charts - an inside day - 5, 10, and 21-day moving averages coil,

• 21-day Bolli bands contract, daily momentum studies rise - mixed signals

• Tested 1.0745 Fibo, 0.382% of the March/April fall is the key resistance

• The 1.0677 low in New York then this week's 1.0649 base are initial support

• 1.0700/05 1.984 BLN and 1.0750 1.093BLN are the close strikes for May 3rd

  For more click on FXBUZ

• AUD/USD likely to remain bid in Asia after closing 0.75% higher on Thursday

• Boosted by Fed indicating that it was still leaning toward a dovish stance

• Buoyed by Powell's comments Wed that Fed rate increases remained unlikely

• Decline in U.S. yields, Wall Street rally, higher CNH boost AUD sentiment

• Expectations of a hawkish shift in RBA's rate stance on Tue underpins AUD

• Focus shifts to U.S. payrolls data due Fri, forecast is for 243,000 new jobs

• ANALYSIS-Powell's soothing tone may not be enough for inflation-spooked mkts

• Resistance 0.6585-90, 0.6610-15, support 0.6545-50, 0.6520-25

• For more click on FXBUZ

Synopsis:

ING discusses the recent uplift in EUR/CHF exchange rates, attributing it largely to the re-pricing of the ECB's rate curve which has led to increased swap rate differentials between the Eurozone and Switzerland.

Key Points:

• Rate Differential Impact: The significant rise in Eurozone two-year swap rates, increasing by 60 basis points since January, contrasts with relatively stable Swiss rates. This divergence has been a key driver behind the recent appreciation of EUR/CHF.

• ECB Rate Cut Projections: ING predicts the European Central Bank (ECB) will implement three rate cuts this year, a more aggressive stance compared to the current market pricing of 68 basis points in cuts. This discrepancy presents a potential risk to further substantial gains in EUR/CHF.

• Forecast and Policy Outlook: ING maintains a near-term EUR/CHF forecast around 0.98 and anticipates a year-end rate of approximately 1.00. This outlook is based on the expectation that the Swiss National Bank (SNB) will adopt a more dovish approach than the ECB, potentially including the strategic use of foreign exchange policies to manage the CHF's strength.

Conclusion:

While the current re-pricing of the ECB curve has lifted EUR/CHF, the potential for additional significant gains may be limited if ING's predictions of more aggressive ECB rate cuts materialize.