• 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

For more click on FXBUZ

• 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

• For more click on FXBUZ

• 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

• For more click on FXBUZ

• 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)

For more click on FXBUZ

• 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

Synopsis:

Credit Agricole predicts a continued downward pressure on EUR/USD due to diverging monetary policies between the European Central Bank (ECB) and the Federal Reserve. Despite potential inflationary pressures from a weak euro and high commodity prices, the bank sees limited impact from exchange rate movements on Eurozone inflation.

Key Points:

• Monetary Policy Divergence: The ongoing divergence in monetary policy between the ECB and the Fed is expected to be a key driver for EUR/USD. The Fed's outlook and the ECB's ability to match this stance will significantly influence the currency pair.

• ECB's Exchange Rate Concerns: ECB President Christine Lagarde has highlighted concerns that further weakening of the euro, coupled with high commodity prices, could increase inflationary pressures and potentially disrupt the ECB's plans for easing. However, Credit Agricole expresses skepticism about the market's reaction, suggesting that investors might test Lagarde's resolve on this issue.

• Exchange Rate Pass-through (ERPT) Effect: Recent data suggests that the pass-through effect of a weaker euro on Eurozone inflation has diminished compared to previous years. For instance, a 10% depreciation in the euro's nominal effective exchange rate (NEER) is now estimated to increase headline CPI by only 0.2-0.3% after four quarters, compared to 0.5% in earlier periods.

• Resilience of the Euro NEER: Despite the weakness observed in EUR/USD, the euro's nominal effective exchange rate has remained relatively stable, supporting the view that direct impacts on inflation might be subdued.

• Upcoming Inflation Data: The upcoming Eurozone April flash Harmonised Index of Consumer Prices (HICP) is expected to indicate further disinflation, reinforcing expectations for an ECB rate cut in June followed by additional easing measures later in the year.

• EUR/USD Outlook: Given these factors, Credit Agricole advises that EUR/USD should remain a sell on rallies next week, anticipating that any upward movements in the currency pair may be short-lived.

Conclusion: As the ECB and Fed continue on their divergent paths, EUR/USD is likely to face downward pressures, influenced by policy decisions and evolving economic indicators. Investors should closely monitor upcoming inflation data and ECB communications, as these will play crucial roles in shaping market expectations and the trajectory of EUR/USD. Selling on rallies could be a prudent strategy in this environment, given the limited efficacy of a weaker euro in driving up inflation and the anticipated monetary easing by the ECB.

Cable went on the back foot to close out the week, failing to maintain a foothold above the 1.25 handle and in need of a solid foray across the 200-day moving average beyond that figure to change the soft-sterling narrative.

After the worrying price data in the Q1 U.S. GDP report, traders appeared to breathe a sigh of relief following March PCE figures.

Despite a topside surprise relative to expectations, a 0.1ppt beat on both the core and headline figures were arguably less than what could’ve been given the GDP report.
In turn, market pricing over Fed policy was little changed with 35bps of easing seen by year-end 0#FEDWATCH.

The data reaffirms the current stance from Fed officials that more confidence is needed until they can consider cutting interest rates -- a message that will likely be reiterated at next week’s FOMC meeting.

For GBP/USD, while 1.25 is a key pivot zone – prior support, now resistance – the 200-DMA situated at 1.2555 needs clearing before bulls can get excited.
As previously highlighted, month-end flows will continue to favor the greenback in the immediate future.

For more click on FXBUZ

Synopsis:

Bank of America forecasts a ceiling on the potential rally of USD/CAD, despite imminent monetary policy divergence, citing inflation risks and structural financial concerns within Canada that could limit the pair’s upward movement.

Key Points:

• Monetary Policy Divergence: BofA expects the Bank of Canada (BoC) to begin its rate cutting cycle in the summer, while anticipating the first Federal Reserve rate cut towards the end of the year. This policy divergence is recognized by many investors, potentially influencing USD/CAD dynamics.

• Impact of CAD Weakness: A sharp sell-off in the CAD following the BoC’s rate cuts could lead to significant inflationary pressures within Canada. BofA estimates that for every significant rise in USD/CAD, there could be an additional 15 basis points added to Canadian CPI. A surge to 1.45 in USD/CAD could increase Canada’s CPI by a full percentage point.

• Market Reaction and Ceiling on Rally: The potential inflationary impact and structural portfolio outflows due to a weaker CAD may concern FX markets, thereby imposing a ceiling on how much USD/CAD can rally. This is in contrast to other currency pairs where similar dynamics may not be as pronounced.

• Relative Position of CAD: Compared to other major developed country currencies, the CAD is in a more favorable position, making it a less preferred option for those holding a bullish USD view.

• Bank of Canada’s Potential Interventions: While the current risk of FX intervention by the BoC is low, the bank has a history of intervening in the FX and repo markets. Such measures could be considered if USD/CAD movements threaten economic stability.

• Outlook and Forecasts: BofA maintains a downward forecast path for USD/CAD, expecting it to revisit the 200-day SMA of 1.35 by the end of the year. However, the long-term forecast for 2025 has been adjusted from 1.30 to 1.32 due to diverging terminal policy rates between the Fed and BoC.

Conclusion:

While the impending divergence in monetary policies between the U.S. and Canada suggests potential for a USD/CAD rally, BofA advises caution, highlighting structural and inflationary risks that could cap significant gains.

• EUR/GBP hits 0.8563 after extending south from 0.8643 (16-week high Tuesday)

• 0.8563 is lowest level since April 19 (0.8556 was low that day)

• GBP supported by lower risk of BoE rate cut before August, re: Pill Tuesday

• Probability of BoE June cut has halved to 32% since Pill spoke 0#BOEWATCH

• HSBC expects another 8-1 BoE MPC rate hold vote on May 9 (as per March)

• French President Macron calls on ECB to nuance its focus on inflation

Synopsis:

ANZ projects a rise in the AUD/CAD exchange rate, driven by robust Australian CPI data and improved risk sentiments. The bank anticipates that the Reserve Bank of Australia (RBA) will maintain its current policy stance until at least November, further supporting the Australian dollar's strength against the Canadian dollar and other major currencies.

Key Points:

• Australian CPI Data: The recent CPI print from Australia showed significant strength in non-tradable and services inflation, particularly in the health and education sectors. This robust inflationary pressure supports the view that the RBA will not alter its policy rate until November, providing a stable backdrop for the AUD.

• AUD/USD Outlook: Strengthened by the Q1 CPI data and a favorable risk environment, the AUD/USD pair is well-supported heading into the next week. A convincing breach of its 200-day moving average at 0.6527 could pave the way for further gains, potentially testing higher resistance levels at 0.6588 and 0.6650.

• AUD/CAD Dynamics: With Canadian inflation showing signs of easing and risk sentiment improving, ANZ sees a potential for higher AUD/CAD rates. The pair has previously overstretched beyond 0.90, yet changes in the economic landscape could push it towards 0.95 under favorable conditions.

• Comparative Inflationary Pressures: The AUD is expected to perform stronger on G10 crosses, particularly against currencies like the CAD, NZD, and JPY, where inflationary pressures are more evidently subsiding.

Conclusion:

ANZ's analysis indicates a bullish outlook for the AUD, especially against the CAD, driven by persistent inflationary pressures in Australia contrasted with easing inflation in Canada. The anticipated stability in Australian monetary policy, coupled with favorable global risk sentiments, may enhance the AUD's position in the forex markets.

Synopsis:

Société Générale assesses the potential for a final significant surge in USD/JPY, following the Bank of Japan's decision to maintain interest rates and adjust inflation forecasts upward. The analysis focuses on the impact of diverging yield dynamics between the U.S. and Japan and the fundamental valuation of the yen.

Key Points:

• Bank of Japan’s Policy Decision: As expected, the Bank of Japan held interest rates steady at its recent policy meeting but raised its inflation forecasts for the fiscal year 2025/26, anticipating core inflation at 2.1% and real GDP growth at 1%.

• Yield Differentials: The ongoing disparity between U.S. and Japanese yields, with U.S. yields on the rise and Japanese yields constrained by low short-term rates, continues to fuel the ascent of USD/JPY. This yield differential, historically aligned with more than nominal GDP growth over time, suggests potential narrowing in the future but remains wide for now.

• Long-Term Valuation of the Yen: According to SocGen, the yen is fundamentally undervalued, with purchasing power parity (PPP) for USD/JPY estimated in the mid-90s, while a fair value adjusted for U.S. exceptionalism and Japanification would be around 110. The current levels are significantly above these estimates due to the large yield gap.

• Potential for a Final Surge: There is a concern that unless Japanese policymakers adopt more aggressive measures, both in terms of intervention and monetary policy adjustments, the continued upward pressure on USD/JPY could lead to an excessive final spike before the eventual normalization.

Conclusion:

SocGen's analysis indicates that while a correction in USD/JPY is inevitable due to fundamental undervaluation and expected shifts in yield differentials, the timing and nature of this adjustment could be dramatic unless there is significant policy action from Japan. The firm suggests that market participants should prepare for potential volatility in USD/JPY, especially as U.S. yields continue to climb and Japanese rates remain low.

• Ichimoku cloud twists have a habit of attracting

• EUR/USD has been drawn toward weekly cloud twist at 1.0740

• The daily cloud twists soon too but higher around 1.0840

• EUR/USD has been directionless for a long time

• The lack of volatility heightens chance that the twist attracts

• Cheap natural gas likely to underpin EUR/USD nL2N3GZ0NP

• Cable has traded a 43 pip range since the London open; 1.2498-1.2541

• 1.2541 is highest level since April 12 (1.2558 was high that day)

• GBP supported by Anglo's rejection of BHP's 31 bln pound takeover proposal

• Consensus growing that BHP will have to sweeten its offer to get deal done

• US March core PCE data due 1230 GMT; upside risk to 0.3% MM, 2.7% YY f/c

• WSJ-Trump allies draw up plans to blunt Fed's independence (election Nov 5)

• USD/JPY dropped from 156.82 to 154.97, on EBS, before a quick rebound

• No MOF comment after yen's sharp but brief jump versus dollar nL2N3GZ0KX

• Sudden drop in Ldn highlights market nerves about intervention nL2N3GZ0LM

• Weekly chart show spot remains on track to soar to test 160 nL2N3GZ0JA

• Huge rate differential between Fed and BOJ keeps USD/JPY bias on the upside

• Japan frets over relentless yen fall, BOJ keeps ultra-low rates nL2N3GY49Z

• USD/JPY and EUR/JPY pairs maintain a strong 60-day positive correlation

• USD/JPY rose to break and register a weekly close above the huge 152.60 Fibo

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

• That is a very bullish sign, backed by continued positive 14-week momentum

• Scope for much bigger gains to eventually retest the 160 psychological level

• A fall and weekly close under 152.60 Fibo would be a negative development

• USD/JPY Trader TGM2336. EUR/JPY 166.73-168.23 EBS range on Friday

• EUR/USD's recent failure under 1.0611 Fibo has led to later recovery moves

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

• Despite that failure, negative 14-day momentum shows the mkt remains bearish

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

• We are short at 1.0725 in anticipation of a slump to our 1.0525 target

• EUR/USD Trader TGM2334. Previous update nL2N3GY0PB

• FX Option strike expire at 10-am New York/3-pm London - Friday April 26

• EUR/USD: 1.0675-85 (1.9BLN), 1.0700 (1BLN), 1.0725-30 (1.4BLN)

• 1.0750 (1.7BLN), 1.0785 (1.1BLN), 1.0800 (548M)

• USD/CHF: 0.9100-10 (765M), 0.9200 (276M). EUR/CHF: 0.9775 (357M)

• GBP/USD: 1.2430 (1.1BLN), 1.2490-1.2505 (1.1BLN)

• AUD/USD: 0.6500 (469M), 0.6515-25 (390M), 0.6540-50 (556M), 0.6570 (377M)

• NZD/USD: 0.5905 (329M), 0.5925 (229M), 0.5940 (385M)

• USD/CAD: 1.3560-65 (600M), 1.3650 (259M), 1.3770-85 (1.1BLN)

• USD/JPY: 155.00 (1.5BLN), 156.00 (376M), 156.25 (320M), 156.50 (530M)

For more click on FXBUZ

• EUR/GBP pierced the 10 and 100-DMAs Thurs then struck a four-session low

• Slide stalled near the daily cloud top and a bounce ensued

• A long legged doji-hammer formed, a concern for our short

• A close below those daily MAs needed to bolster the trade

• Cloud top and 50-DMA are at 0.8558

• Daily momentum has just nudged to negative and RSI falling

• Short is risk free: drop under 0.8565, Thurs low, sees stop lowered

  For more click n FXBUZ