• Cable falls to 1.2471 before Fed event risk: hawkish hold expected

• 1.2471 is lowest level this week (1.2449 was last Friday's low)

• 1.2554 was Tuesday's Ldn am high, before USD rose on hot US labor cost data

• US spending on London real estate rebounds to 8-year high - BNP Paribas data

• UK house prices down 0.4% in April vs f/c increase of 0.2% - Nationwide data

• Reuters/Ipsos poll says 40% of U.S. voters support Biden vs 39% for Trump

• Overnight FX option expiry now includes the Fed policy decision

• No change expected, but statement, press conference provide volatility risk

• Overnight EUR/USD implied volatility jumps from 8.0 on Tuesday to 12.0 Wed

• Implied volatility gauges realised volatility risk when setting premium

• Premium/break-even for straddle now 53 vs 35 USD pips in either direction

• Other expiry dates are underpinned by FED, NFP event risk and firmer USD

• Benchmark 1-month expiry recovers Monday's 6.1 high vs 5.9 Tuesday

• FX options wrap - Firmer USD and Fed/NFP risk support vol nL1N3H31KT

For more click on FXBUZ

• Just missed out on forming a bearish engulfing line Tues

• However, sterling risk has flipped to the downside

• Minimum correction off 1.2299-1.2569 climb met at 1.2505, 1.2473 Wed low

• Next Fibo level at 1.2466 with 1.2449, Apr. 25 low behind

• Daily momentum readings have been negative since Mar. 22

• Daily RSI is now confirming the price drop

• We look for an opportunity to get short

  For more click on FXBUZ

• AUD/USD opened -1.43% at 0.6472 after hot US ECI sent US yields higher nL1N3H32MN

• AUD/USD consolidated in a 0.6465/80 range as much of Asia was on holiday

• AUD/USD is under pressure after closing below the 10-day MA at 0.6483

• Next support is at the 61.8 of the April rise at 0.6448

• A break below 0.6445 targets the April trend low at 0.6362

• Resistance is at the 10-day MA at 0.6483 and 21-day MA at 0.6504

• Market is positioned for a hawkish hold when the Fed decides later today

• Key for AUD/USD will be bond and equity market reaction to Fed event

• For more click on FXBUZ

• -0.05% after closing +0.95% after strong US data saw 2yr UST hit a 2024 high

• Rising Treasury yields after stronger-than-expected US data support USD/JPY

• 2yr UST -1bp to 5.0309 in early Asia, Nikkei -0.65% after Wall Street's fall

• BOJ remains ready to intervene when necessary - spent around $35bln Monday

• Charts: 21-day Bollinger Bands, 5, 10 & 21-day moving averages head higher

• Daily charts remain positive - a close below 154.36 21 DMA would be bearish

• Horizontal Tenkan and Kijun lines suggest a period of consolidation

• Tuesday's 156.50 early European low is initial support

  For more click on FXBUZ

• -0.05% - closed -0.55% with the USD +0.6% as inflation pushed up UST yields

• Yield spreads widened, 10yr gilt +6bp to 4.352%, 10yr UST +7bp to 4.684%

• UK inflationary pressures are easing as UST yields rise - likely caps GBP

• Expecting a low-key Asian session - only Tokyo, Sydney and Wellington open

• Charts; 5, 10 & 21 DMAs conflict, 21-day Bollinger bands edge lower

• Daily momentum studies rise - the daily signals show no strong bias

• Monday's 1.2569 high then 1.2596, 50% of the March/April fall are resistance

• Friday's 1.2448 low and the 1.2299 April low are initial supports

  For more click on FXBUZ

• USD/JPY likely to remain bid on dips after closing 0.95% higher Tuesday

• Boosted by higher US yields on sticky inflation, higher-for-longer Fed rates

• Growth in US labor costs accelerates in Q1; wages up 4.4% year-on-year

• 10-yr yields up 49.6 bps in April, largest monthly gain since September 2022

• US 2-yr yields hit highest since Nov as focus turns to Wed Fed rate decision

• Quagmire anyone? Fed watchers try to divine a confusing state of play

• USD to ratchet higher; Japan slows JPY drop, unlikely to fight gradual fall

• Japan may have spent some $35.05 bln in supporting JPY on Monday

• Resistance 158.00-05, 158.50, support 157.20-30; Tue range 156.08-157.81

• For more click on FXBUZ

• AUD/USD opens -1.43% after USD broadly rose following hot US ECI nL1N3H32MN

• Risk assets clobbered as market fears Fed may turn more hawkish nL4N3H35MB

• AUD weakened against most currencies as key commodities also fell hard nL8N3H331T

• AUD/USD closed below 10-day MA (0.6483) to increase downward pressure

• Next support is at the 61.8 of the April rise at 0.6448

• A clear break below 0.6445 puts the trend low at 0.6362 back in focus

• Resistance is at the 10-day MA at 0.6483 and 21-day MA at 0.6504

• AUD/USD likely to consolidate losses ahead of key FOMC decision Wednesday

• For more click on FXBUZ

Synopsis:

Bank of America identifies a potential bear flag formation on the EUR/USD daily chart, suggesting a possible continuation of the downward trend. Key resistance levels and historical patterns support this bearish outlook.

Key Points:

• Bear Flag Formation: Analysts at BofA have observed what appears to be a bear flag pattern forming on the daily chart of EUR/USD as of late April. This pattern is typically indicative of a continuation of a prior downtrend following a brief consolidative period.

• Critical Levels to Watch: A break below the key support level of 1.0675 would confirm the bear flag pattern, potentially setting the stage for a move toward the year-to-date low at 1.0601, and possibly extending to the 2023 low of 1.0448.

• Resistance Levels: The EUR/USD faces significant resistance from declining moving averages and trend lines that currently cap the spot rate at or below the 1.08-1.0840 range. These levels need to hold to maintain the bearish outlook.

• Additional Chart Patterns: Supporting the bearish view, a diamond top pattern has also been confirmed on the weekly chart, which generally signals a reversal from previous uptrends. This pattern aligns with the potential for further declines.

• Longer-Term Targets: Should the bear flag and other bearish patterns hold, the EUR/USD might target the 61.8% Fibonacci retracement level at 1.0201, provided weekly closes remain below medium-term trend line resistance at 1.0915.

Conclusion:

The technical analysis by Bank of America suggests a cautious or bearish stance on EUR/USD in the near to medium term, given the formation of a bear flag and the presence of other bearish chart patterns.

• GBP/USD -0.5%, back below its 200-DMA to test support at 1.25

• With EUR/GBP trading flat, this would imply a USD led move

• Hawkish Fed risk clearly a concern with both USD, yields higher

• Meanwhile, U.S. Q1 ECI data elevates the Fed risk nL1N3H31JG

• Worth noting that month-end flows were touted to be dollar positive

• Break of 1.25 opens door to further support at 1.2450-55

• COMMENT-Sterling upside likely to struggle in lead up to Fed nL1N3H32LI

For more click on FXBUZ

• NY opened near 0.6530 after 0.65675 traded overnight, slide extended

• Upside surprise to US Q1 ECI drove yields US2YT=RR, US$ higher

• Risk soured; stocks ESv1, commodities XAU=HGv1 fell, USD/CNH rallied

• AUD/USD fell below the 21-, 55- & 200-DMAs, neared the 10-DMA, hit 0.6482

• Most losses were maintained, AUD/USD traded down -1.23% late in the day

• Techs lean bearish; RSIs falling, pair below slew of daily MAs & daily cloud

• Fed meeting, Powell presser are key event risks for Wednesday

• US April ADP, S&P Global & ISM manufacturing PMIs are data risks Wednesday

• For more click on FXBUZ

• NY opened near 1..0725 after 1.07355 traded on EBS in Europe's morning

• Slide extended with help from upside surprise to US Q1 employment cost data

• Broad based US$ buying took hold as data rallied US yields US2YT=RR

• Risk-off took hold; stocks ESv1, commodities XAU=LCOc1 fell sharply

• USD/CNH rallied above 7.2540 on D3 which reinforced risk-off sentiment

• EUR/USD fell below the 10-DMA, hit 1.0676, was down -0.42% late in the day

• Techs lean bearish; RSIs falling & pair below the 21- & 10-DMAs

• Fed meeting, Powell presser are key event risks for Wednesday

• US April ADP, S&P Global & ISM manufacturing PMIs are data risks Wednesday

• For more click on FXBUZ

Synopsis:

Credit Agricole discusses the recent movements in the USD/JPY exchange rate, suggesting that Japan's Ministry of Finance (MoF) likely intervened to support the yen as it approached a crucial level of 160. The intervention, believed to have occurred during a Japanese public holiday, temporarily curtailed the yen's decline.

Key Points:

• Recent Yen Movements: USD/JPY surged past 160 before experiencing a sharp drop below 155, following potential intervention efforts by Japan's Ministry of Finance. The exact details of these actions remain unconfirmed until the MoF's official report at the end of May.

• Intervention Context: The intervention likely took advantage of low liquidity due to a public holiday in Japan. The level of 160 is seen as a significant psychological and technical threshold, prompting the MoF to act to prevent further escalation toward this mark.

• Masato Kanda's Comments: Masato Kanda, Japan's Vice Minister of Finance for International Affairs, emphasized the readiness to act around the clock in FX markets but did not specify target levels for intervention.

• Intervention Firepower: According to Credit Agricole, the MoF possesses about USD 160 billion in liquid reserves for potential interventions, with historical data showing around USD 60 billion used in similar actions in late 2022.

• Upcoming Public Holiday and Global Events: Another public holiday in Japan this Friday and the forthcoming Labour Day may influence market liquidity. Additionally, the upcoming FOMC meeting in the U.S. might further affect market dynamics, particularly if Fed Chair Jerome Powell's remarks do not align strongly with current market expectations for future rate cuts.

Conclusion:

Credit Agricole suggests that recent yen stabilization efforts by Japan's MoF have only temporarily slowed the yen's decline against the dollar. The situation remains fluid, with upcoming holidays and global economic events likely to influence currency market volatility. I

• UDS/CAD rallied above the 10- & 21-DMAs with help from US Q1 ECI data

• ECI data fueled concerns inflation is running hot again, sank riskier assets

• Commodities LCOc1XAU=HGv1 fell sharply as did stocks ESv1

• US yields US10YT=RR rallied to drive broad based US$ gains

• USD/CAD rally helped to increase bullish technical signals

• Daily RSI turned upward and a 6-session high was struck

• Rally stalled near the down trend line off the April 16 daily high

• Break of that line would complete a bullish flag continuation pattern

• Completion of pattern suggests USD/CAD could break November's monthly high

• Rally above that high brings the 1.39755 (D3) 2022 yearly high into focus

• For more click on FXBUZ

Synopsis:

MUFG discusses the recent weakness of the Japanese yen and its potential implications for the Chinese yuan, suggesting that China might allow the yuan to depreciate further in response to Japan's currency movements and domestic economic signals.

Key Points:

• Yen Weakness: The yen has shown significant volatility, recently relinquishing some of its gains, which has pushed USD/JPY back to the 157.00 level. This movement is reminiscent of the patterns observed during Japan's last currency intervention in autumn 2022.

• Implications for the Yuan: The ongoing weakness of the yen is fueling speculation that China may permit a further weakening of the yuan. The People's Bank of China (PBoC) has been adjusting the daily currency fix slightly higher, which has allowed USD/CNY to approach the upper limit of its daily trading band around 7.2480.

• China's Economic Indicators: Recent economic data from China, including softer than expected PMI surveys for April, suggests that the country's economic recovery is losing momentum as it enters Q2. The surveys indicated a particular decline in business confidence in the non-manufacturing sector, raising concerns about the overall health of the Chinese economy.

• Policy Expectations: While there is speculation about further yuan depreciation, MUFG believes that Chinese policymakers are likely to favor a controlled, gradual appreciation of USD/CNY towards the levels seen last year around 7.3000, rather than a sharp, one-off devaluation.

Conclusion:

The recent fluctuations in the yen and emerging economic data from China are contributing to expectations of a potential policy shift that could see a weakening of the yuan.

• Cable elicited support pre-1.2500 after USD rose on hot US labor cost data

• US Q1 ECI up 1.2% vs 1.0% forecast. 1.2500 approximates to Monday's low

• 1.2554 was Ldn am high; 1.2561 was Asia high; 1.2569 was Monday's high

• Hot ECI data is boost for hawks opposed to Fed rate cut this year

• Chicago PMI due at 1345 GMT; 45 f/c. Consumer confidence 1400 GMT; 104 f/c

• BoE raises lifetime loss estimate for QE programme by 5 billion pounds

Synopsis:

CIBC analyzes the recent Canadian GDP data for February and the advanced estimate for March, noting a quick fading of economic momentum as Q1 progressed. The implications for upcoming Bank of Canada (BoC) policy shifts are discussed, with potential rate reductions on the horizon.

Key Points:

• GDP Growth Fades: February's GDP growth in Canada was modest at 0.2%, slightly below consensus forecasts, and following a downward revision of January's growth from 0.6% to 0.5%. The advance estimate for March suggests that economic activity may have stalled, indicating a weakening momentum as Q1 concluded.

• Sector Performance Variations: Key sectors such as mining, oil & gas, and air transportation showed strength in February, contrasting with declines in utilities and manufacturing. The transportation manufacturing sector, in particular, experienced a notable drop due to ongoing retooling shutdowns, affecting overall manufacturing output.

• March's Flat Growth Estimate: The advance estimate for March indicates no change in GDP, with declines in manufacturing and retailing contributing to the stagnation. This suggests a weak end to the quarter, potentially affecting projections for Q2.

• Economic Implications: The overall Q1 GDP growth is now estimated at a 2.5% annualized pace, weaker than initial estimates and just below the BoC's 2.8% forecast in its April Monetary Policy Report. The slowdown towards the quarter's end poses downside risks to the BoC's Q2 growth expectation of 1.5% annualized.

• Potential BoC Policy Response: Given the waning economic momentum and assuming inflation remains controlled, CIBC suggests that the BoC might commence a gradual reduction in interest rates starting from the June meeting. This adjustment would aim to stimulate economic activity in response to the observed slowdown.

Conclusion:

The recent Canadian GDP data highlights a rapid loss of economic momentum in early 2023, prompting CIBC to predict potential easing of monetary policy by the BoC. With key sectors showing mixed performance and overall growth tapering off towards March, the central bank may need to adjust its strategy to support the economy.

Synopsis:

Bank of America analysts indicate that Japan's Ministry of Finance (MoF) likely implemented three separate rounds of currency intervention on April 29 to support the yen, as observed through notable USD/JPY fluctuations. These actions could have significant short-term and long-term implications for the currency pair.

Key Points:

• Intervention Details: USD/JPY experienced unusual price movements on April 29, suggesting three potential intervention rounds by the MoF. The first intervention appeared around 1 PM JST, with subsequent actions pushing USD/JPY significantly lower from peaks around 160 down to 145.5, before stabilizing around 156.6.

• Short-Term Market Implications: In the short term, BofA expects the MoF might continue with additional interventions if the currency pair approaches or exceeds critical levels, to prevent further testing of their resolve. This could drive USD/JPY into the 151-153 range as the market reacts to Japan's defensive measures.

• Long-Term Considerations: Over the longer term, the MoF may need to intensify and prolong its intervention efforts compared to 2022 due to persistent upward pressure from carry trades and Japan's structural deficit. This pressure is likely to continue until there is a shift in the Federal Reserve's interest rate policy.

• Limitations and Risks of Interventions: BofA notes that there are practical limits to how much the MoF can intervene, estimated at around $300 billion for 2024. A delay in the Fed's expected rate cuts or an unforeseen rate hike could challenge these limits, potentially pushing USD/JPY above 160 and necessitating a response from the Bank of Japan (BoJ).

• Focus on Intervention Scale: Market participants will likely focus on the scale of future interventions. A significant intervention amount (greater than ¥10 trillion or approximately $65 billion) could be perceived negatively for the yen, as it might suggest a rapid depletion of Japan's forex reserves.

Conclusion:

The actions taken by Japan's MoF on April 29 underline the complexities of managing national currency values amid global financial pressures.

• AUD/USD traded 0.65675-0.65145 overnight, NY opened near 0.6530, down -0.57%

• China April NBS mfg PMI 50.4 from 50.8 in March; fueled doubt on econ growth

• Data helped rally USD/CNH up to 7.2572 (D3) which helped weigh on AUD/USD

• Commodity DCIOc2HGv1, equity ESv1 drops added weight on AUD/USD, risk

• AUD/USD fell away from the thin daily cloud, pierced the 55- & 200-DMAs

• Pair remained above the 10- & 21-DMAs but daily RSI turned downward

• Investors focused on looming US jobs reports, Fed meeting, ISM mfg PMI

• US Q1 employment cost a risk Tues., will give some color on wage inflation

• For more click on FXBUZ

There are fundamental and technical factors that point to even bigger USD/JPY gains in the days and weeks ahead to 165.

The yen dropped against the dollar on Tuesday, giving up some of its sharp gains the previous day sparked by suspected intervention by Japanese authorities.
On Monday USD/JPY dropped from 160.24 to 154.40, on the EBS, before recovering.

While the Bank of Japan left interest rates on hold at its recent meeting, the policy rate differential between the Federal Reserve and the BOJ remains sizeable and keeps USD/JPY's bias on the upside.
FX traders could take USD/JPY much higher, despite Japanese authorities' continuing concerns over a weakening yen.

Earlier in April USD/JPY overcame the 152.60 Fibo, a 38.2% retrace of the major 277.65 to 75.31 (1982 to 2011) drop, which keeps the underlying market structure quite bullish for gains back above the 160 level.
Fourteen-week momentum remains positive, adding the upside potential.

For more click on FXBUZ

• UK BRC shop price index falls for second straight month, down 0.3%

• In turn, the yearly rate has fallen to its lowest level since Dec 2021

• While this indicates easing price pressures ahead of the national print

• Base effects are expected to take CPI at or close to 2%

• Therefore, the bigger focus for the BoE will be on services CPI

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

For more click on FXBUZ

• AUD/USD falls to 0.6515 as disappointing data continues to weigh on the AUD

• Australian retail sales down 0.4% in March vs forecast increase of 0.2%

• 0.6515 is lowest level since Thursday (0.6511 is 21-day moving average)

• Monday's high was 0.6587 (highest level since April 10, hot US CPI data day)

• Two-day Fed meeting gets underway later. RBA meets next week (May 7)

• China overtakes Japan in April as Australia's top coal market nL1N3H30BA

• Cable falls to 1.2525 as USD strengthens before two-day Fed meeting starts

• 1.2525 is lowest level since Monday's 1.2569 peak (high since April 11)

• Bids expected around 1.2500 (1.2497 was Monday's low, in early Asian trade)

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

• BoE rate decision next week: HSBC expects 8-1 hold vote again (as per March)

• UK local elections this week (Thursday); PM Sunak's Tories face big losses

• EUR/USD's failure earlier in April under 1.0611 Fibo led to a rebound

• 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 highlights a bearish market

• 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 nL1N3H20HM

• Speculators pile into the dollar for two major reasons nL1N3H10IN