• Monday: Japan
  Wage data, Swiss Unemployment Rate.
• Tuesday: US
  NFIB Small Business Optimism Index.
• Wednesday: Japan
  PPI, RBNZ Policy Decision, US CPI, BoC Policy Decision, FOMC Minutes.
• Thursday: China
  CPI, ECB Policy Decision, US PPI, US Jobless Claims.
• Friday: New
  Zealand Manufacturing PMI, New Zealand Retail Sales, UK GDP, UK Industrial
  Production, US University of Michigan Consumer Sentiment.

Monday

The Japanese Average Cash Earnings Y/Y are
expected to rise to 3.0% vs. 2.0% prior. The JPY might get bid on a strong
figure as the BoJ continues to see the achievement of their inflation target
and mentioned that another rate hikeis dependent
on the data. The timing for such a
move remains uncertain though with July and October being on the table,
although the latter is the most probable one. Overall, even if we see a
beat, the market will likely want to wait for the US CPI on Wednesday as that
is what will likely decide the USD trend for the following days and weeks.

Wednesday

The RBNZ is expected to keep the OCR
unchanged at 5.50%. As a reminder, the central bank dropped
the tightening bias in the last policy
decision stating that interest rates will need to remain at restrictive level
for a sustained period of time. There’s nothing to expect from this week’s
decision as the RBNZ is looking to normalise policy in 2025 while the
market sees the first cut coming in August.

The US CPI Y/Y is expected at 3.4% vs.
3.2% prior, while the M/M measure is seen at 0.3% vs. 0.4% prior. The Core CPI
Y/Y is expected at 3.7% vs. 3.8% prior, while the M/M reading is seen at 0.3%
vs. 0.4% prior. This is probably one of the most important inflation reports
of 2024 as the recent data has already hit the Fed’s confidence and another
hot release will likely trigger a change in the near-term policy outlook,
especially following a good labour
market report on Friday.

Fed’s
Waller recently said that he wanted to see
a couple of good reports to consider a rate cut in June, so we just need
this week’s report to be hot to make the market to price out the June cut.
This will most likely have big repercussions on the markets with Treasury
yields and the US Dollar rallying and the stock market correcting lower. On the
other hand, a cold report should trigger the opposite reaction with the stock
market hitting new highs and the Treasury yields and the US Dollar coming under
pressure as the risk-on sentiment ensues.

The BoC is expected to keep interest rates
unchanged at 5.00%. Their policy decision comes right after a weak labour
market report on Friday where we saw
job losses and the unemployment rate jumping to 6.1% from the prior 5.8%
figure. StatCan said that the spike in the unemployment rate is tied to an
additional 60,000 people looking for work or on temporary layoff in March as
the agency reported recently that population growth hit its fastest rate since
1957.

The central bank is also focused on wage
growth and unfortunately for them, the rate increased again to 5.1% from the
prior positively revised 5.0% rate. On the positive side, the latest inflation
report missed expectations across the board
with notable easing in the underlying inflation measures. This puts the central
bank in a difficult position although they should have enough reasons to start
leaning more dovish. The market expects the first rate cut in June.

Thursday

The ECB is expected to keep interest rates
unchanged at 4.00%. The central bank will likely set the stage for the June
rate cut as policymakers have been touting such a move for quite some time
and we even got the uber-hawk Holzmann joining the team recently. The latest Eurozone
inflation report missed expectations for
both the Headline and Core measures although the M/M readings were both very
high and Services inflation got stuck at 4% since November 2023. Nevertheless,
the data before the June decision will have the final word as the ECB is also
waiting for the Q1 2024 wage data to give it a bit more confidence.

The US PPI Y/Y is expected at 2.3% vs.
1.6% prior, while the M/M measure is seen at 0.3% vs. 0.6% prior. The Core PPI
Y/Y is expected at 2.3% vs. 2.0% prior, while the M/M reading is seen at 0.2%
vs. 0.3% prior. The data will come after the US CPI report, so it’s unlikely
to see it changing whatever trend will be set by the CPI release.

The US Jobless Claims continue to be one
of the most important releases every week as it’s a timelier indicator on the
state of the labour market. This is because disinflation to the Fed’s target is
more likely with a weakening labour market. A resilient labour market though
could make the achievement of the target more difficult. Initial Claims
keep on hovering around cycle lows, while Continuing Claims remain firm around
the 1800K level. Initial Claims are expected at 215K vs. 221K prior, while
there’s no consensus at the time of writing for Continuing Claims although last
week we saw a decrease to 1791K vs. 1810K prior.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

Dow jones (DJIA) technical analysis: bearish trend watch

Investors and traders, a key technical signal in the Dow Jones Industrial Average (DJIA) points to a potential bearish trend. Let’s dive in:

• Broken trendline: the DJIA has broken below a significant trendline support, indicating a shift toward selling pressure and a possible downward trend.

Looking ahead: Bullish vs bearish price targets for Dow Jones

• Bearish target: if the price fails to cross back above the broken trendline, I’m looking at a potential downside target of 38,600.
• Bullish target: conversely, if the DJIA manages to cross back above the trendline, a bullish move toward 39,300 could be in play.

Stay informed with ForexLive.com

Keep a close eye on the DJIA! Resources like ForexLive https://www.forexlive.com/ offer up-to-date news, analysis, and expert insights to help you navigate the market. Trade the Dow Jones at your risk only.

This article was written by Itai Levitan at www.forexlive.com.

• Forexlive Americas FX news wrap: US dollar jumps on hot NFP and then gives it back

Bond giant Pacific Investment Management Company (PIMCO) has dialed back its forecast for Federal Open Market Committee (FOMC) rate cuts this year. The previous PIMCO projection was for 3, but they’ve dialled that back to 2 now as thier ‚base case‘. A PIMCO rep spoke with Reuters after the NFP numbers on Friday:

• this means a little bit less out of the Fed
• the economy is proving for now that it can handle higher rates

Checking FedWatch you’ll see the pricing for a June rate cut is now bordering on a coin toss. I reckon the likelihood is closer to 10% than 50%. If you’ve been following along with my ’no June rate cut for you!‘ shouting this’ll come as no surprise.

FOMC members are piling on the later cut bandwagon:

• Fed’s Logan: It’s much too soon to think about cutting interest rates

• Fed’s Waller says may need to hold current rate for longer than expected, no rush to cut
• Waller’s remarks have pumped up the US dollar
  • (ps still is too)
• More Fed’s Waller: The economy has supported the cautious approach by the Federal Reserve

• Still more from Fed’s Waller: If unemployment goes up no reason to panic
• Fed’s Bostic say he now anticipates only one rate cut this year
• If economy continues to be healthy, why would we cut rates

And, I like this reasoning:

• Global economic recovery, blistering commodities rally … threatening to derail the Fed

FedWatch update:

This article was written by Eamonn Sheridan at www.forexlive.com.