85 of 102 economists forecast a 50 bps rate hike in May56 of 102 economists forecast a follow-up 50 bps rate hike in JuneFed funds rate now expected at 2.00% – 2.25% at the end of the year (previously 1.50% – 1.75%)Fed funds rate then expected to be at 2.50% – 2.75% at the end of 2023That’s quite the aggressive view but I guess it reflects what we’re hearing from Fed policymakers recently. But again, how exactly will the economy take to all this when rate hikes aren’t exactly the solution to rampaging inflation? I still don’t see how the Fed can get away with an unimpeded path to hike towards 2% considering the economic backdrop.If they do get there, it’s going to be a short-lived one if anything else as rate cuts are surely going to return to the table soon when the economy stutters. Some analysts in the poll are already calling for that in Q4 2023.ING economist, James Knightley, says that:“Given the shift in official commentary with inflation pressures visible throughout the economy, we believe the Fed will deliver half-point interest rate increases at the May, June and July policy meetings. With the Fed seemingly feeling the need to ‚catch up‘ to regain control of inflation and inflation expectations, a rapid-fire pace of aggressive interest rate increases heightens the chances of a policy misstep that could be enough to topple the economy into a recession.“The Reuters poll also shows a median 1/4 chance of a recession in the US during the coming year, with the odds rising to 40% in the next 24 months.

There isn’t anything too significant on the board for today with light expiries seen around current levels.As such, trading sentiment will still be dictated by the flows as sentiment (from the bond market especially) is the key driver for the time being. For USD/JPY, just be wary that there is a lack of meaningful expiries at and above 125.00 so there isn’t much to hold the pair down in the event of a firmer breakout.Besides that, the Easter break will start to kick in on Friday so that explains the lack of interest on the board for the day itself.For more information on how to use this data, you may refer to this post here.

There’s no end in sight to the lockdown measures restricting 25 million people and the world’s largest port in Shanghai.
Daily infections rose to 23,624 nationally in China with the vast majority in Shanghai. A new round of mass testing was ordered and lockdowns are no expected to last through the month.
Difficulties in getting food are beginning to cause unrest, with people complaining of having to survive on one meal a day. The Chinese diet consists largely of fresh food and takeout is very popular in Shanghai. Both are unavailable or restrained.
A new plan will put districts into three types of zones: lockdown, control and precaution; with various levels of severity.
In an ominous sign, Guangzhou ordered all 18 million residents to get tested after finding two cases while Shenzhen put a community under lockdown after finding a case.
Eyes are now turning to economic support measures as China risks missing its 2022 growth targets.
“China’s economy needs further policy support to achieve the targeted 5.5 percent expansion this year”, according to a poll of Chinese research analysts that was published in the state-sponsored press.
The PBOC meeting on Friday is likely to include easing measures. The survey also recommend supply-side and tax policies to stabilize employment and subsidize operations for SMEs as well as for larger businesses. They also recommend policies that support real estate and infrastructure spending, with the latter a particular potential tailwind for commodity markets.

It only seems like yesterday that the last earning season ended. Yet here we are again with the restart of the quarterly earning calendar next week. The banks and financials will release starting on Wednesday.  Below are the list of some of the major companies releasing:Wednesday, April 13:JP Morgan ChaseBlackRockFirst Republic BankDelta Air linesBed Bath and BeyondThursday, April 14Rite Aid Corp.US BancorpCitigroupWells FargoPNC Financial Services GroupUnitedHealth groupGoldman SachsMorgan StanleyLooking ahead to the week starting April 18 and beyond:Monday, April 18Bank of AmericaBank of New York MellonXeroxCharles SchwabIntuitive Surgical Inc.Tuesday, April 19IBMInteractive Broker’s groupLockheed MartinHalliburtonJohnson & JohnsonWednesday, April 20AlcoaUnited AirlinesProcter & GambleTeslaThursday, April 21AT&TAutoNationPhilip MorrisFriday, April 22American ExpressCleveland CliffsVerizonKimberly-ClarkMonday, April 253MalphabetAMDCoca-ColaMicrosoftTuesday, April 26FordGEGeneral MotorsChipotle Mexican GrillGeneral DynamicseBayVisaPepsiCoShopifyWednesday, April 27BoeingCirrus logicFirst SolarGilead sciencesPayPal holdingsServicenowSpotifyThursday, April 28Southwest AirlinesIntelMcDonald’sCaterpillarMerckColgate-PalmoliveFriday, April 29Bristol-Myers SquibbExxon MobilChevronHoneywell

Canada March employment +72.5K vs +80K expected
Macron seen getting 26% in Sunday’s first round versus 24% for Le Pen
ECB’s Stournaras: Stagflation and recession probability very low
US February wholesale inventories +2.5% vs +2.1% expected
No signs of China easing lockdown rules as covid cases continue to mount. PBOC eyed
EU Von Der Leyen: Zelensky says more sanctions are needed
Atlanta Fed GDPNow moved up to 1.1% from 0.9%

Markets:

Gold up $12 to $1944
US 10-year yields up 5 bps to 2.70%
WTI crude up $1.78 to $97.80
S&P 500 down 12 points to 4488
CAD leads, NZD lags
The US dollar surged in early New York trade then gave it all back.The rally in the dollar had some backing as Treasury yields continued to march higher. Yields in the belly of the curve made new cycle highs with 7s hitting 2.81%. Three year yields also inverted over 30s and that continues to raise concerns.A broad dollar rally came with that and it ran stops as cable fell through 1.3000 to the lowest since November 20202. USD/JPY though couldn’t get through the March highs despite a sixth day of gains. That, combined with a softening of yields sparked a reversal as large as the initial move.All the dollar gains against the pound, euro and commodity currencies unwound and most of the gains against the yen did as well.The reversal in tone was helped by a turn higher in stocks midway through the day. That tone though didn’t last into the close as US equities stumbled in the final minutes of trading.The week ahead features US CPI and retail sales and that will help to keep things lively. Have a great weekend.

The major US indices are closing mixed with the Dow industrial average higher, while the S&P, NASDAQ and Russell 2000 are all lower NASDAQ and S&P is down for the third time in four trading days S&P and NASDAQ have the first weekly loss in four weeks All three major indices close lower for the week. Russell 2000 also lower transports on track for the worst week since October 20 NASDAQ down nearly 4% on the week the final numbers are showing A look at the final numbers for the major indices are showing: Dow industrial average rose 137.55 points or 0.4% at 34721.11. S&P index fell -11.93 points or -0.27% at 4488.27 NASDAQ index fell -186.29 points or -1.34% at 13711.01 Russell 2000 fell -15.23 points or -0.76% at 1994.56 For the trading week: Dow industrial average, -0.28% S&P index, -1.2% NASDAQ index, -3.86% Russell 2000-4.68% For the S&P index, it closed back below its 200 day moving average currently at 4492.89 (green line on the chart below). On Wednesday the price closed below that moving average, but rebounded back above yesterday before rotating back to the downside again today. So overall, the market is saying it is a bit unsure as to the direction, but with the price below the 100 day moving average, the sellers are a little bit more in control. S&P index closes below its 200 day moving average

TD Research discusses its expectations for next week’s ECB policy meeting.
„The ECB is likely to announce that its APP programme will end in May, and prepare markets for a June rate hike,“ TD notes. 
„We continue to like EURUSD downside through the start of Q2 on a mix of drivers. An ECB pivot would anchor a possible low for EURUSD, though a break of the 1.12 high requires settlement on the US terminal rate pricing. That said, a more active ECB is likely to reinforce the lows in EURCHF and would favor buying EURGBP dips towards 0.83,“ TD adds.

For bank trade ideas, check out eFX Plus.

USDCHF moved up to the swing area and reversed The USDCHF moved up on the daily chart extending to a new high for the week in the process. However, that high moved into a swing area (see green numbered circles) between 0.93658 and 0.93822. The high reached 0.9373 and rotated back down. The last 5 highs in the GBPUSD had stalled within that range area. Why not today too? The holding of that level once again is just another notch in increasing that levels importance going forward. Next week be aware. If there is a break, the price should extend higher toward the highs from 2022 and 2021 in the 0.9459 to 0.9472 area. For now, however, the sellers once again are giving the sellers some confidence. Drilling down to the USDCHF hourly chart below, the run to the downside erased the gains and moved lower on the day. The low price, however, did find support buyers near the 50% midpoint of the move down from the March 16 high. That level comes in at 0.93268. The current price is at 0.9340. What now? For the week, the price has been moving higher since basing near the 100 day MA down near 0.9236. We know the high stalled near recent swing highs between 0.9366 to 0.9382, but the 50% midpoint of a move is always an important barometer for buyers and sellers. I am not surprised the buyers on the dip today, came in against that level. IT makes sense. However, if broken going forward/next week it should give the sellers more confidence and have them looking toward the 100 hour MA at 0.93118 (and moving higher). Move below that level and more selling could see the 200 hour MA in traders sites at 0.92844. The USDCHF stalled in the swing area and rotated back down

Headlines:French election poses weekend risk for the euroJapan moves to ban Russian coal importsEU formally adopts new sanctions against Russia, includes coal import banBank of Russia brings down key rate by 300 bps to 17%Markets:USD leads, NZD lags on the dayEuropean equities higher; S&P 500 futures up 0.4%US 10-year yields up 2.5 bps to 2.679%Gold flat at $1,932.30WTI up 0.3% to $95.75Bitcoin down 0.4% to $43,350It was a quiet session for the most part but the dollar is continuing its recent good form as it firms slightly across the board.There were few notable headlines in European morning trade, with the Russian central bank moving to cut its key interest rate from 20% to 17% being arguably the highlight. That comes after the ruble has made a strong recovery in the past few weeks after a massive plunge during the beginning of the Russia-Ukraine conflict.Equities are looking to end the week on a more positive note after the gains in Wall Street yesterday. European indices are up over 1% while US futures are posting slight gains ahead of the open later. But the advance today comes after a tough week for stocks in general.Meanwhile, the bond market selloff is continuing to play out as Treasury yields climb further on the day. 2-year yield are back up above 2.50% and 10-year yields on approach to 2.70% soon enough. The latter is now approach its 200-month moving average @ 2.67% so that is a key level to be wary about.In the FX space, the dollar is seen firming with EUR/USD easing to fresh one-month lows around 1.0850-60 levels. The euro itself has some weekend risk to consider with the French presidential election on the cards on Sunday.GBP/USD is also weighed down as sellers start to take aim at the 1.3000 level. USD/JPY is looking perky as it tries to keep above 124.00 now with buyers hoping to try and retest 125.00 in the bigger picture.Elsewhere, commodity currencies aren’t faring too well either with AUD/USD down near the lows around 0.7460 and NZD/USD down 0.6% to 0.6850 levels. Both the aussie and kiwi are struggling for momentum after a bit of exhaustion following the post-RBA surge earlier in the week.

Just to give a bit of background, Japan is the world’s third-largest importer of coal and Russia is the country’s second-largest supplier. In total, Russia supplies over 10% of Japan’s coal imports.Japan prime minister Kishida says that in banning Russian coal, the country will focus on renewable energy and nuclear power to replace the lost supplies. Those aren’t things that will come overnight but it highlights the long-term planning by many countries now in diversifying away from Russian energy.Coal is obviously the easy step. Oil and gas is an entirely different ballgame but it is one that could be on the cards in the year(s) ahead.Much like the EU, Japan also relies heavily on Russian oil and gas. For some context, the city of Hiroshima imports almost half of its gas supplies from Russia and Tokyo roughly about 10%.It will take time to replace existing contracts and projects that are running at the moment but over time, one can expect more and more countries to continue to lessen their dependency on Russian energy.The question then becomes, what is the long-term outlook for Russian oil and gas? I fear it is going to be a Venezuela situation but considering Putin’s ideals, you never really know what might come next when his back is against the wall.