UPCOMING EVENTS:

• Monday: UK/US
  Holidays, German IFO.
• Tuesday:
  Australia Retail Sales, Canada PPI, US Consumer Confidence.
• Wednesday:
  Australia Monthly CPI, Fed Beige Book.
• Thursday:
  Switzerland GDP, Eurozone Unemployment Rate, US GDP 2nd
  Estimate, US Jobless Claims.
• Friday: Tokyo
  CPI, Japan Retail Sales and Industrial Production, China PMIs, Switzerland
  Retail Sales, Switzerland Manufacturing PMI, Eurozone Flash CPI, Canada
  GDP, US PCE.

Tuesday

The US Consumer Confidence is expected to
tick lower in May to 95.9 vs. 97.0 in April. The last
report missed expectations by a big margin
reaching the lowest level since July 2022. The Chief Economists at The
Conference Board highlighted that “Confidence retreated further in April as
consumers became less positive about the current labour market situation, and more
concerned about future business conditions, job availability, and income”.

She further added that “despite April’s
dip in the overall index, since mid-2022, optimism about the present
situation continues to more than offset concerns about the future.“ The
Present Situation Index will be something to watch as that’s generally a leading indicator
for the unemployment rate.

Wednesday

The Australian Monthly CPI Y/Y is expected
at 3.4% vs. 3.5% prior.
The RBA focuses more on the quarterly CPI readings, but the monthly
indicator is timelier and can be a guide for the trend, especially at
turning points. The Core measures will be more important but this report is
unlikely to change much for the central bank at the moment, although another
hot report is likely to trigger a hawkish reaction in the market.

Thursday

The Eurozone Unemployment Rate is expected
to remain unchanged at 6.5% vs. 6.5% prior. The rate has been hovering at the
record low for a year denoting a tight labour market. Moreover, the recent Eurozone
Negotiated Wage Growth for Q1 2024 came in
higher than the prior quarter, which was kind of a setback for the ECB even
though they “dismissed” it as a one-off because of the delayed action to raise
wages against inflation in Germany. Nonetheless, it will give them less
confidence regarding the rate cuts path following the one in June.

The US Jobless Claims
continue to be one of the most important releases to follow 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. This
week Initial Claims are expected at 218K vs. 215K prior, while there is no consensus at the
time of writing for Continuing Claims although the prior release showed an
increase to 1794K vs. 1794K expected and 1786K prior.

Friday

The Tokyo Core CPI Y/Y is
expected at 1.9% vs. 1.6% prior. The last report showed a big drop in the inflation
rate across all measures although it was attributed to a one-off factor as high school tuition in Tokyo was
effectively eliminated and took effect in April. Nonetheless, inflation in
Japan continues to ease and it doesn’t justify a rate hike from the BoJ
anytime soon.

The Chinese Manufacturing
PMI is expected at 50.5 vs. 50.4 prior, while the Services PMI is seen at 51.5
vs. 51.2 prior. We’ve got some disappointing data recently with industrial
output and retail sales missing expectations. This suggests that the economy is
still struggling to recover robustly amid weak domestic demand, lingering
deflation risk, and prolonged weakness in the property sector. If we
continue to see weakness, the PBoC will likely react by easing its policy further.

The Eurozone Headline CPI
Y/Y is expected at 2.5% vs. 2.4% prior, while the Core CPI Y/Y is seen at 2.7%
vs. 2.7% prior. This report is likely to influence the market’s expectations
for the rate cuts path beyond the June meeting. In fact, hot inflation data
after strong PMIs, wage growth and labour market reports will likely trigger a
hawkish repricing in interest rates expectations from the current 55 bps of
easing seen by year-end.

The US Headline PCE Y/Y is
expected at 2.6% vs. 2.7% prior, while the M/M measure is seen at 0.26% vs.
0.32% prior. The Core PCE Y/Y is expected at 2.75% vs. 2.8% prior, while the
M/M reading is seen at 0.24% vs. 0.32% prior. Forecasters can reliably estimate
the PCE once the CPI and PPI are out, so the market already knows what to
expect.

This report is unlikely
to change anything for the Fed as the central bank remains in a “wait and see” mode until September at
very least. In fact, despite calls of cuts in July or November, I’d say the Fed
will want to deliver the first cut on a meeting containing the SEP (barring a
quick deterioration in the labour market).

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

Bank of Japan Governor Ueda and Japan finance minister Suzuki spoke over the weekend, at the conclusion of the G7 meeting in Italy.

Suzuki said he hadn’t had a one-on-one meeting with US Treasury Secretary Yellen. Which seems to indicate no discussion on co-ordinated yen intervention took place. Prior to the weekend Suzuki’s offsider, Vice MInister for International Affairs Masato Kanda (the official who will instruct the BOJ to intervene, when he judges it necessary) had basically said there was no need for a meeting.

Earlier this month Yellen was not encouraging of the idea:

• US support for Japan on intervention rightt now is only lukewarm

A few days later there was more cold shoulder from Yellen:

• Yellen didn’t sound unsupportive of Japan’s ‚rumoured‘ intervention, but she didn’t sound real keen either

Not to hammer this point too much but Yellen repeated the same just last week, that intervention should be rare and well-telegraphed in advance.

So, it was only a Suzuki and Ueda tag team show after the G7.

Suzuki:

• Reaffirmed the G-7 commitments on foreign exchange
• Said that many factors are making contributions to increase in yields
• Warned against maintaining rates above zero

And with rising rates in Japan he also

• called against maintaining rates above zero… „We must be acutely aware that the world of positive interest rates has come … we will make progress in restoring fiscal health with more sense of urgency than ever.”

Bank of Japan Governor Ueda seemed happy to let Suzuki handle the gnarly issues, shrugging it all off with:

• Long-term bond yields are determined by financial markets in principle
• Will monitor fixed interest markets

Ueda didn’t talk about the rate path ahead, nor did he specify much on the chances of trimming back on Japanese Government Bond bond purchases at the next policy meeting (this is in June).

Bank of Japan Governor Ueda and Finance Minister Suzuki.

—

G7 finance leaders met this Friday and Saturday in Stresa, Italy.

G7 member States are Canada, France, Germany, Italy, Japan, the UK, and the US. The EU participates in all discussions as a guest.

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

As Bank of Italy Governor, Fabio Panetta is also a member of the European Central Bank Governing Council. On Saturday he spoke at a news conference at the end of the G7 finance leaders meeting saying that he sees „a fairly general consensus has emerged on the possibility of a rate cut“.

We’ve certainly been getting a consensus out of ECB officials that a June cut is happening, these are from Friday:

• ECB’s Nagel: The probability of a June rate cut is increasingECB’s Nagel: The probability of a June rate cut is increasing
  • As Justin said on Nagel: For one of the more hawkish members, the headline comment is pretty much a concession that they will cut rates in two weeks‘ time.
• ECB’s Schnabel: A June rate cut is likely

ECB rates:

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

• NASDAQ index rises by over 1%. Dow Industrial Average average flat
• 77 Tories are standing down ahead of the general election
• Crude oil futures trade to new session highs
• Bakers Hughes oil rigs unchanged in the current week
• European indices close unchanged/down. Lower for the week.
• Japan’s Kanda: Excessive FX moves undesirable. Ready to take action if needed
• ECBs Nagel: Core and headline inflation are decelerating
• Atlanta Fed GDPNow growth estimate for Q2 falls to 3.5% from 3.6%
• University of Michigan consumer sentiment versus 69.1 estimate. Preliminary 67.4
• Fed Gov. Waller: US financing pressures may contribute to rise in longer run neutral rate
• Kickstart FX trading for May 24 w/a technical look at the EURUSD, USDJPY and GBPUSD.
• ECBs Muller: ECB must stay cautious as inflation can surprise to the upside
• Canada retail sales for March -0.2% versus 0.0% expected
• US durable goods orders for April 0.7% versus -0.8% expected
• The EUR is the strongest and the CHF is the weakest as the NA session begins
• ForexLive European FX news wrap: Dollar lightly changed in mixed trading
• NZDUSD Technical Analysis – The market is slowly fading the US Dollar strength
• ECB’s Nagel: The probability of a June rate cut is increasing
• ECB’s Schnabel: A June rate cut is likely

As the week comes to a close, the CAD is ending the day as the strongest of the major currencies. The CHF is the weakest. The USD is mostly lower with modest gains vs the JPY and CHF. The CAD moved higher despite lower than expected retail sales in March. However, the estimate for April was solid at 0.7% offsetting the -0.2% decline this month.

The USD moved lower helped by more favorable Michigan consumer confidence. Not only did the confidence, expectations and current situation increase, but the inflation expectations moved lower (click here for the full report). An analyst on CNBC today did warn of the reliability of the data due to political bias. GOP respondents tend to have an overly negative view of the economy and inflation vs Dem counterparts. Recall in the preliminary, the confidence fall sharply while inflation moved higher. Today’s data saw those trends reverse some of the large changes from the preliminary numbers. What do you believe?.

Also in the US today, the US Durable goods orders came in stronger than expectations at 0.7% vs -0.8%. However, this data is open to sharp revisions. The Factory Orders to be released in about 10 or so days,will show the durable goods revisions. Last month, the revisions were quite significant (from 2.6% originally reported to 0.8% final).

For the trading week, versus the major currencies the USD was higher. Below is a review of the weekly change of the major currencies vs the USD:

• EUR: + 0.17%
• JPY, .+0.82%
• GBP: -0.30%
• CHF: +0.72%
• CAD: +0.3%
• AUD: + 0.93%
• NZD unchanged

In the USD market today, yields are ending the day with mixed results:

• 2- year yield 4.940%, +1.5 basis points
• 5-year yield 4.527%, +0.2 basements
• 10 year yield 4.466%, -0.8 basis points
• 30-year yield 4.572%, -0.7 basis points

For the trading week, yields are higher with the sugar and moving up the most is the yield curve go flatter:

• 2-year yield +11.9 basis points
• 5-year yield, +8.1 base points
• 10 year yield +4.5 basis points
• 30-year yield +1.1 base points

The 2-10 years spread is at -47.9 basis points which is more negative by -.7.4 basis points

The 2-30 year spread is and -37.7 basis points which is more negative by -10.8 basis points

In other markets:

• Crude oil is trading at $77.70 up $0.83 or 1.05%. For the trading week the price of crude oil fell $-1.76 or -2.22%
• Gold fell by $-79.97 or -3.31%
• Bitcoin rose $2683
• Ethereum surged by $648 to $3738. That is a gain of nearly 21% on the back of expectations that an Ethereum ETF would be approved.

Monday is a holiday in the UK and the US. Hoping all have a great weekend.

This article was written by Greg Michalowski at www.forexlive.com.

The major US stock indices are all closing higher on the day, however with different variances.

• The Dow Industrial Average averages closing near unchanged at 39069.58 up 0.01%.
• The S&P index is closing up 36.86 points or 0.70% at 5304.71. A close short of its record close reached on Tuesday at 5321.42.
• The Nasdaq index is closing up 184.76 points or 1.10% at 16928.79.

The small-cap Russell 2000 rebounded 21.25 points today or 1.04% at 2069.6 X.

For the trading week, the major indices are closing with mixed results:

• Dow Industrial Average average fell -2.33%
• S&P index eked out a small gain of 0.03%. The gain was good enough for its fifth consecutive positive week
• NASDAQ and the rose 1.41% for its fifth weekly gain.
• Russell 2000 fell -1.24% snapping its 4 week up string.

Looking at individual stocks this week:

• Nvidia shares rose 15.13% after earnings beat expectations and the company announced a 10:1 stock split
• Meta Platforms, +1.34%
• Amazon, -2.14%
• Alphabet, -0.60% after closing at a record level last week
• Microsoft is closing at a record level and is up 2.37%
• Apple. rose 0.05%
• Tesla rose 1.0%
• Netflix rose 4.13%
• ServiceNow fell -3.47%
• Chipotle fell -1.92%
• Micron rose 3.35%
• Salesforce -4.66%
• Crowdstrike, rose 1.60%
• Dell rose 7.13%
• Gamestop fell -14.45%
• Trump Media, fell -10.03%

This article was written by Greg Michalowski at www.forexlive.com.

The NZDUSD traded in a narrow range this week with a low to high range of only 70 pips . That is not a lot of movement. The good news is that next week, trader might be ready to move the pair outside of the narrow range. If so, look for momentum in the direction of the break.

To find out all about it, click on the video link above.

This article was written by Greg Michalowski at www.forexlive.com.

The rats are leaving the sinking ship.

This article was written by Greg Michalowski at www.forexlive.com.

As the week moves to a close, the USDCHF is higher on the week, but did find willing sellers against a topside swing ceiling. That ceiling stalled near 0.9146-0.9156. The price has rotated lower.

However, the close support at the 61.8% of the move down from the April/May 2024 high is stalling the decline today at 0.9133.

So going into the new week, both those levels are setting up as close support and close resistance. Move below 0.9133, and I would expect the sellers to take more control with the first target near 0.9105.

If the 0.9156 is broken, that opens the door with traders thinking about a retest of the May 1 high at 0.92237. PS that high is also near other highs going back in to 2023.

Find all about it, in the video above. Be aware. Be prepared.

This article was written by Greg Michalowski at www.forexlive.com.

That’s a bit of a late revision as markets have ruled out both June and July for quite some time now. As of today, the odds of a September move are priced at a ~58% probability with just ~36 bps of rate cuts for the year.

This article was written by Justin Low at www.forexlive.com.

Fundamental
Overview

The USD got a boost
yesterday from the strong US
PMIs which lifted Treasury yields and put in question the rate cut in
September with the probability falling to roughly 60%. I would argue
that the details weren’t that bad on the inflation front but overall good for
the growth side. If the market digest it as good news today, we should see the
risk-on sentiment returning which is generally negative for the greenback.

The NZD,
on the other hand, remains supported from the hawkish RBNZ decision
where the central bank pushed further out the timing for a rate cut and even
added that they considered a rate hike. If the risk-on sentiment returns, the Kiwi
will likely rise to new highs.

NZDUSD Technical
Analysis – Daily Timeframe

On the daily chart, On the
daily chart, we can see that NZDUSD broke above the trendline
recently following the US CPI report and consolidated around the highs. This breakout
opened the door for a rally into the 0.6217 swing level.

NZDUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that the buyers continue to step in around the upward trendline where they
will also have the 50% Fibonacci retracement level for confluence.
The sellers, on the other hand, will need to see the price breaking below the
trendline to invalidate the bullish setup and position for a drop into the 0.60
handle.

NZDUSD Technical Analysis
– 1 hour Timeframe

On the 1 hour chart, we can
see that we’ve been stuck in a range between the 0.6095 support and
0.6140 resistance. A breakout on either side should trigger a bigger move as
the momentum will likely pick up.

It’s unlikely that we will
see it to the upside today though given that the upper limit of the average daily range stands right at the resistance and we don’t have any catalyst that
could lead to a bigger move. Therefore, the risk for the buyers is a breakout
to the downside which could happen if the market interprets yesterday’s data
as bad news for inflation.

Upcoming
Catalysts

There are no
catalysts today so the market should trade based on the yesterday’s US PMI by
either fading the moves or print new lows.

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