From before:

• Barclays no longer sees the BOE cutting rates in June
• HSBC, Deutsche now expects BOE to only start cutting rates in August

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

Fundamental
Overview

The USD has been generally
under pressure since the benign US CPI report last week as the hawkish
expectations subsided and the market switched its focus from inflation back to
growth. This triggered a positive risk sentiment which is generally negative
for the greenback.

The CAD,
on the other hand, got pressured from the weaker than expected Canadian CPI
figures which raised the chances of a rate cut in June (although it remains
basically a coinflip). If the positive risk sentiment were to continue though,
we might see the CAD gaining ground against the USD anyway.

USDCAD Technical
Analysis – Daily Timeframe

On the daily chart, we can
see that USDCAD bounced from the key support zone
around the 1.36 handle where we had the confluence
of the trendline
and the 61.8% Fibonacci retracement level and extended the rally into the 1.37 handle following the weaker
Canadian CPI report.

The
buyers will need the price to break above the 1.37 handle to start targeting
the 1.38 handle next. The sellers, on the
other hand, will want to see the price breaking below the trendline and especially
the 1.36 support to gain more conviction and increase the bearish bets into the
1.34 handle.

USDCAD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that the sellers stepped in around the 1.37 handle where they had also the
confluence of the downward trendline and the 61.8% Fibonacci retracement level.
As previously mentioned, they will need the price to fall below the 1.36
support to increase the bearish bets into new lows.

The
buyers, on the other hand, will want to see the price breaking above the
trendline to invalidate the bearish setup and increase the bullish bets into
the 1.38 handle next.

USDCAD Technical
Analysis – 1 hour Timeframe

On the 1 hour
chart, we can see that we have a good support around the 1.3650 level where we
can find the confluence of the upward minor trendline and the 61.8% Fibonacci retracement
level.

This is where we
can expect the buyers to step in again to position for a break above the
downward trendline with a better risk to reward setup. The sellers, on the
other hand, might want to pile in on a break lower to increase the bearish bets
in expectations of a breakout to the downside.

Upcoming
Catalysts

Today we get the latest US PMIs and Jobless Claims figures.
Tomorrow, we conclude with the Canadian Retail Sales data.

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

Nvidia reported earnings yesterday after the close and not surprisingly it beat expectations across the board. We saw a rally in the S&P 500 futures as a result given the big weight of Nvidia on the index. The downward spike triggered by the FOMC minutes was clearly a dip-buying opportunity since there was nothing new there.

On the 1 hour chart, we can see that the S&P 500 broke out of the recent consolidation and the buyers are now stepping in around the resistance turned support. Today, we get the US PMIs and jobless claims figures which might trigger another downward spike.

In such a scenario, the dip-buyers will likely step back in around the 5306 level (unless the data is recessionary). The sellers, on the other hand, will want to see the price breaking below the 5306 level as that should open the door for a correction into the 5217 level.

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

Headlines:

• UK April CPI +2.3% vs +2.1% y/y expected
• Sterling gains as UK inflation slows by less than anticipated
• Traders move to pare back BOE rate cuts odds after UK CPI report
• What are the main events to look out for today?
• 10-year JGB yields touch 1% for the first time since 2013
• US MBA mortgage applications w.e. 17 May +1.9% vs +0.5% prior
• China announces countermeasures against 12 US companies and their senior executives
• ForexLive Asia-Pacific FX news wrap: NZD jumped on a more hawkish RBNZ Statement

Markets:

• NZD leads, CHF lags on the day
• European equities lower; S&P 500 futures down 0.1%
• US 10-year yields up 2.7 bps to 4.443%
• Gold down 0.3% to $2,413.92
• WTI crude down 0.6% to $78.14
• Bitcoin up 0.5% to $70,054

The highlight of the session was the UK CPI report, which came in hotter than expected. While the April readings still reflected a decline from March, it owed much to Ofgem dropping the energy price cap by 12% for UK households.

The more exasperating development for the BOE is that annual services inflation was seen at 5.9%, not much changed from 6.0% previously.

That saw traders pare back rate cut odds and effectively rules out a June rate cut. Cable rallied on the back of that in a move from 1.2710 to 1.2760 in the aftermath. Despite rate cuts odds being slashed, we are seeing sterling give back most of its earlier gains though. GBP/USD is now back down to 1.2715 as buyers fail to build on the earlier momentum surprisingly.

The dollar itself was steadier throughout the session, with yields holding higher and the risk mood in a more cautious position.

EUR/USD is down 0.2% to 1.0830 while USD/CHF is up 0.4% to 0.9145 currently. Meanwhile, USD/JPY is also seen up by 0.2% to 156.48 with eyes on last week’s high of 156.78.

Besides that, the kiwi is the lead gainer on the day but NZD/USD has given back a chunk of those gains after a more hawkish RBNZ. The pair is up 0.4% to 0.6115 but is down from a high of 0.6150 earlier.

In other markets, equities remain cautious with European indices down again and US futures also lower. The mood is soured slightly by the UK CPI report but we have Nvidia earnings to focus on after the close later today.

In the commodities space, gold is lower in a push to $2,413 while copper is also seeing its upside momentum wane in a drop back under $5 per pound.

It is on to the Fed minutes next.

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

• Prior +0.5%
• Market index 201.9 vs 198.1 prior
• Purchase index 140.0 vs 141.7 prior
• Refinance index 536.9 v 499.9 prior
• 30-year mortgage rate 7.01% vs 7.08% prior

Mortgage applications moved up in the past week but owed to a jump in refinancing activity. That is slightly offset by a drop in purchases activity, even as the average rate of the most popular US home loan eased further to near 7%.

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

Fundamental
Overview

The USD has been
generally under pressure since the benign US CPI report last week as the
hawkish expectations subsided and the market switched its focus from inflation
back to growth. This triggered a positive risk sentiment which is generally
negative for the greenback and benefited the other major currencies.

The NZD, on the
other hand, got a boost today from a 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. The currency should remain
supported amid the positive risk sentiment and a hawkish RBNZ for the time
being.

NZDUSD Technical
Analysis – Daily Timeframe

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 has opened the door for a rally into the 0.6217 swing
level and should give the buyers more conviction especially after the hawkish
RBNZ decision.

NZDUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour
chart, we can see that from a risk management perspective, the buyers will have
a good risk to reward setup around the upward trendline where they will also
find the 50% Fibonacci
retracement
level for confluence. The sellers, on the other hand, will want to see the
price breaking lower 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. Another breakout to the upside
should see the buyers piling in more aggressively to extend the rally into the
0.6217 level although it’s unlikely that we will see it today as we have the
upper limit of the average daily
range right at the
resistance.

The FOMC Minutes or the US PMIs might boost the USD in the short term and provide a dip-buying opportunity as long as there are no worrying inflationary comments in the PMIs.

Upcoming
Catalysts

Today we have the FOMC Minutes late in the day although it’s
unlikely to be market moving. Tomorrow, we will get the New Zealand Q1 Retail
Sales, the US PMIs and the latest US Jobless Claims figures.

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

Bond yields are sitting higher after the UK CPI report earlier and that is helping to prop up USD/JPY a little. The pair is up 0.2% to 156.47 as it continues to close in on last week’s high at 156.78. This comes with 10-year Treasury yields being up 2.9 bps to 4.443%.

Besides that, the greenback is holding a light advance against the likes of the euro, franc, aussie and loonie. It is up just 0.1% against those currencies.

The pound and kiwi are the only ones seen higher against the dollar but they owe to other instances. And even then, we’re seeing both currencies lose some ground after earlier gains as well.

GBP/USD is down to 1.2728, up 0.2% on the day, after a high of 1.2761 earlier following the UK CPI report. Meanwhile, NZD/USD is down to 0.6115 from a high of 0.6153 earlier after a slightly more hawkish RBNZ at the balance.

In the equities space, European stocks are down across the board while S&P 500 futures are also lower by 0.1%. And the more cautious risk mood there is also helping the dollar find a better footing on the week.

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

Fundamental
Overview

The USD has been
generally under pressure since the benign US CPI report last week as the
hawkish expectations subsided and the market switched its focus from inflation
back to growth. This triggered a positive risk sentiment which is generally
negative for the greenback and benefited the other major currencies.

The EUR, on the
other hand, has been gaining ground mostly because of the US Dollar softness amid
positive risk sentiment. One thing to watch will be the Eurozone wage growth data
tomorrow as that might shape market’s expectations for rate cuts beyond June.

EURUSD Technical
Analysis – Daily Timeframe

On the daily
chart, we can see that EURUSD rallied into the key 1.09 resistance
following the US CPI release and got stuck in a consolidation ever since. The
market is waiting for a catalyst to push the price in either direction, but for
now the bias remains bullish. A break above the 1.09 handle should see the
buyers taking the pair into the 1.10 handle next.

EURUSD
Technical Analysis – 4 hour Timeframe

On the 4 hour
chart, we can see that we have a good support around the 1.0830 level where we
can find the confluence
of the trendline
and the 38.2% Fibonacci
retracement level. This is where we can expect the buyers to step in with a
defined risk below the trendline to position for a break above the resistance
with a good risk to reward setup.

The sellers, on the other hand, will want to
see the price breaking lower to invalidate the bullish setup and position for a
drop into the 1.0727 support.

EURUSD
Technical Analysis – 1 hour Timeframe

On the 1 hour
chart, we can see more clearly the rangebound price action since the US CPI
rally. We have the support zone around the 1.0830 level and the resistance zone
around the 1.09 level. A breakout on either side should see the momentum
increasing in the direction of the breakout.

It’s unlikely that
we will get a breakout today though as the average
daily range limits are basically right at the support and resistance levels
and we don’t have major economic releases that could trigger a strong move.

Upcoming
Catalysts

Today we have the FOMC Minutes late in the day although it’s
unlikely to be market moving. Tomorrow, we will get the Eurozone negotiated wage
growth for Q1, the Eurozone and US PMIs, and the latest US Jobless Claims
figures.

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

Headlines:

• Another slow day for major currencies
• Ether runs into April high as ETF anticipation grows
• What are the main events to look out for today?
• Eurozone March trade balance €24.1 billion vs €23.6 billion prior
• Eurozone March current account balance €35.8 billion vs €29.5 billion prior
• Germany April PPI +0.2% vs +0.3% m/m expected
• UK May CBI trends total orders -33 vs -20 expected
• SNB total sight deposits w.e. 17 May CHF 467.4 bn vs CHF 468.9 bn prior
• IMF says BOE should cut bank rate by 50-75 bps this year
• Yellen: Global economy has been resilient amid challenging geopolitical landscape

Markets:

• CHF leads on the day
• European equities lower; S&P 500 futures flat
• US 10-year yields down 1.1 bps to 4.425%
• Gold down 0.2% to $2,420.63
• WTI crude down 1.7% to $78.45
• Bitcoin up 2.6% to $71,344; Ether up 8.3% to $3,791

It was mostly a quiet one once again in European morning trade, with broader markets lacking any real appetite. It’s a case of traders waiting to get their next fix, that being big events on the economic calendar.

And we’re not going to get much in the day ahead besides the Canadian CPI report. The Fed minutes tomorrow might be one to get the ball rolling this week, otherwise it might be a bit of a drag until the PMI data on Thursday.

But for now, it’s more sideways trading for FX especially. The dollar is steadier and keeping little changed overall. EUR/USD is resting within a 25 pips range, with a more or less similar mood among dollar pairs today. The changes among them are all within 0.1% currently. Talk about a snoozefest.

In the equities space, European indices are down slightly while US futures are flat. Meanwhile, the bond market is also not serving up anything to work with so far this week.

Looking to commodities, gold is down slightly but copper is still making headway as it seeks to build on the break above $5 per pound. The price is currently touching $5.14, just shy of the record high yesterday.

Instead, the action today is mostly in cryptocurrencies as Ether is surging towards $3,800 on anticipation of its spot ETFs getting approved by the SEC. Another case of buy the rumour, sell the fact?

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

That is helping to fuel a continued surge since overnight trading, with ETH/USD now up to test the April high at $3,729 earlier. But much like the story was for Bitcoin earlier this year, is this going to be another case of buy the rumour, sell the fact?

Of course, Bitcoin has recovered from that minor setback in late January to rally strongly to fresh record highs since. But Ether might not be that fortunate considering its secondary status to Bitcoin itself. We’ll see though.

As for the ETF applications itself, this week will see decisions for VanEck and Ark Invest. They are both due on Thursday and Friday respectively.

The optimism here is also pushing the likes of Bitcoin higher, with price there contesting the $71,000 mark with the high earlier today nearly clipping $72,000.

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