USD

• The Fed left interest rates unchanged as expected at the last meeting with basically no
  change to the statement. The Dot Plot still showed three rate cuts for 2024 and
  the economic projections were upgraded with growth and inflation higher and the
  unemployment rate lower.
• The US CPI beat expectations for the third
  consecutive month, while the US PPI came in line with forecasts.
• The US NFP beat expectations across the board
  although the average hourly earnings came in line with forecasts.
• The US ISM Manufacturing PMI beat expectations by a big margin with
  the prices component continuing to increase, while the US ISM Services PMI missed with the price index dropping to
  the lowest level in 4 years.
• The US Retail Sales beat expectations across the board by a
  big margin with positive revisions to the prior figures.
• The market now expects the first rate cut in
  September.

AUD

• The
  RBA left interest rates unchanged as expected at the last meeting and
  finally dropped the tightening bias.
• The
  last Monthly CPI report came in line with
  expectations although the underlying inflation measure increased from the prior
  month.
• The
  latest labour market report missed expectations by a big
  margin.
• The
  wage price index surprised to the upside as wage
  growth in Australia remains strong.
• The
  latest Australian PMIs showed the Manufacturing PMI falling
  further into contraction while the Services PMI continue to increase and remain
  in expansion.
• The
  market expects the first rate cut in November.

AUDUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that AUDUSD fell
below the 0.6440 low and extended the selloff into the 0.64 handle. The price
is a bit overstretched as depicted by the distance from the blue 8 moving average. In such
instances, we can generally see a pullback into the moving average or some
consolidation before the next move. In this case, the pullback would also
coincide with the support now turned resistance and the
38.2% Fibonacci retracement level
which will be a nice zone for the sellers to enter the market again with a
better risk to reward setup.

AUDUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that we have a
minor trendline defining
the current downward momentum with the blue 8 moving average acting as dynamic
resistance. We can expect the sellers to lean on this trendline with a defined
risk above it to position for further downside. The buyers, on the other hand,
will want to see the price breaking higher to position for a rally into the
0.65 resistance zone.

AUDUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
price has been diverging with
the MACD which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, if get a pullback, the sellers should lean on the
trendline where they will also find the confluence of the
trendline, the Fibonacci retracement levels and the red 21 moving average. If
the price were to break higher though, the reversal will be confirmed, and the
buyers will pile in for a rally into the 0.65 resistance zone.

Upcoming Events

On Thursday we get the Australian jobs data and the latest
US Jobless Claims figures.

This article was written by FL Contributors at www.forexlive.com.

What a run it has been for gold in 2024, and we’re still only just four months in. A surging run from $2,000 all the way to $2,400 in a time when the dollar is also holding strong says quite a lot. That especially when traders are also seen paring back rate cut bets since the start of the year.

Amid ongoing tensions involving Iran and Israel, the precious metal ran up just above $2,400 on Friday. That before some profit-taking eventually kicked in and we’re seeing price chop around a fair bit in the last few sessions. But what does the technical picture say about gold at the moment?

The near-term chart seen above shows that buyers are still in control at this point. And during the run higher in April so far, they have done their part in defending the more bullish near-term bias.

The first couple of brushes against the 100-hour moving average (red line) were quickly defended before the strong dip buying yesterday at the 200-hour moving average (blue line). In short, sellers were unable to seize back near-term control in their first attempt.

As such, buyers are still poised with price action holding above both key hourly moving averages. Even with the slight drop today, it isn’t all too bad for gold in terms of the charts.

In the bigger picture, I can’t help but think there’s still so much more potential for gold to rip higher. As mentioned, we’re seeing gold surge despite a stronger dollar and softening of rate cut bets. What happens when those two factors switch around?

I reckon we might be due a major retracement/correction before that. But if anything else, that’s just going to present another prime dip buying opportunity – similar to October last year.

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

• February eurozone industrial production -6.4% vs -5.7% expected
• ECB’s Kazimir: ECB can cut rates in June given persistent fall in inflation
• ECB’s Rehn: Rates can be lowered in June if inflation slows as expected
• Donald Trump’s hush-money criminal trial starts today
• France’s Macron says will urge Israel not to reply with further escalation
• Germany’s Baerbock: Isreal should secure ‚defensive victory‘ with diplomatic means
• UK Prime Minister Sunak could announce Iran sanctions later today
• UK’s Cameron: We will consider more sanctions against Iran
• Tesla may announce large workforce layoffs this week
• ECB’s Simkus: Rate cut is also possible in July
• Swiss March price prices +0.1% vs +0.1% prior

Markets:

• Gold up $15 to $2359
• US 10-year yields up 7.8 bps to 4.58%
• WTI crude down 67-cents to $84.99
• S&P 500 futures up 27 points
• AUD leads, JPY lags

Yields are up but the US dollar is down. That’s the kind of rare dynamic you see when a geopolitical flight-to-safety bid is fading from the US dollar. That’s exactly what’s ongoing as markets calculate the the Isreali response to Iran won’t lead to war. That’s likely to be highly variable depending on what happens so it will remain a critical market focus and the latest reports say action is likely sooner rather than later.

The general theme in European trading so far has been a small improvement in the risk mood with local stock markets up from 0.5-1.0%, aside from the UK, which is down. The euro has edged higher with the pound doing a bit better.

The yen is struggling and hit fresh 34-year lows. There was some modest verbal intervention that caused a brief 15 pip dip but now the pair remains pushed up near 154 after steady bids in Asia.

Commodity currencies are higher despite a moderate decline in oil prices as the risk mood improves.

Overall, moves outside of the yen have been medium-sized to start the week but some of the excitement could be held back ahead of today’s US retail sales report, coming up shortly.

This article was written by Adam Button at www.forexlive.com.

Israel’s war cabinet is still debating how to respond to Iran attack, according to CNN. They still remain on track to respond but the report says the ‚heated debate‘ is looking at military and diplomatic options.

Among the military options that are being considered, the war cabinet is considering an attack on an Iranian facility that would send a message, but would avoid causing casualties, one Israeli official said. But Israeli officials recognize that will be a difficult needle to thread, hence the ongoing debate.

The report says Netanyahu and fellow cabinet ministers have yet to make a decision.

This article was written by Adam Button at www.forexlive.com.

• ECB can cut rates in June given persistent fall in inflation, restriction can be gradually reduced
• ECB not committing to any policy path beyond June
• Economic recovery taking hold, will accelerate in H2

I don’t think there’s any doubt about the ECB plan from here.

This article was written by Adam Button at www.forexlive.com.

There are a chorus from the ECB teeing up a June rate cut.

This article was written by Adam Button at www.forexlive.com.

The initial reaction to Goldman Sachs earnings has been positive with the shares up around 3%. Shares fell heavily on Friday in sympathy with JP Morgan earnings, which caused the sharpest earnings fall in JPM in 23 years.

This article was written by Adam Button at www.forexlive.com.

UPCOMING EVENTS:

• Monday: New
  Zealand Services PMI, Eurozone Industrial Production, US Retail Sales, US
  NAHB Housing Market Index, PBoC MLF.
• Tuesday: China
  Industrial Production and Retail Sales, UK Labour Market report, Eurozone
  ZEW, Canada CPI, US Housing Starts and Building Permits, US Industrial
  Production.
• Wednesday: New
  Zealand CPI, UK CPI.
• Thursday:
  Australia Labour Market report, US Jobless Claims.
• Friday: Japan
  CPI, UK Retail Sales.

Monday

The PBoC is expected to keep the MLF rate
unchanged at 2.50%. The recent “activity” data has been pretty good with the
latest PMIs
coming in strong. The CPI
figures though missed expectations by a big margin as the deflationary threat
remains present. The PBoC Governor Pan stated that they still have
sufficient room for monetary policy, so adjustments to the policy rates
cannot be ruled out.

The US Retail Sales M/M is expected at
0.3% vs. 0.6% prior, while the Retail Sales ex-Autos M/M figure is seen at 0.4%
vs. 0.3% prior. Retail Sales are notoriously volatile, but the underlying
trend shows stable spending and given the resilience in the labour market
and the recent pickup in economic activity we can expect it to continue. If we
get a miss, the market should fade the reaction as the trend set by the third
consecutive hot US CPI is unlikely to change by the Retail Sales data.

Tuesday

The UK Unemployment Rate is expected to
remain unchanged at 3.9% and there is no consensus at the time of writing for
the other figures. The focus will be mainly on wage growth metrics but
unless we get some big surprises, the market’s pricing is unlikely to change
much as market participants will be looking for the UK CPI report the next
day.

There is no consensus for the Canadian CPI
readings at the time of writing but as always, the attention will be on the
underlying inflation measures as that’s what the BoC is most concerned about.
The central bank at its latest
monetary policy meeting removed a line in
the statement where it previously noted its concern about the inflation
outlook. This was interpreted as a dovish move as it followed weak labour
market and inflation
reports. The market sees the BoC cutting rates in June, but the central bank
will need the disinflationary trend to continue to deliver on expectations.

Wednesday

The New Zealand CPI Y/Y is expected at
4.1% vs. 4.7%, while the Q/Q measure is seen at 0.7% vs. 0.5% prior. The RBNZ
at its latest
monetary policy meeting dropped the
tightening bias and stated that the OCR will need to remain at a restrictive
level for a sustained period of time. The
central bank expects to normalise policy only in 2025 while the market sees the
first rate cut in August. Unless we get big surprises, the data is unlikely
to change the market’s pricing much.

The UK CPI Y/Y is expected at 3.1% vs.
3.4% prior, while the M/M measure is seen at 0.0.4% vs. 0.6% prior. The Core
CPI Y/Y is expected at 4.3% vs. 4.5% prior. The BoE is very concerned
about the Services Inflation rate which stands at an uncomfortable 6.1% level,
so that will be the most important data point. There’s basically a 50/50
chance for a rate cut in June and it’s unlikely that the BoE will deliver on
expectations unless we get some notable easing in the inflation rates
(especially services inflation) in the next couple of months or the labour
market cracks in the meantime.

Thursday

The Australian Labour Market report is
expected to show 15.5K jobs added in March vs. 116.5K in
February and the Unemployment Rate to tick
higher to 3.9% vs. 3.7% prior. Unless there are big surprises, the data is
unlikely to change much for the market with the first rate cut expected in
November.

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. There is no consensus at the time of
writing although the prior
week saw Initial Claims at 211K vs. 215K
expected and Continuing Claims at 1817K vs. 1800 expected.

Friday

The Japanese Core CPI Y/Y is expected at
2.6% vs. 2.8% prior with no consensus of the other measures. The BoJ continues
to support the status quo while mentioning that another rate hike will depend
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.
Nevertheless, if we start to see inflation trending upwards, the BoJ will
likely move already in July.

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

US President Joe Biden told Israeli prime minister Benjamin Netanyahu during a call today that the US will oppose any Israeli direct counterattack against Iran, according to an Axios report that cited a ’senior White House official.‘

Two things:

1) If the US doesn’t want a war, this makes sense. Aside from oil prices, I can see plenty of reasons that Biden wouldn’t want this war now.

2) Could this be a smokescreen? Things like this don’t ‚leak‘ out of the White House. This would be some of the most-highly classified information on the planet. So was it leaked to pressure Israel? To lower expectations of the US actually getting involved? Or is it a fake to get Iran to let its guard down?

The answer to that might have to do with what was said behind closed doors when Iran briefed the US, Italy and a number of other countries before its response.

Iran could told have told diplomats an approximation of what it was going to do and could have said no one was likely to get injured. It may have also launched several ballistic missiles into very sensitive regions to prove that it could. Reports (if they’re true) said Iran hit close to an Israeli military base and near a port on the far side of the country. The message there could be to say: We missed on purpose but could hit you wherever we want. Maybe Iran was looking for an opportunity to show Israel that its defenses weren’t iron clad? Perhaps all the forewarning and easy-to-shoot down drones were performative and a gift to Israel to show the people at home the strength of its defense.

Iran obviously thinks that’s how it will be taken, that’s why this tweet was so clear. If it has the desired effect, you could argue this is the most-important tweet ever sent.

The timing, clarity and wide reach of made it abundantly clear that Iran doesn’t want a war.

So Iran doesn’t want a war. We can also take the White House at face value that it also doesn’t want a war.

The frightening miscalculation here would be if Netanyahu does want or a war, or feels that he must respond to this. And if he must and the US is sincere, then is there some kind of further face-saving move that he could do without US support and without provoking Iran further? Will he try to walk that dangerous line?

Or maybe he thinks now is the right time to deal with Israel’s arch enemy forever?

It’s a dangerous 24 hours ahead.

This article was written by Adam Button at www.forexlive.com.

(Update: Israel says the strike caused ’slight damage‘ to a military base)

Iran’s IRGC says it has „successfully hit important military targets“ of Israeli army and „destroyed them“, according to Iranian press. The Iranian government’s newspaper also said that Tehran successfully targeted Israel’s most important military base in Nagev using Kheibar missile.

That could just be propaganda for domestic purposes.

The latest generation of Kheibar missiles accelerate to Mach 5 at impact, so they would be very difficult to intercept. It wasn’t previously known if Iran had the capability to launch those missiles the 2000km to Israel, though last May Iran claimed it could have a 2000km range.

Several videos do seem to show fast-moving objects hitting near Nagev.

It seems there is a ’secret‘ US military base in Nagev as well.

This article was written by Adam Button at www.forexlive.com.