A renewed strain on the banking sector, fears of a US recession, and fears of the debt ceiling continued the risk-off trend for most of the week, weighing on the high-yielding currency.
US data fell short of expectations as the Bank of Japan’s cautious decision loomed, and the dollar and yen continued to struggle despite their safe haven appeal.
The British pound took the top spot this week, perhaps due to the lack of negative headlines from the UK, allowing traders to continue riding the bullish atmosphere triggered by last week’s strong UK inflation update. rice field.
USD pair
overlay of USD pair: 1 hour chart
The US dollar has seen a lot of volatility as traders have to balance a sticky inflation picture and an economic update that shows both signs of slowing economic growth.
However, based on the greenback’s net bearish trend seen in the chart above, traders are more likely to be tempted by talk of a growing recession and speculation that the Fed will likely reach the peak of its hiking cycle soon. It looks like you are concentrating.
🟢 Bullish Headline Arguments
US March Durable Goods Orders: +3.2% MoM $276.4B MoM -1.2% downward revision; Core Durable Goods Orders +0.3% MoM vs. -0.3% MoM 0.1%)
US mortgage applications increased 4.6% w/w for the week ended 21 April. 30-year fixed mortgages rose 12 bps to 6.55% (highest in a month)
US Advance Quarterly Core PCE Price Index Soars 4.4% QoQ and 4.9% QoQ (+4.1% QoQ Forecast)
US weekly first-time jobless claims for the week ending April 22: 230K vs. 246K the week before
Chicago PMI in April: 48.6 (forecast 46.0) vs. 43.5 in March
The US employment cost index rose 1.2% q/q (seasonally adjusted) in the first quarter of 2023, beating economists’ forecasts of 1% q/q
US April Consumer Sentiment: 63.5 vs 62.0 – University of Michigan
🔴 Bearish Headline Argument
Dallas Fed April manufacturing activity: -23.4 (forecast -11.0) vs -15.7 in March. The employment index fell 2.4 points to 8.0.Wages and benefits index rose to 37.6, above the average of 21.0
U.S. Treasury Secretary Yellen says failure to raise debt ceiling will lead to default and ‘economic catastrophe’
US Consumer Confidence Index fell to 101.3 in April (forecast 106.0) vs 104.0 a year ago
S&P/Case-Shiller US Home Price Index: +0.4% y/y (+1.3% y/y expected) vs. 2.6% y/y last
Q1 2023 US Advance GDP Reading: +1.1% QoQ +2.6% QoQ; Core PCE Price +4.4% QoQ 4.9% QoQ (+4.1% QoQ Forecast) soared at
US pending home sales in Mar: 0.0% m/m -5.2% m/m (+0.3% m/m forecast).Decrease in sales due to supply shortage
euro pair
overlay of EUR Pairs: 1 Hour Forex Chart
The euro has seen a significant net weakness this week, likely aided by ECB officials’ continued push for rate hikes at the next monetary policy meeting.
Economic data also supports the rate hike speculation, most notably renewed high inflation, improved survey sentiment data, and signs that the eurozone is avoiding a technical recession.
🟢 Bullish Headline Arguments
Germany Ifo Business Climate Index for April: 93.6 vs. 93.2 before
ECB chief economist Lane said on Monday that the current data justify further rate hikes at the ECB’s next meeting in May.
Germany’s GfK Consumer Climate Index improved from -29.3 to -25.7. Earnings expectations rebounded significantly in April against expectations of -28.0.
German Reserve Inflation in Apr: +7.2% y/y vs. +7.4% y/y Mar
European Central Bank Vice-President Luis de Guindos believes eurozone could avoid recession
Germany has raised its 2023 growth forecast to 0.4% from 0.2% after better-than-expected manufacturing at the start of the year.
Eurozone Economic Sentiment Index (ESI) for April: 99.3 (forecast 99.8) vs 99.2.European Union’s ESI remains unchanged at 97.3
Q1 2023 Eurozone Flash GDP Reading: +0.1% QoQ +0.0% as expected
🔴 Bearish Headline Argument
French Consumer Sentiment Index for April: 83 (forecast 81) vs. 82 for March
German Flash GDP in Q1 2023: 0.0% q/q (0.1% q/q forecast) vs -0.5% q/q previous reading (down from -0.4% q/q)
GBP Pair
overlay of GBP Pair: 1 hour chart
There have been some lower tier economic updates this week in the UK, but they didn’t seem to have much of an impact on Stirling.Riding on the price momentum sparked by last week’s UK inflation update, it likely escaped the broader risk-off mood early on.
🟢 Bullish Headline Arguments
UK public sector net debt reached $21.5 billion in March as the government continued its energy support programme.
CBI’s UK retail survey improved from +1 in March to +5 in April, but retailers don’t expect sustained improvement.
🔴 Bearish Headline Argument
Real estate website Rightmove: Average property asking prices rose 0.2% m/m in April, less than the 1.2% rise seen during the period.
CHF pairs
overlay of CHF pairs: 1 hour chart
The Swiss franc ended mixedly against major currencies on Friday, likely due to the risk-off atmosphere across the broader market.
Its gains were likely limited by concerns in the banking sector, with Wednesday’s peak being characterized by a correlation with new banking sector headlines from the US (First Republic Bank reported 720 in the first quarter). The banking sector has regained its trepidation as it considers selling $100bn of assets amid $100bn of deposits being executed).
🟢 Bullish Headline Arguments
Swiss trade surplus widened to CHF 4.53 billion from CHF 3.31 billion in March
🔴 Bearish Headline Argument
Swiss retail sales in March: -1.9% y/y -0.5% y/y; monthly reading -0.1% m/m
Swiss National Bank governor Thomas Jordan warned on Friday of tighter regulation for the banking sector
April KOF Swiss Economic Barometer: 96.38 vs 99.23
Australian dollar pair
overlay of Australian dollar pair: 1 hour chart
Australia saw immediate selling pressure, possibly as traders priced in expectations of a weaker-than-expected consumer price update from Australia later in the week.
The actual consumer price index was lower than expected, prompting further Australian dollar selling throughout Wednesday’s US session.
The Aussie has since recouped some of its losses, perhaps with short-term profit taking, but remains down this week. Traders are unlikely to abandon shorts ahead of another bearish event with the next Reserve Bank of Australia statement out early next week.
🟢 Bullish Headline Arguments
Australian producer price gains accelerated to 1.0% quarter-on-quarter from 0.4% in the fourth quarter. On an annualized basis, prices rose 5.2% (vs 5.0% expectations)
🔴 Bearish Headline Argument
Australia’s first quarter CPI fell from 1.9% to 1.4% quarter-on-quarter, and annual inflation fell to 6.3% from 6.8%, versus the 6.5% forecast.
Q1 2023 Australian Import Price Index: -4.2% QoQ (+0.7% QoQ forecast) +1.8% QoQ
Australian Private Sector Credit in Mar: +6.8% y/y (+7.4% y/y forecast) vs. +7.6% y/y
CAD pair
overlay of CAD Pairs: 1 Hour Forex Chart
The Looney is net weaker this week, with immediate downward pressure from lower oil prices and an early risk-off atmosphere, followed by continued selling pressure triggered by last week’s weaker-than-expected Canadian inflation update. may have been
🟢 Bullish Headline Arguments
The EIA reported that commercial crude oil investment (excluding SPR) fell by 5.1 million barrels to 460.9 million barrels in the week ending 21 April 2023.
🔴 Bearish Headline Argument
Bank of Canada Deliberation Summary: Canada’s faster-than-expected growth weighs rate hike in April. However, it was eventually put on hold due to softening demand and inflation indicators. Inflation is expected to reach 3% this summer and 2% by late 2024.
Canada’s GDP Feb: +0.1% m/m (+0.3% m/m forecast) +0.6% m/m
NZD Pair
overlay of New Zealand dollar Pairs: 1 Hour Forex Chart
The kiwi dollar was a strong net winner despite this week’s negative net data update from New Zealand. This suggests a weaker countercurrency narrative than NZ’s catalyst and likely benefited more from the weekend’s shift to risk-on.
🟢 Bullish Headline Arguments
New Zealand Prime Minister Chris Hipkins promises to cut spending and impose no new taxes this year
🔴 Bearish Headline Argument
New Zealand credit card spending slowed to 20.3% in March from 25.5% year-on-year
New Zealand trade balance in March 2023: -NZ$1.27 billion (-NZ$0.7 billion forecast) vs. -NZ$0.8 billion
ANZ: Business confidence in New Zealand is little changed, with 43.8% of respondents (up from 43.4%) expecting the economy to deteriorate in April.
yen pair
Inverted overlay yen pair: 1 hour chart
It’s been an up and down week for the Japanese Yen as traders turned bullish on the JPY on Tuesday after a hot reading from the Bank of Japan’s core CPI update. Broad markets also turned risk averse on Tuesday, likely supporting the yen until midweek.
Risk sentiment returned to risk-on on Thursday, likely with a significant uptick in positive corporate earnings from the US
And by Friday, yen bearishness had regained control, especially after the Bank of Japan’s monetary policy statement. and dashed hopes for monetary policy normalization.
🟢 Bullish Headline Arguments
Bank of Japan’s core CPI rose to 2.9% y/y in March from 2.7%
Japan’s business services inflation rate rises 1.8% in FY2022 (from 1.2% in 2021), fastest rise since FY2014
On Tuesday, Bank of Japan Governor Ueda said it was “appropriate to maintain monetary easing” for the time being, but said the BOJ was ready to raise rates “if wage growth and inflation accelerate faster than expected.” He also said there is.
Tokyo’s CPI, considered a leading indicator of inflation in Japan, accelerated to 3.5% y/y in April from 3.2%.
Japan’s retail sales rose 7.2% y/y in March, up 5.8% from expectations, 7.3% in February
BOJ removes forward guidance and announces intention to review monetary policy
The Bank of Japan has raised its core CPI forecast for 2023 to 1.8% from 1.6% y/y. Core CPI forecast for 2024 is now 2.0% y/y 1.8% y/y
🔴 Bearish Headline Argument
Japan’s unemployment rate jumped from 2.6% to 2.8% in March (vs a 2.5% forecast)
Early readings for Japanese factory output showed a 0.8% m/m rise in March, slower than the upwardly revised 4.6% rise in February but faster than the 0.5% growth forecast.
The Bank of Japan postponed a change in monetary policy on Friday (interest rates remain at -0.10% and the 10-year JGB yield curve control range remains at 0.50% on either side of the 0.0% target). A review of monetary policy may take a year or more.
