• Just over EUR 11 billion of expiries between 1.0600-1.0815 for Friday's cut

• Close to a yard of 0.5950s kiwi expiries in the diary

• The AUD also busy with 8-billion worth of deals between 0.6450 and 0.6600

For more click on FXBUZ

• AUD/USD has respected its 0.6565-0.6585 Asia range since the European open

• 0.6585 is two pips shy of Monday's peak (highest level since April 10)

• US jobs report due at 1230 GMT: April NFP f/c at 243k; jobless rate f/c 3.8%

• NFP miss might inflate AUD/USD through 0.6600 (0.6644 was April high)

• Support points below 0.6565 include 0.6540 (Wednesday's high) and 0.6500

• 36 of 37 economists expect RBA rate hold on May 7; one forecasts 25 bps hike

• Cable consolidates gains from 1.2472 (Thursday's low) pre-US jobs report

• Pound supported by word Glencore studying an approach for Anglo American

• Anglo rejected 31 billion pound offer from BHP last week nL1N3H3140

• 1.2557 was GBP/USD high in Asia (1.2569 was two-and-a-half week high Monday)

• Thursday's low was five pips shy of Wednesday's pre-Fed event risk low

• Labour make gains at the expense of PM Sunak's Tories in UK local elections

• USD/JPY has scope for a break above Monday's 160.24 new multi-year high

• Medium-term outlook bullish since spot overcame major 152.60 Fibo in April

• 152.60 Fibo, a 38.2% retrace of major 277.65 to 75.31 (1982 to 2011) drop

• Those that are bullish need another weekly close above 152.60 Fibo

• Recall spot managed to register three weekly closes in a row above 152.60

• We remain long at 155.25 for 165.00, meanwhile our stop is just below 150.00

• EUR/JPY 164.02-164.46 EBS range on Friday. USD/JPY Trader TGM2336

• EUR/USD's failure, in April, under the 1.0611 Fibo led to a recovery moves

• 1.0611 Fibo is a 76.4% retrace of the 1.0448-1.1139 (Oct-Dec) EBS rise

• The negative alignment of the tenkan and kijun lines still points to a drop

• We are short at 1.0725 for a slump to our 1.0525 target

• However, 14-day momentum turned positive on Thursday, highlights upside risk

• EUR/USD Trader TGM2334. Previous update nL1N3H50HG

• AUD/USD +0.1% in Asia after trading a relatively narrow 0.6565-0.6585 range

• Opened at 0.6568, moved higher as JPY rallied above 103.00, CNH above 7.2000

• Failed to break 0.6587 Mon high, settles at 0.6572 ahead of Europe open

• Fed indicating that it is still leaning toward a dovish stance weighs on USD

• Expectations of a hawkish shift in RBA rate stance on Tue underpins AUD

• POLL-RBA to hold rates in May, only cut once by end-year

• Focus turns to U.S. payrolls data Friday, forecast is for 243,000 new jobs

• Resistance 0.6585-90, 0.6610-15, support 0.6545-50, 0.6520-25

• For more click on FXBUZ

Synopsis:

Danske Bank holds a negative outlook on the Swiss Franc (CHF), anticipating a potential larger-than-expected rate cut by the Swiss National Bank (SNB) in June due to lower inflation expectations and easing geopolitical tensions.

Key Points:

• EUR/CHF Movement: The currency pair saw significant movement, breaking above the 0.98 level. This was influenced by a decrease in geopolitical risks and an improving market sentiment towards the Euro against the Swiss Franc.

• Inflation Expectations: April’s inflation data is anticipated with the consensus expecting a slight rise in headline inflation but a drop in core inflation below 1.0% year-on-year. This data is crucial as it will shape expectations for the SNB's monetary policy decisions in June.

• SNB Rate Cut Outlook: Danske Bank has consistently forecasted a 25 basis point cut from the SNB in June. However, they now see a possibility for a more aggressive 50 basis point reduction if inflation figures trend significantly below target, highlighting an underappreciated risk of deeper cuts.

• Global Monetary Policy Context: The expected easing cycle across global central banks might be delayed, which reinforces the bearish view on CHF, particularly if other central banks delay easing or adjust their paths less aggressively than anticipated.

Conclusion:

Danske Bank advises investors to maintain a cautious stance on the Swiss Franc in the near term, especially in light of potential aggressive monetary easing by the SNB and the broader context of global monetary policies. The bank suggests that the upcoming inflation data will be pivotal in solidifying the SNB's policy trajectory, potentially leading to significant currency movements in EUR/CHF.

• AUD/USD up 0.2% in Asia as dovish leaning Fed weighs broadly on USD

• Boosted by stronger JPY and Asian currencies; CNH rises above 7.2000

• Japan interventions undermine dollar, traders wary of more MOF action

• Expectations of a hawkish shift in RBA rate stance on Tue underpins AUD

• POLL-RBA to hold rates in May, only cut once by end-year

• Some analysts hawkish, Rabobank expects RBA rate hikes in August and Nov

• Focus shifts to U.S. payrolls data due Fri, forecast is for 243,000 new jobs

• Resistance 0.6585-90, 0.6610-15, support 0.6545-50, 0.6520-25

• For more click on FXBUZ

• USD/JPY recovers some ground as some demand surfaces below 153.00 in Asia

• Rallies from 152.88 low as shorts square positions ahead of U.S. NFP Fri

• Dollar upside limited as Japan interventions saps confidence of yen shorts

• Fed indicating that it is still leaning towards a dovish stance weighs

• Japan holiday Fri, Mon; markets thin, traders remain on intervention watch

• Wide U.S.-Japan yield differential, BOJ's still-easy policy limit JPY rise

• Support 152.61, 38.2% Fibo of Dec-April rally; resistance 153.90-154.00

• For more click on FXBUZ

• USD/JPY down 0.45% in Asia as 153.00 support yields on third attempt

• Unwinding of short-yen positions weighs as Japan intervention takes a toll

• BOJ data suggests Japanese officials may have spent almost $60 bln in 2 days

• Japan holidays May 3 and May 6 add to trader unease as markets illiquid

• Dovish leaning Fed, lower U.S. yields undermine USD

• Support at 152.61, the 38.2% Fibo of December-April rally

• Resistance 153.50, 153.90-154.00; Asia range Fri 153.75-152.88

• For more click on FXBUZ

• +0.05% early after closing up 0.1%, recovering earlier losses in Europe

• EZ manufacturing activity fell in April, led by weak German PMI

• Yield spreads widened a touch, 10yr bund -3bp 2.553%, 10yr UST -2bp 4.571%

• Tight range likely in Asia ahead of the often volatile U.S. jobs data

• Charts - an inside day - 5, 10, and 21-day moving averages coil,

• 21-day Bolli bands contract, daily momentum studies rise - mixed signals

• Tested 1.0745 Fibo, 0.382% of the March/April fall is the key resistance

• The 1.0677 low in New York then this week's 1.0649 base are initial support

• 1.0700/05 1.984 BLN and 1.0750 1.093BLN are the close strikes for May 3rd

  For more click on FXBUZ

• AUD/USD likely to remain bid in Asia after closing 0.75% higher on Thursday

• Boosted by Fed indicating that it was still leaning toward a dovish stance

• Buoyed by Powell's comments Wed that Fed rate increases remained unlikely

• Decline in U.S. yields, Wall Street rally, higher CNH boost AUD sentiment

• Expectations of a hawkish shift in RBA's rate stance on Tue underpins AUD

• Focus shifts to U.S. payrolls data due Fri, forecast is for 243,000 new jobs

• ANALYSIS-Powell's soothing tone may not be enough for inflation-spooked mkts

• Resistance 0.6585-90, 0.6610-15, support 0.6545-50, 0.6520-25

• For more click on FXBUZ

Synopsis:

ING discusses the recent uplift in EUR/CHF exchange rates, attributing it largely to the re-pricing of the ECB's rate curve which has led to increased swap rate differentials between the Eurozone and Switzerland.

Key Points:

• Rate Differential Impact: The significant rise in Eurozone two-year swap rates, increasing by 60 basis points since January, contrasts with relatively stable Swiss rates. This divergence has been a key driver behind the recent appreciation of EUR/CHF.

• ECB Rate Cut Projections: ING predicts the European Central Bank (ECB) will implement three rate cuts this year, a more aggressive stance compared to the current market pricing of 68 basis points in cuts. This discrepancy presents a potential risk to further substantial gains in EUR/CHF.

• Forecast and Policy Outlook: ING maintains a near-term EUR/CHF forecast around 0.98 and anticipates a year-end rate of approximately 1.00. This outlook is based on the expectation that the Swiss National Bank (SNB) will adopt a more dovish approach than the ECB, potentially including the strategic use of foreign exchange policies to manage the CHF's strength.

Conclusion:

While the current re-pricing of the ECB curve has lifted EUR/CHF, the potential for additional significant gains may be limited if ING's predictions of more aggressive ECB rate cuts materialize.

• GBP$ settles near flat into cls, at 1.2527; Thursday range 1.2545-1.2472

• Pair remains nestled in tight range b/w 10-DMA at 1.2471 & 200-DMA 1.2550

• Early rise post-dovish Fed lean unravels after below f/c claims data

• Focus on potential sterling downside heading into US payrolls nL1N3H51NU

• Belly of UST curve leads yields lower after Powell balks on rate hike option

• Below 10-DMA, dly conversion line at 1.2434 & lwr 21-d Bolli at 1.2359 supt

• Res at 1.2579 April 11 high, 1.2596 50% Fib of 1.2894-1.2299

• Above 50% Fib momentum shifts to bulls for run toward 100-DMA by 1.2646

• NY opened near 1.0705 after 1.0728 traded on EBS in Europe's morning

• Slide extended as yields US2YT=RR, US$ were firm in early trading

• USD/CNH rally above 7.2350, commodity XAU= drops weighed on EUR/USD

• 1.0675 traded but bears ran out of steam, buyers emerged

• Equities added to gains, yields & US$ weakened, EUR/USD neared 1.0715

• Pair traded near flat on the session, daily doji formed, implies indecision

• US April payroll report & its impact on Fed policy is a key risk Friday

• Data indicating softening jobs market could drive a EUR/USD rally

• For more click on FXBUZ

• NY opened with AUD/USD trading lower on the session, opened near 0.6525

• Choppy trading ensued, pair then dipped toward the 0.6516 low from Asia

• US yield US2YT=RR, US$ lifts & USD/CNH lift near 7.2360 weighed on AUD/USD

• Buyers emerged however as yields softened and risk improved

• Equities ESv1 added to gain, gold bounced USD/CNH hit a 1-1/2- month low

• AUD/USD pierced the daily cloud base, traded 0.65605, was up +0.57% late

• Techs lean bullish; RSIs rising & pair above a slew of daily moving averages

• US April payroll report and its impact on Fed policy is a key risk Friday

• A downbeat result may send US yields, US$ down & drive AUD/USD upward

• For more click on FXBUZ

Synopsis:

Credit Agricole discusses the suspected foreign exchange interventions by the Bank of Japan (BoJ), acting on behalf of the Ministry of Finance (MoF), to bolster the Japanese yen (JPY). Recent significant currency moves and BoJ financial data suggest substantial interventions, raising questions about their long-term impact on USD/JPY exchange rates.

Key Points:

• Intervention Evidence: Recent sharp increases in the JPY, coupled with BoJ reports of significant drops in its current account due to fiscal activities, strongly suggest intervention efforts. Estimates suggest around JPY5.5 trillion (approximately USD35 billion) might have been spent this Monday, with similar actions suspected early today.

• Official Confirmation: Japan’s Vice Minister of Finance for International Affairs, Masato Kanda, has opted not to confirm intervention activities, maintaining a strategic ambiguity that leaves markets guessing about future moves.

• Financial Impact: Despite the high cost of these interventions, recent changes in U.S. monetary policy rhetoric and market dynamics may be aligning to support the MoF's strategy. The Fed's recent signals that rate cuts are postponed rather than canceled, alongside falling U.S. Treasury yields and a rally in global equities, have contributed to a more favorable environment for the JPY.

• Model Insights: Preliminary updates to Credit Agricole’s FAST FX model indicate a slight decrease in USD/JPY's short-term fair value, influenced by the shifts in short-term rate differentials between the U.S. and Japan and global equity movements.

Conclusion:

While the MoF's interventions have initially shown limited immediate gains, changing global financial conditions and market reactions to U.S. monetary policy may enhance the effectiveness of these efforts. USD/JPY is currently trading close to its recalculated fair value, suggesting that the MoF's expenditures on interventions might not be in vain. 

• EUR/CHF once again fails to hold above 0.98

• Latest pullback stems from hotter than f/c Swiss CPI (1.4% vs 1.1%)

• However, Swiss CPI is unlikely to move the needle for the SNB nL1N3H50VW

• Muted move in rate-differentials also points to limited CHF rally

• With support at 0.9680-90 putting a floor under EUR/CHF, upside risks remain

• Although, a close above 0.9840-50 is needed to fuel topside momentum

For more click on FXBUZ

Synopsis:

Societe Generale discusses the recent suspected intervention by Japanese authorities in the USD/JPY exchange rate following the Federal Reserve's latest monetary policy decision, noting the limited impact of these actions on reversing the currency's gains.

Key Points:

• Timing and Context: The intervention reportedly occurred amidst key global events, including the Champions’ League semi-final, suggesting a strategic choice of timing to maximize impact.

• Immediate Market Impact: The intervention led to a 3% decrease in the USD/JPY rate, although half of this reduction was quickly recouped. The resilience of the USD/JPY rate post-intervention highlights the ongoing challenges faced by the Bank of Japan (BoJ) in managing the exchange rate amidst differing monetary policy trajectories between the U.S. and Japan.

• Volume of Intervention: While exact figures are awaited, early indications suggest that this week's total intervention may be the most substantial single-week effort by the BoJ to date.

• Yield Differentials and Market Dynamics: The continuing wide yield differentials between the U.S. and Japan are a major force driving the USD/JPY higher, complicating the BoJ's efforts. The yield gap underscores the fundamental economic differences currently influencing the currency pair.

Conclusion:

SocGen expresses skepticism about the immediate effectiveness of the BoJ's intervention strategy, given the significant yield differentials between the U.S. and Japan that continue to apply upward pressure on USD/JPY. The report suggests that without a fundamental shift in either monetary policy direction or economic performance, interventions might only provide temporary relief, with broader economic factors ultimately driving currency value. I

• $CAD soft in early NorAm, -0.2% at 1.3710; Thursday range 1.3737-05

• Post-Fed CAD strength intact; Fed cut odds rise as Powell shrugs off hike

• LSEG's IRPR touts 68% odds for Sept cut, Nov near-100% priced in IRPR

• BoC: There's a limit to how far US and Canada rates can diverge

• BoC's Macklem: Bank could start cutting rates before inflation rate hits 2%

• $CAD supt at 1.3705 Wed/Thur lows, 1.3696 10-DMA, 1.3663 daily base line

• Res 1.3737 Thurs high, 1.3755 upper 21-d Bolli, 1.3847 Apr 16 2024 high caps

 Synopsis:

Bank of America (BofA) projects a possibly hawkish tone at the Reserve Bank of Australia's (RBA) May meeting next Tuesday, which could influence Australian Dollar (AUD) valuations positively amidst several economic tailwinds.

Key Points:

• Context and Expectations: Despite recent reluctance from global central banks, including the Fed, to adopt hawkish tones, BofA suggests that the RBA might surprise markets with a hawkish stance. Such a move would align with the stabilization seen in the Chinese economy and other positive factors affecting Australia.

• AUD Strength Factors: Several factors could bolster the AUD, such as signs of recovery in China’s economy and property markets, resilience in industrial metal prices, and easing pressures on the Chinese Yuan following interventions by the Bank of Japan.

• Rate Hike Expectations: Although BofA does not foresee additional rate hikes from the RBA, any unexpected hawkish adjustments in inflation forecasts or forward guidance could significantly support the AUD. The current market pricing indicates modest expectations for rate hikes by November.

• Currency Strategy: BofA continues to favor long positions in AUD against currencies like the Canadian Dollar (CAD) and the New Zealand Dollar (NZD), citing a year-end target of 0.69 for the AUD.

Conclusion:

As the RBA's next meeting approaches, investors are advised to monitor for potential hawkish signals that could influence both local and broader currency markets. With several supportive economic indicators and market conditions, any surprises from the RBA could provide significant momentum for the AUD, particularly in currency pair trades against the CAD and NZD.

Synopsis:

Goldman Sachs highlights recent market activity suggesting another suspected intervention by Japanese authorities in the USD/JPY exchange rate following the Federal Reserve's latest FOMC meeting. The aim was seemingly to capitalize on post-meeting USD softness and market illiquidity.

Key Points:

• Timing and Scale of Intervention: The intervention reportedly occurred late in the London session, around 9:15-9:45 PM, with approximately $33 billion USD transacted during this period. Goldman estimates that roughly 70% of these transactions were executed by the Ministry of Finance (MoF) and Bank of Japan (BoJ), driving USD/JPY from 157.50 down to 153.00 before it settled around 154.70.

• Market Reaction: Following the suspected intervention, there was significant buying activity from retail and macro traders, exploiting the dip. This buying pressure helped push the pair back up to the 155.50-156.00 range as the European markets opened the following morning.

• Ongoing Intervention Strategy: The interventions have continued throughout the week, with this being the fourth wave. Despite these efforts, USD/JPY levels have returned to those seen at the week's start, leading to questions about the long-term efficacy of Japan's intervention strategy against the backdrop of broader macroeconomic factors.

• Volume and Market Sentiment: Trading volumes were slightly above average in the Asia session following the intervention, normalizing later but again picking up as London trading began. The persistent market willingness to "lean into" these interventions suggests a robust challenge to Japan's efforts given the current macroeconomic environment.

Conclusion:

Goldman Sachs' analysis of the suspected interventions in the USD/JPY market post-FOMC reveals a complex interplay between Japanese policy actions and market forces. While the immediate effects of the interventions have temporarily influenced exchange rates, the overall effectiveness remains under scrutiny as the market continues to test these interventions against prevailing global economic conditions.

• A large number of expiries for today's New York cut

• EUR/USD has a total of USD 18 billion between 1.0600 and 1.0785

• Sizeable AUD/USD expiries, AUD 1.5 billion between 0.6490 and 0.6500

• Another AUD 920 million worth of deals between 0.6520 and 0.6540

• The largest yen expiries are away from market at 152.50, USD 1.35 billion

For more click on FXBUZ

• Yen weakens, paring sharp rise after suspected intervention nL1N3H50CR

• Ex-official: FX intervention signals 160 yen line in the sand nL1N3H505L

• However, Japan will likely struggle to keep a lid on USD/JPY nL1N3H50LB

• Huge rate differential between Fed and BOJ keeps USD/JPY bias on the upside

• USD/JPY chart medium-term outlook is still very bullish nL1N3H50G3

• Spot has seen a 154.15-156.28 range, according to EBS data, on Thursday

• USD/JPY and EUR/JPY pairs maintain strong 30/60-day positive correlations