• AUD/USD hovers near 2-mth 0.6650 Fri high as traders await RBA rate decision

• RBA likely to hold rates at 4.35%, sound more hawkish on inflation concerns

• Revival in Fed rate cur expectations on softer US jobs data buoys AUD

• Fed's Williams says next Fed move likely to be lower rates

• Buoyant risk appetite, higher commodity prices provide further boost for AUD

• Resistance 0.6640-50, 0.6665-75, support 0.6595-0.6600, 0.6550-60

• Monday range 0.6638-0.6606

• For more click on FXBUZ

Synopsis:

MUFG predicts potential downside for the GBP in response to the upcoming Bank of England (BoE) policy meeting. They highlight the possibility of a dovish shift indicating closer proximity to rate cuts, prompting them to suggest a long position on EUR/GBP.

Key Insights:

• Dovish BoE Anticipated: MUFG anticipates that the BoE might signal readiness to cut rates sooner than market expectations currently reflect, potentially as early as June rather than the later months of August or September.

• GBP Historical Performance: There's a noted historical pattern of GBP underperformance in May, particularly evident from 2010 to 2020. Although this trend has been inconsistent post-COVID, it underlines potential seasonal weakness.

• Trade Recommendation: Reflecting their bearish stance on GBP, MUFG recommends initiating a long EUR/GBP position as a strategic move to capitalize on potential GBP depreciation.

• Balanced View on GBP Decline: While expecting GBP softness, MUFG believes that improved economic momentum in the UK and favorable conditions for higher-yielding currencies could temper a more significant drop.

Conclusion:

MUFG's analysis suggests cautious positioning regarding GBP leading into the BoE's meeting.

• USD/JPY up 0.6% by 154 after Fri's post-NFP miss 151.86 low

• That low off last Mon's 160.245 peak and suspected MoF interventions

• The drop erased April's breakout beyond 2023/22 peaks by 152

• Made for an attractive dip-buying opp, but dimmed by bearish US data

• Focus now is on the May 15 US CPI and retail sales after hot March readings

• Forecasts for April CPI and sales suggest pullbacks to cooler levels

• But may take much cooler data to put 3 or more Fed cuts by yr-end in market

• At or above-f/c data could test tenkan/50% of last week's dive at 156.05

• All contingent on potential MoF intervention

For more click on FXBUZ

• AUD$ ending NorAm, +0.26% at 0.6628; NorAm range 0.6638-0.6620

• Pair holds near 2-mos high Fri's 0.6650, Mar 8 0.6667

• AUD$ rally off Apr 19 low 0.6363 as Fed rate expectations turn less-hawkish

• Commods a touch higher copper HGc1 +1.27%, oil CLc1 +0.22% aid AUD rise

• Next key data Tues AU ret trade; RBA rate meeting Wednesday, no change exp'd

• Techs are bullish; RSIs rising, pair above slew of daily MAs & daily cloud

• Res 0.6642 upper 30-d Bolli, 0.6650 Friday's 2-mos high, 0.6667 Apr 19 high

• Supt 0.6606 Monday Asia low, 0.6583 100-DMA, 0.6506 50% of 0.6363-0.6650

• Close below 0.6505 shifts momentum back to AUD bears

• For more click on FXBUZ

Synopsis:

Morgan Stanley projects a strengthening U.S. dollar against the euro in the coming quarters, driven primarily by shifting inflation dynamics and central bank policy differences between the U.S. and the Eurozone.

Key Points:

• Inflation Influence: The exchange rate between EUR/USD has historically been sensitive to relative core inflation rates in the U.S. and Eurozone. Fluctuations in these rates since 2020 have notably impacted the currency pair's performance.

• ECB's Rate Cut Strategy: Internal discussions within the European Central Bank are focused on the frequency of rate cuts after an expected initial reduction in June. A market shift towards expecting more aggressive ECB rate cuts could strengthen the USD's position.

• Expected Shifts in Market Pricing: As core inflation rates in the Eurozone decrease, this is likely to alter expectations around central bank policies, potentially favoring the U.S. dollar and exerting downward pressure on EUR/USD.

Conclusion:

Morgan Stanley's analysis suggests a bearish outlook for EUR/USD over the medium term.

• $CAD drifted lower in early NorAm, -0.2% at 1.3658; Monday range 1.3696-48

• Lower Fed rate expectations, US-CA yield convergence provides boost for CAD

• Post dovish Fed hold, IRPR 2024 rate view moved from -22bp to -47bp

• LSEG's IRPR page hints BoC to cut in Jun/Jul, -65bp by Dec meeting

• More aggressive BoC cut view will likely cap outsized CAD gain vs USD

• $CAD supt 1.3648 Mon low, 1.3610 Friday's post-NFP flash low, 55-DMA 1.3601

• Res 1.3696 Monday high, 1.3705 21-DMA, 1.3782/85 May 1/Apr 30 double top

Synopsis:

Credit Agricole advises maintaining long positions in AUD/NZD as it anticipates the cross to approach 1.12, particularly in the context of this week's RBA meeting. They highlight that RBA Governor Michele Bullock is facing a significant test of credibility given current economic indicators.

Key Points:

• RBA's Credibility Test: With inflation above forecasts and unemployment below expectations, Governor Bullock must balance maintaining credibility with cautious policy guidance.

• Neutral Bias Expected: Despite pressures, the RBA is likely to maintain a neutral stance on interest rates, considering softening consumption data and the upcoming impact of mortgage roll-overs at higher rates.

• Bullish on AUD/NZD: Credit Agricole remains bullish on AUD/NZD, citing it as the preferable strategy to capitalize on a strong AUD outlook, despite aggressive market pricing of a potential RBA rate hike by September.

• Global Economic Context: The firm’s outlook considers the robust performance of the US economy and the strength of the USD, which supports their strategy on AUD/NZD.

Conclusion:

Credit Agricole advises staying long on AUD/NZD, anticipating that upcoming developments and economic releases will reinforce a bullish scenario for the Australian dollar, particularly in comparison to the New Zealand dollar.

• AUD$ +0.36% to 0.6634 in early NY; early NorAm Range 0.6638-0.6626

• Pair hovers near Friday's post-payroll 2-month high 0.6650, Mar 8's 0.6667

• LSEG's IRPR: RBA cut odds near 50% for Aug/Sep, Fed 80% odds for Sept cut

• Commods firm; copper +1.39%, oil +0.5% keeps AUD$ near trend high

• Traders focus shifts to May 15 U.S. CPI data for clues on Fed policy path

• Below-f/c payroll data weighs on USD, UST yields as Fed cut odds rise

• Shift to more dovish Fed view props up AUD, despite Fed talk of steady rates

• AUD$ res 0.6643 upper 21-d Bolli, 0.6650 Friday's post-payrolls 2-month high

• Supt 0.6606 Mon Asia low, 0.6583 100-DMA, 0.6505 50% of 0.6363-0.6650

• For more click on FXBUZ

Synopsis:

Nomura provides an analysis on the potential limits of Japanese forex intervention, considering historical data, Japan's foreign exchange reserves, and U.S. Treasury reports. They highlight that while alarm bells might ring if intervention reaches ¥9-13 trillion, the actual capacity for intervention could be higher.

Key Points:

• Intervention Limits: Market concerns may arise if intervention amounts reach ¥9-13 trillion, based on past interventions and Japan's current forex reserves.

• Potential for Greater Intervention: Despite market concerns, Nomura suggests that Japan has the capacity for a greater amount of intervention than the market anticipates.

• Role of U.S. Policies: U.S. actions, particularly those of the Treasury Department regarding foreign exchange policies, will be crucial in determining the scope and impact of Japan's intervention efforts.

• IMF Constraints: Nomura is skeptical about the idea that International Monetary Fund (IMF) constraints would significantly limit Japan's ability to intervene in forex markets.

Conclusion:

Nomura's analysis suggests that Japan may have more leeway in managing its currency through intervention than is commonly perceived. The effectiveness and scope of these interventions will heavily depend on the actions of the U.S. and the broader international response.

Synopsis:

Goldman Sachs assesses the effectiveness of the recent Japanese Yen intervention, suggesting it provides only temporary relief given the prevailing negative macroeconomic fundamentals. They maintain a cautious outlook with the USD/JPY expected to stabilize around 155 in the near term.

Key Points:

• Intervention Impact: The intervention by Japanese authorities last week, though significant, is viewed primarily as a measure to buy time rather than a long-term solution. It helped realign the Yen closer to its fundamental value after a period of volatile trading.

• Economic and Monetary Outlook: Despite this intervention, the broader economic context continues to exert downward pressure on the Yen. Key factors include Japan's economic policies and the global interest rate environment, particularly the policies of the U.S. Federal Reserve.

• USD/JPY Forecast: Goldman Sachs forecasts the USD/JPY exchange rate to hover around 155 in the coming three to six months, with potential risks of a rise if the Fed delays or reduces expected rate cuts.

Conclusion:

While the recent intervention has stabilized the Yen temporarily, Goldman Sachs advises caution due to ongoing negative economic pressures. They suggest that the Bank of Japan may need to continue such measures unless there are significant changes in Japan’s economic conditions or global monetary policies.

• A tight 0.6606-0.6630 range so far Monday

• Speed and magnitude of last week's gain argues for consolidation

• Friday high of 0.6650 the initial hurdle for the AUD

• March 8 high the next resistance and AUD bull target at 0.6667

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

• A rate hike should not be ruled out but consensus is for no

• Markets are pricing in around a one-in-10 chance of a hike

• Softer U.S. labour report added to fuel to the easier dollar scenario

  For more click on FXBUZ

• EUR back at 1.0775 from 1.0750 early low and 1.0764 Friday close

• Thin market in Europe with London out: could favour the EUR

• Yields spreads tighten, 10yr UST -2bp 4.4975% and 10yr bund -1bp 2.4990%

• ECB is 'most likely' to cut rates three times in 2024 - ECB's Stournaras

• ECBWATCH agrees - it prices 71.83bp in cuts by the December 12 meeting

• EUR/USD looks constructive: risk of a return to the 200DMA, 1.0797

• Larger option expiries for today's cut: EUR5 bln between 1.0645-1.0750

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• Sterling faded ahead of 100-DMA resistance at 1.2645 Friday

• Fell to new session low 1.2530 after hitting 3-week high

• A 1.2705-11 cloud twist may have aided the rise but advantage lost

• Early Monday and modest gains from 1.2539

• Daily studies remain bullish and we have a bid by the session low

• Underlying bull trend intact despite Friday's 1.2634 failure

  For more click on FXBUZ

• USD/JPY in April overcame a 152.60 Fibonacci level-EBS

• A 38.2% retrace of the major 277.65 to 75.31 (1982 to 2011) drop

• A very bullish sign, backed by continued positive fourteen-week momentum

• Scope for much bigger gains beyond last week's 160.24 new multi-year high

• A weekly close under 152.60 Fibo level would signal a shift to the downside

• We are long 155.25 for 165.00 with a 149.95 stop

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• USD/SGD stays firm into early London trades, steady DXY underpins

• Rally in USD/JPY and USD/CNH keeps the USD well bid in Asia

• USD/JPY may test 160 again as USD-Japan rate differentials underpin

• No chance of US rate cut till Sept, at the earliest

• USD/JPY last at 153.82-85, off 152.80 early Asian low

• USD/SGD last at 1.3515-20, traded 1.3470-1.3525 range so far

• Focus at 1.35550, break risks return to 1.3600

• DXY holds firm above 105.0 handle, last at 105.16

• For more click on FXBUZ

• EUR/USD rallied above the 55 and 200-DMAs Friday

• Nearing the 76.4% Fibo of 1.0885-1.0602 profit taking set in

• The pair then fell back below the daily MAs

• Early Monday and a small bullish move holding

• Daily and monthly RSIs are rising which implies upward momentum

• The pair remains above the 10 and 21-DMAs

• We lean bullish but will wait for additional signals

  For more click on FXBUZ

• USD/JPY +0.5% in Asia as bargain hunters step in after large drop last week

• Technical buying cited after 61.8% Fibo of Dec-March drop at 151.74 held Fri

• Traders wary as Japan's Suzuki Fri said may need to smooth excessive moves

• Yellen counsels caution on currency intervention after yen surge-Bloomberg

• Japan off Mon, traders watchful as MOF intervened in thin markets last week

• Upside limited, softer-than-expected jobs data revives Fed rate expectations

• Resistance 154.00-10, 154.40-50, support 153.30-35, 152.80-90

• Asia range 152.75-153.97

• For more click on FXBUZ

• USD/SGD higher, tracks steady DXY, rally in USD/CNH, USD/JPY

• Pair last at 1.3512-15, traded amid 1.3470-1.3518 range so far

• Sustained gains above 1.3500 risks return to 1.3550 resistance

• DXY last at 105.09, traded amid 105.05-105.20 range so far

• USD/CNH rallies on short squeeze, deeply oversold 21days BB

• USD/JPY last at 153.65-70, traded amid 152.80-153.74 range so far

• For more click on FXBUZ

• +0.4% after closing down 0.45% - bargain hunting on a Tokyo holiday

• The rise through 160.00 was on a public holiday - the BoJ is watching

• No significant weekend news for the Yen - USD and risk appetite lead

• Charts 5, 10 & 21 Day moving averages conflict, 21-day Bolli bands contract

• A neutral setup - 151.73, 0.618% March/April rise is first support

• 154.48 5 and 21-day moving averages are the initial resistance

• USD/JPY has been above the daily Ichimoku cloud since January

• The cloud comes in at 148.93/150.17 - likely a major support level

For more click on FXBUZ

• Unchanged early after closing up 0.1%, as post-US jobs gains evaporated

• NY reversal off 1.2634 leaves a bearish shooting star on the daily candles

• Yield spreads unchanged, 10yr gilt -7bp 4.2227, 10yr UST -7bp 4.500

• Steady yields spread likely behind the modest sterling rise at the close

• Conservative government likely short-lived after recent local elections

• Charts; 5, 10 & 21-day moving averages conflict, 21-day Bolli bands contract

• Mixed daily momentum studies - the daily charts show no strong bias

• Friday's 1.2634 high then 1.2666, 0.618% of the Mar/Apr fall are resistance

• 1.2513 10-day moving average and last week's 1.2467 base are first supports

For more click on FXBUZ

• USD/JPY up 0.15% early as light demand surfaces after last week's sharp drop

• Traders cautious on Bloomberg report Yellen counsels caution on intervention

• Japan may need to smooth excessive yen moves says finmin Suzuki on Friday

• Upside limited; softer-than-expected jobs data revives Fed rate expectations

• Japan holiday Mon; traders wary as MOF intervened in thin markets last week

• Support 152.20-30, 151.75, 61.8% of Mar-May rally

• Resistance 153.40-50, 153.80-90; range Fri 153.75-151.86, Mon 152.75-153.26

• For more click on FXBUZ

• AUD/USD stays bid in early Asia after closing 0.7% higher on Friday

• Boosted by lower U.S. yields on softer-than-expected U.S. jobs data

• Buoyed by buoyant risk appetite as Fed rate cut expectations revive

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

• Higher JPY, CNH lift AUD; Japan holiday Mon, traders on intervention watch

• Yellen counsels caution on currency intervention after yen surge-BBG

• AUD Fri range 0.6565-0.6650; strong resistance 0.6665-75, support 0.6550-60

• For more click on FXBUZ

Repeat with no changes

• USD net spec G10 long -$3.6bn in Apr 24-30 period; USD index +0.6% in period

• Take IMM data w/grain of salt, was prior to USD dip post-Fed hold Wednesday

• EUR$ -0.36%, specs +3,212 contracts, now -6,777; low ECB rates key driver

• $JPY +1.93%, specs +11,531 now -168,388 contracts; rise pre-intervention

• GBP$ +0.34%, specs -2,757 contracts now -28,990; US-UK rate spreads in focus

• $CAD +0.85% in period; specs +13,249 now -63,201 contracts

• AUD$ +1.19%; specs +13,004 contracts now -83,235; AUD, CAD shorts lightening

• BTC -9.78% in period; specs +6 contracts; lower Fed rate view steadies

• NY opened near 0.6585 after 0.6565 traded overnight, rally then extended

• US April payroll report indicated the jobs market is cooling a bit

• US yields US2YT=RR, US$ fell sharply and risk assets rallied

• USD/CNH fell to 7.1652 (D3) while stocks Esv1, copper Hgv1 rallied

• AUD/USD rallied to 0.6650 then pulled back after April ISM non-mfg report

• 0.6601 traded but risk remained buoyant, pair sat near 0.6615 late

• Techs are bullish; RSIs rising, pair above slew of daily MAs & daily cloud

• Rally following the March monthly doji reinforces bullish signals

• For more click on FXBUZ