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

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• 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

• GBP$ ekes out slight gain, +0.06% at 1.2545; Friday range 1.2634-1.2530

• Pair climbed to 3-week high 1.2630 after soft U.S. payroll data

• Sterling bulls feast after soft payroll data affirms dovish Fed tack

• Data initially sank UST yields dragging USD broadly lower, then USD sank

• GBP$ supported ahead of minor Fib at 1.2526 as bottom-fishers entered mkt

• Below 1.2525 supt at 10-DMA 1.2504, Apr 26 low 1.2449, lwr 30-d Bolli 1.2359

• Res at 1.2596, bruised 50% Fib of 1.2894-1.2299 and 1.2630 Friday high

• With Fed tipped to less-hawkish path, focus shifts to BoE Presser May 9

Synopsis:

HSBC's proprietary commodity cycle model, COCCLES, indicates that the commodity market is currently in a "Weak Bull" phase. This stage, characterized by moderate upward momentum, is likely to persist based on historical trends and the model's current outputs.

Key Points:

• Model Insights: COCCLES assesses the probability of various commodity market cycles. The transition to a Weak Bull phase has been confirmed over the past month, suggesting sustained but moderate growth in commodity prices.

• Cycle Duration: Historical data from COCCLES suggest that Weak Bull phases typically last at least six months. This indicates that the current cycle could continue to influence market conditions well into the future.

• Current Probabilities: Although the confidence in the Weak Bull cycle has slightly decreased from near 100% to approximately 90%, this level of probability is still strong and aligns with previous periods where the cycle has maintained its influence over an extended time.

• "We expect this Weak Bull phase to continue. First, from a modelling point of view there are a broad array of drivers pushing the probability of a Weak Bull cycle higher...Second, from a fundamental point of view we see signs that the global growth cycle has troughed and that commodity supply generally remains tight.," HSBC notes.

Conclusion:

The insights from HSBC's COCCLES model provide valuable foresight into the commodity markets, suggesting a continuation of the Weak Bull phase. 

GBP/USD rallied on Friday to a flash intra-day high at 1.2634 after unexpectedly soft U.S. payrolls data shifted Fed rate-cut expectations back to September, which could put cable's early April peak of 1.2709 on the agenda.

The surprisingly large fall in payrolls growth highlighted Fed Chair Jerome Powell's comment on Wednesday that it is unlikely the next policy move would be a hike, which could leave traders inclined to buy sterling and unwind recent shorts.

However, it also puts the BoE's rate announcement on May 9 in focus as well as Monday's UK retail sales.

The Reuters consensus forecast is for another BoE 8-1 vote to hold rates steady.

However, Reuters forecast data does have three respondents, out of 14 sampled, forecasting a second vote to cut.

If the BoE were to follow the Fed's lead and drifts toward a more dovish rate outlook of its own, recent sterling gains are likely to unravel.

For more click on FXBUZ

Synopsis:

Credit Agricole suggests that recent interventions by Japan's Ministry of Finance (MoF) and Bank of Japan (BoJ) have successfully created asymmetric risks around the USD/JPY exchange rate. Estimated expenditures nearing those of previous interventions in 2022 have effectively influenced market expectations and risk assessments.

Key Points:

• Intervention Estimates: Preliminary data indicates that the BoJ may have spent approximately USD 55 billion on interventions to support the yen, with significant purchases occurring on specific days last week.

• Comparison with Previous Interventions: This level of intervention is close to the USD 60 billion spent during the last major intervention effort in September and October 2022, which resulted in a notable depreciation of USD/JPY.

• Market Impact: The actions by the MoF and BoJ have likely set a temporary ceiling on USD/JPY, deterring traders from pushing the pair significantly higher. This effect is complemented by the recent dovish signals from the Federal Reserve, which curb expectations of a rapidly strengthening USD.

Conclusion:

The concerted efforts by Japan's financial authorities appear to have tempered the bullish momentum in USD/JPY, establishing a cautious trading environment. Investors may be hesitant to challenge these levels soon, given the aggressive stance of the MoF and supportive rhetoric from the Fed.

EUR/USD may be set to enter a range-bound period as Fed and ECB rate paths appear to be converging a bit following the U.S. jobs report on Friday.

Following the downside surprise to payrolls, EUR/USD spiked up, piercing the 55- and 200-DMAs on its way to a near one-month high.

The April payroll data showed unemployment climbed to 3.9%, above the 3.8% estimate, while payrolls printed 175k versus estimates for 243k and average hourly earnings fell to 0.2% from 0.3% in March.

U.S.
Treasury yieldsUS2YT=RR spiked lower and short-term rates markets priced in more than 50bps of Fed cuts for 2024, an increase from near 35bps on Thursday.

The dollar's yield advantage over the euro eroded as German-U.S.
spreads US2DE2=RR hit their tightest since April 2.

EUR/USD's rally may not have much further to run, however, and the broader 1.0500-1.1100 range could hold as investors may now see rate-cutting paths for the ECB and Fed converge after their recent divergence.

Should future jobs reports indicate softening labor markets U.S. rates and yields could sink further and investors price in more Fed cuts, which would bring its policy path more into alignment with investors' expectations for ECB easing.

For more click on FXBUZ

Synopsis:

Bank of America advises investors to exhibit patience in buying dips in USD/JPY, highlighting recent large-scale interventions by Japanese authorities and recommending waiting for more favorable risk-reward levels closer to the low 150s.

Key Points:

• Intervention Size: Market speculation suggests significant intervention by the Ministry of Finance (MoF) on April 29 and May 1, which may approximate the total intervention scale seen in 2022. Exact figures will be confirmed by the end of May.

• Structural Outflows: BofA notes that ongoing structural outflows from Japan are expected to keep the yen weaker over an extended period, suggesting a long-term downtrend in JPY despite recent interventions.

• Investment Strategy: While the temptation to buy dips might be strong, BofA recommends investors wait for USD/JPY to approach lower levels around the 150s for a better risk-reward scenario. This cautious approach accounts for potential further interventions that could affect short-term price movements.

Conclusion:

In light of recent substantial interventions in the currency market by Japanese authorities, and the underlying structural pressures expected to weaken the yen, Bank of America advises a strategic wait for more advantageous buying opportunities in USD/JPY