FED: Beige Book: Tariffs Increasing Price Pressures (2/3)
Jun-04 18:39
The Beige Book suggested rising tariff-related inflationary pressures, with all 12 Fed Districts indicating that higher tariff rates were putting upward pressure on both input and output prices. Additionally, contacts appeared to suggest future price increases could be "substantial". Overall, "Prices have increased at a moderate pace since the previous report."
- 8 of 12 Fed banks reported prices increases were "moderate" (two more than in April), with the remaining 4 mixed (Boston "slightly", Chicago and SF "modestly", Dallas "steady").
- From the Beige Book summary: "There were widespread reports of contacts expecting costs and prices to rise at a faster rate going forward. A few Districts described these expected cost increases as strong, significant, or substantial. All District reports indicated that higher tariff rates were putting upward pressure on costs and prices. However, contacts' responses to these higher costs varied, including increasing prices on affected items, increasing prices on all items, reducing profit margins, and adding temporary fees or surcharges. Contacts that plan to pass along tariff-related costs expect to do so within three months."
- See summary table below:
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STIR: Jun'25 SOFR Put Condor Buy - Looking for More
May-05 18:31
- +15,000 SFRM5 95.68/95.75/95.81/95.87 put condors, 2.0 ref 95.78
USDJPY TECHS: Resistance At The 50-Day EMA Remains Intact
May-05 18:30
- RES 4: 149.28 High Apr 3
- RES 3: 148.27 High Apr 9
- RES 2: 146.60 50-day EMA
- RES 1: 145.92 High May 2
- PRICE: 143.88 @ 15:03 BST May 5
- SUP 1: 142.88/141.97 Low MAy 1 / Apr 29
- SUP 2: 139.79 1.382 proj of the Feb 12 - Mar 11 - 28 price swing
- SUP 3: 138.82 1.500 proj of the Feb 12 - Mar 11 - 28 price swing
- SUP 4: 138.07 Low Jul 28 ‘23
Recent gains in USDJPY resulted in a move through the 20-day EMA, undermining the bear trend. However, price action remains below resistance at the 50-day EMA, at 146.60. A clear break of this average would highlight a possible reversal. For now, gains are considered corrective. Moving average studies remain in a bear-mode position highlighting a dominant downtrend. A resumption of the trend would open 139.79 next, a Fibonacci projection.
FOREX: Tale of Two Halves as Greenback Recovers Following US Data
May-05 18:11
- Initially on Monday, the US dollar traded weaker against all others in G10, as traders were happy to erode a portion of the post-NFP advance and resume the underlying trend of greenback selling. However, firmer-than-expected ISM services data assisted a solid rebound, with dollar indices now only trading in moderately negative territory as we approach the APAC crossover.
- US ISM Services Index data rose to the highest level since January 2023, and the higher-than-expected prices paid component (65.1 vs. 61.4 est.) has provided further impetus for the greenback recovery.
- This has helped the likes of EUR and GBP to edge back towards unchanged on the session, the clear underperformers in G10. For EURUSD, this translates to the pair reversing around 65 pips from session highs to trade back at 1.13. Initial key support to watch is the 20-day EMA, at 1.1264.
- A similar move for GBPUSD has seen spot narrow the gap to overnight lows of 1.3257. A bearish tweezer top formation on the daily candle chart last Monday/Tuesday highlights a short-term top. Support to watch lies at 1.3225, the 20-day EMA. A break of this level would signal scope for a deeper retracement.
- AUD remains among the best performers after an extended period of consolidation, AUDUSD is gaining following the surprisingly strong showing for Anthony Albanese in the weekend's general elections. The price action puts the rate above the 200-dma and a close above would be the first since November last year.
- Despite the dollar rebound, USDJPY remains 0.6% lower on the session at 144.10, with technical resistance levels remaining intact for now. Moving average studies remain in a bear-mode position highlighting a dominant downtrend. Lower-than-forecast inflation data in Switzerland did little to knock the ongoing optimism for the Swiss Franc. Key USDCHF resistance remain intact at 0.8333, the 2023 low and breakdown point.
