EURJPY TECHS: Bull Cycle Remains In Play

• Stocks remain broadly weaker late Wednesday, off morning lows to near the middle of a wide session range. Currently, the DJIA trades down down 235.06 points (-0.58%) at 40291.68, S&P E-Minis down 44.25 points (-0.79%) at 5539.5, Nasdaq down 187.4 points (-1.1%) at 17273.72.
• Stocks had pared nearly half of the early session losses after solid PCE income growth reflected in the PCE data partially offset by tariff impacts, while pessimistic earnings kept a lid on further dip buying, Caterpillar declined .8% after lowering sales sales targets. Note, Microsoft and Meta trade lower ahead of earnings after the close (*).
• Laggers included Super Micro Computer down over 14.47% after missing earnings expectations late Tuesday, First Solar -9.73%, Garmin -9.50%, CoStar Group -8.72%, Norwegian Cruise Line -8.26%, International Paper -5.28% and Starbucks -6.47% after second quarter sales disappointed.
• Energy stocks retreated as crude prices continued to fall (WTI -2.19 at 58.23): ONEOK -7.20%, Targa Resources -4.95%, APA -4.68%, Kinder Morgan -4.19% and Diamondback Energy -3.73%.
• Some tech, industrial and health care stocks rejected the selloff: Seagate Technology +9.11%, Trane Technologies +7.94%, Western Digital +7.09%, Vulcan Materials +6.41%, PPG Industries +4.48%. Elsewhere, Regeneron Pharmaceuticals gained 4.39% while GE HealthCare Technologies +3.66%.
• *Earnings expected to release after today's close include: Wingstop, Allstate, Host Hotels & Resorts, QUALCOMM, eBay, Teladoc Health, Microsoft Corp, American Water Works, Crown Castle, Align Technology, Meta Platforms, Robinhood Markets, Equinix, Ventas, Albemarle Corp, MetLife, KLA and MGM Resorts.

The BOC's April 16 meeting deliberations released today (here) showed some debate over whether to ease rates for an 8th consecutive meeting, but overall reiterated the message from Governor Macklem that the policy stance would be less forward-looking given tariff-related uncertainty over both growth and inflation.

• The BOC did indeed consider cutting rates ("As they did at their March meeting, Governing Council members debated two options for the April monetary policy decision: maintain the policy interest rate or reduce it by 25 basis points.")  But ultimately "While there were differences in views, everyone agreed there was a great deal of uncertainty and the situation could change quickly. They also agreed they should be less forward looking than usual. Against this backdrop, members reached a consensus to maintain the policy interest rate at 2.75%."
• The tradeoff in risks discussed extensively by Gov Macklem was the key focus: "The growth vs inflation tradeoff Governing Council agreed to continue to focus on assessing the opposing pressures on inflation from weaker demand and higher costs. In doing so, they would pay particular attention to how much higher tariffs reduce demand for Canadian exports/how lower demand for exports impacts business investment, employment and household spending / how much and how quickly cost increases are passed on to consumer prices / how inflation expectations evolve. If new information pointed clearly to one side or the other of these opposing forces on inflation, Governing Council would be prepared to act decisively. Members agreed that in the face of tariffs, monetary policy should support the economy while maintaining its primary focus on price stability."
• On inflation, BOC officials saw higher shelter costs distorting the signal from core CPI: "Core measures of inflation were running a little under 3%, boosted by higher goods prices. It appears that core inflation measures are also being distorted by still-high inflation in shelter services. Members agreed they would need to look carefully at all subcomponents of the CPI data to gauge the trend of underlying inflation."

• WTI extended declines today after Reuters cited Saudi sources that the Kingdom is unwilling to prop up the oil market with further supply cuts and can handle a prolonged period of lower prices.
• WTI Jun 25 is down by 3.7% at $58.2/bbl.
• The possible shift in Saudi policy suggests a move towards higher production, targeting market share.
• A medium-term bearish theme in WTI futures remains intact and the latest move down reinforces this theme. Below here, next support is seen at $54.67 the April 9 low and the bear trigger, followed by $53.72, a Fibonacci projection.
• Meanwhile, spot gold has edged down by 0.5% to $3,302/oz.
• This latest move down in gold appears corrective and the trend needle continues to point north. The next objective is $3,547.9, a Fibonacci projection. Initial firm support to watch lies at $3,245.4, the 20-day EMA.
• Elsewhere, copper has fallen by 5.6% to $460/lb amid reports that traders in China were squaring off their positions ahead of the 5-day Labour Day holiday there.
• The move in copper undermines the recent bullish theme and suggests that the rally between Apr 7 - 23 has been a correction. Further weakness would expose $436.00, the Apr 10 low, ahead of $407.40, the Apr 7 low and key support.