ACGBs are cheaper (YM -7.0 & XM -7.5) ahead of today’s RBA Policy Decision. US tsys yields were sharply higher in NY trade after the April ISM Manufacturing Prices Paid component surpassed anticipated values, registering 53.0 compared to the expected 49.0. Additionally, Bloomberg reported that JP Morgan has reached an agreement to acquire First Republic Bank in a government-assisted deal, with JP Morgan and the FDIC agreeing to jointly absorb any losses incurred.
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The current bear cycle in USDCAD remains in play and the pair continues to weaken. This week’s bearish extension has resulted in a break of the 50-day EMA and 1.3562, the 50% retracement for the Feb 2 - Mar 10 rally. The move lower signals scope for a continuation towards 1.3491, the 61.8% retracement. On the upside, initial firm resistance is seen at 1.3649, the 20-day EMA.