GOLD: Gold Benefits From Geopolitical Worries & Weaker US Dollar

The BBDXY has had an Asian range of 1237.68 - 1240.11, Asia is currently trading around 1237. USD/JPY has edged lower after Japanese Finance Minister Kato said he will seek an opportunity to discuss currency matters with US Treasury Secretary Scott Bessent when the two are in Canada for a meeting of Group of Seven officials."*UCHIDA: WAGES EXPECTED TO KEEP RISING DUE TO TIGHT LABOR MARKET" - BBG. The USD/CNY fix was set at 7.1991. Today's fixing is sub the 7.2000 level for the first time since Apr 7. It comes despite the stronger USD index levels overnight, although some offset was from lower USD/CNY levels.

• EUR/USD -  Asian range 1.1085 - 1.1117, Asia is currently trading 1.1115. EUR/USD has had a quiet session as the market digests the overnight moves. The market is still expected to use dips as a buying opportunity and dips back towards 1.09/1.10 should see buyers remerge.
• GBP/USD - Asian range 1.3170 - 1.3200, Asia is currently dealing around 1.3195. GPB broke through its support around 1.3200, if this break can hold we could target a move back to 1.3000 where buyers should be expected to return.
• USD/JPY -  Asian range 147.73 - 148.48, the Asia session is currently dealing around 147.85. USD/JPY scythed through the 1.4700 area as shorts pared back some of their positioning. With stocks on a tear as momentum type funds are forced back into the market the USD will continue to benefit particularly against currencies like the JPY. This will now test the conviction of the USD bears short-term, but levels back towards 150/151 should offer good levels for those that want to express this view.
• USD/CNH - Asian range 7.1789 - 7.2045, the USD/CNY fix printed 7.1991. Asia is currently dealing around 7.1835. A lower fix even with the USD broadly higher across the board gave USD/CNH the impetus to extend lower, sellers should be found on any bounce back towards 7.24/25 again.
• Cross asset : SPX -0.38%, Gold $3236, US 10-Year 4.45%, BBDXY 1237, Crude oil $61.76

• Data/Events :Ger ZEW Survey, US CPI

  Fig 1: GBP/USD Spot Daily Chart

  

• Source: MNI - Market News/Bloomberg

RBA-dated OIS pricing is 2–11bps firmer today, led by the late 2025 to early 2026 contracts. Pricing for individual meetings is now 4–35bps higher than levels observed prior to the release of Q1 CPI data on April 30.

• Q1 headline and underlying inflation printed 0.1pp higher than expected but the trimmed mean at 2.9% y/y was below the top of the RBA’s 2-3% target band for the first time since Q4 2021.
• A 25bp rate cut in May is currently given a 96% probability, with a cumulative 82bps (117bps before the CPI data) of easing priced by year-end (based on an effective cash rate of 4.09%).

Figure 1: RBA-Dated OIS – Post-CPI Vs. Pre-CPI

Source: MNI - Market News / Bloomberg