FOREX: NZD Remains Outperformer as Inflation Expectations Shift Higher
May-16 08:51
- The New Zealand dollar remains the strongest performer in G10, following the release of inflation expectations data which has shifted higher in the latest RBNZ survey. The 2yr ahead expectations rose to 2.29%, from 2.06% in Q1. Expectations had been near 2.0% (the mid-point of the RBNZ band) since Q3 last year. We are still well off late 2022 cycle highs of 3.62%, but at face value this isn't a welcome development from an RBNZ standpoint.
- NZDUSD (+0.53%) has regained the 0.5900 handle in sympathy, although remains well shy of the week’s high at 0.5969. Solid support for the pair is buildig around the 0.5850 mark.
- The other notable move in G10 was for USDJPY, which finally bridged the gap to last Friday’s close overnight. Some downside momentum picked up following the moves below 145.37, gravitating to a low print at 144.92 before stabilising. Thepair remains broadly unchanged on the week despite the volatile intra-day ranges. Overall, the latest USDJPY pullback underpins the view that gains since Apr 22 appear corrective.
- Elsewhere, ranges across global currency markets have remained contained, as markets continue to digest the plethora of data releases on Thursday, and the data calendar remains relatively calm to end the week.
- As such EURUSD is a tad firmer on the session, consolidating just above 1.12, while GBPUSD is doing the same above 1.33. For cable, Tuesday’s gains highlight a possible reversal pattern - a bullish engulfing candle. If correct, the pattern signals the end of the corrective cycle and a resumption of the uptrend. A continuation higher would refocus attention on the key resistance and a bull trigger, at 1.3444, the Apr 28 / 29 high.
- Import prices, building permits and preliminary UMich sentiment & inflation expectations highlight the US calendar. We may also hear from SNB President Schlegel.
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CROSS ASSET: Equities Off Lows As China Outlines Requirements For Trade Talks
Apr-16 08:45
Equities rally, bonds sell off and oil firms as BBG sources note that “China wants to see a number of steps from President Donald Trump’s administration before it will agree to trade talks, including showing more respect by reining in disparaging remarks by members of his cabinet”,
- The piece also notes that “other conditions include a more consistent U.S. position” and suggests that they want to conduct negotiations with a “point person” (akin to what was seen in Trump’s first term).
- A second round rally in equities then kicks in, with markets focused on the potential avenues to trade talks, despite some hurdles remaining.
CROSS ASSET: More upside momentum in Gold
Apr-16 08:13
- Some upside momentum in Gold, more likely short cover, than margin related move, spiked to $3307.47, and next Gold MNI Tech resistance is still at $3347.7 - 1.382 proj of the Dec 19 - Feb 24 - Feb 28 swing.
- US Tnotes at session high is helping the Yen, although USDJPY is finding some demand just ahead of the 142.00 level for now.
MNI: ITALY MAR FINAL HICP +2.1% Y/Y (FLASH 2.1%)
Apr-16 08:05
- MNI: ITALY MAR FINAL HICP +2.1% Y/Y (FLASH 2.1%)
- MNI: ITALY MAR FINAL HICP +1.6% M/M (FLASH 1.6%)
