EM CEEMEA CREDIT: REPHUN: Trade Surplus Narrows in April

Spanish April preliminary HICP came in firmer than expected on the yearly rate at +2.2% Y/Y (vs +2.0% cons; +2.2% prior) and the sequential reading at 0.6% M/M (0.3% cons; 0.7% prior). The national CPI also came in above expectations at +2.2% Y/Y (vs 2.0% cons; 2.3% prior) and 0.6% M/M (vs 0.4% cons; 0.1% prior).

• Core CPI came in above expectations, also, at +2.4% Y/Y (vs 2.3% cons; 2.0% prior). Core HICP was 2.5% Y/Y.
• The headline rate was driven downwards by energy, while the leisure and culture category had an upward contribution vs last month, INE added.
• Ahead of the release, analysts had expected firmer travel-related services to push up core inflation, and energy to fall materially as a base effect and a sequential deceleration act in tandem.
• Hence, on the direction of drivers, the release appears to be as expected - but potentially, the jump in travel-related categories was stronger than anticipated, explaining the core 'beat'.
• Overall, there is little colour in the press release, so for full detail, especially on underlying services momentum vs the one-off travel categories, we will have to await the final data.
• For context, Spain represents 12% of the Eurozone HICP basket in 2025.

• RES 4: 1.4415 High Apr 1
• RES 3: 1.4296 High Apr 7 
• RES 2: 1.4120 50-day EMA 
• RES 1: 1.3906/3972 High Apr 17 / 20-day EMA  
• PRICE: 1.3839 @ 08:04 BST Apr 29
• SUP 1: 1.3781 Low Apr 21 and the bear trigger 
• SUP 2: 1.3744 76.4% retracement of Sep 25 ‘24 - Feb 3 bull run
• SUP 3: 1.3696 Low Oct 10 2024
• SUP 4: 1.3643 Low Oct 9 ‘24 

The trend condition in USDCAD is unchanged, the outlook remains bearish. A fresh cycle low on Apr 21 highlights a resumption of the bear cycle and signals scope for a continuation near-term. Potential is seen for a move towards 1.3744, a Fibonacci retracement. Moving average studies are in a bear mode position, highlighting a dominant downtrend. First resistance to watch is 1.3972, the 20-day EMA.

ECB Cipollone's speech titled "Navigating a fractured horizon: risks and policy options in a fragmenting world" here: 

Highlights:

• "Recent moves in exchange rates, bond yields and equities, suggest that US markets have not been playing their usual role as a safe haven in this particular episode of stress. This potentially has far-reaching longer-term implications for capital flows and the international financial system".
• " Trade policy uncertainty has led to a broader rise in global economic policy instability, which is stifling investment and dampening consumption. Our research suggests that the recent increase in trade policy uncertainty could reduce euro area business investment by 1.1% in the first year and real GDP growth by around 0.2 percentage points in 2025-26"
• "ECB staff estimates suggest that the observed increase in financial market volatility might imply lower GDP growth of about 0.2 percentage points in 2025".
• "Over the medium term, tariffs are set to have an unambiguously recessionary effect, both for countries imposing restrictions and those receiving them".
• " The inflationary effects of trade fragmentation are more uncertain."..."The short to medium-term effects may even prove disinflationary for the euro area, where real rates have increased and the euro has appreciated following US tariff announcements".