HUNGARY: Retail Sales Surge in April, Fitch May Review Hungary’s Credit Rating

• RES 4: $36.000 - Round number resistance 
• RES 3: $34.903 - High Oct 23 ‘24 and the bull trigger
• RES 2: $34.590 - High Mar 28  
• RES 1: $33.686 - High Apr 25                                        
• PRICE: $33.064 @ 08:07 BST May 7
• SUP 1: $31.668 -  Low May 1
• SUP 2: $30.915/28.351 - Low Apr 11 / 7 and the bear trigger
• SUP 3: $27.686 - Low Sep 6 ‘24   
• SUP 4: $27.180 - Low Aug 14 ‘24   

A strong rally in Silver on Apr 23 reinforced the current bullish theme. This suggests the latest pullback that started Apr 25, is a correction. Key short-term support has been defined at $31.668, the May 1 low. A break of this level would signal scope for a deeper retracement and open $30.915, the Apr 11 low. For bulls, resistance to watch is $33.686, the Apr 24 high. Clearance of this level would confirm a resumption of the uptrend.

Euribor futures are flat to -1.0 ticks through the blues versus yesterday's settlement levels. There hasn't been a tangible reaction to overnight news that the US and China will hold formal trade talks in Switzerland at the weekend, nor the PBOC's latest monetary easing measures.

• ECB-dated OIS continue to price just over 60bps of easing through year-end. A 25bp cut is essentially fully priced through June, and this will likely remain the case unless the ECB see evidence that downside growth risks are smaller than feared.
• German factory orders rose 3.6% M/M (vs 0.0% prior). This was above the 1.3% median estimate, but the skew of forecasts was exceptionally wide. The data wasn’t a market mover.
• Today’s regional data calendar is light (Eurozone March retail sales are due at 1000BST, consensus -0.1% M/M), with primary focus on this evening’s FOMC decision. 

Sell-side reaction to China’s policy easing package points to a measured approach being deployed thus far, with the potential for deeper monetary and fiscal easing in the relative near-term.

• Goldman Sachs: The relatively small policy rate cut (10bp vs. our expectation of 20bp) and policy communication indicate a measured and reactive easing approach. In addition, PBOC's targeted support areas, including services consumption, elderly care and technology and innovation, were mentioned in the April Politburo meeting and not surprising. Fiscal policy easing remains the primary tool to offset the growth drag from US tariffs. The latest headline of "ice-breaker" talks between US and China raise the prospect of a partial rollback of US tariffs on Chinese goods, which in turn could reduce the need for a large fiscal package. We now expect additional two 10bp policy rate cuts in Q3 and Q4, and another 20bp cut for 2026 (vs. a total of 60bp in policy rate cuts previously). We still expect another 50bp RRR cut in Q4, which may facilitate additional fiscal easing funded by more government bond issuance.
• ING: China's policy response after the escalation of the trade war has been quite calm and measured. Beijing has remained confident this year in stabilising growth despite external headwinds. Monetary policy aside, fiscal policy support will also continue to roll out. This year's focus has been on boosting domestic demand. From today's measures, we can see that monetary policy is also playing a role. We expect these efforts will eventually bear fruit, though it will be challenging to restore consumer confidence, which is closer to historic lows than historic averages. Stabilising asset prices and restoring wage growth are important factors in this process.  After today's moves, we still think there’s room for additional policy easing if needed, given deflationary pressures and the risk of moderating growth. We are looking for another 20bp of rate cuts and 50bp of RRR cuts this year, and we expect that the next move might not come until after the US Federal Reserve resumes rate cuts.
• J.P.Morgan: This is similar to the press conference on September 24 2024, which kicked off a major policy shift to help stabilize the economy. The policy playbook is the same, and easing measures are similar. Today’s easing measures are in line with our expectations. We maintain our interpretation of a two-step approach of policy adjustment, with additional fiscal stimulus likely be introduced later this year (around July politburo meeting).