AUDUSD TECHS: Trend Needle Points North
- RES 4: 0.5682 High Nov 12 ‘24
- RES 3: 0.6550 61.8% retracement of the Sep 30 ‘24 - Apr 9 bear leg
- RES 2: 0.6528 High Nov 29 ‘24
- RES 1: 0.6515 High May 7
- PRICE: 0.6425 @ 07:50 BST May 16
- SUP 1: 0.6354 50-day EMA
- SUP 2: 0.6275 Low Apr 14
- SUP 3: 0.6181 Low Apr 11
- SUP 4: 0.6116 Low Apr 10
The trend condition in AUDUSD is unchanged, it remains bullish and recent weakness is considered corrective. Tuesday’s strong gains signal the end of the corrective pullback and attention is on key resistance at 0.6515, the May 7 high. Note that moving average studies remain in a bull-mode position, highlighting an uptrend. A resumption of the trend would open 0.6550, a Fibonacci retracement. Key support to monitor is 0.6354, the 50-day EMA.
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STIR: Over 85bp Of BoE Cuts Priced Through Year-End After Soft CPI
Dovish repricing in GBP STIRs following softer-than-expected CPI data and the latest round of trade war worry (both detailed elsewhere).
- BoE-dated OIS contracts covering ’25 meetings are 2.5-4.0bp more dovish than closing levels, showing 25.5bp of easing for May, 34.5bp through June, 54.5bp through August and 85.5bp through year-end. Last week’s dovish extremes (which saw ~93bp of cuts priced through year-end at one point) remain untested,
- We still, look for a cut in May, with this morning’s data providing no impediment to such a move, although the scope of the downside surprise wasn’t large enough (headline CPI met the median of the sell-side views that we read) to trigger a more forceful/expedited round of easing, at least not in isolation.
- SONIA futures are 1.0-5.5 higher, last week’s highs are unchallenged across the strip.
- Eyes on macro/cross-market cues for the remainder of the day, with comments from Fed Chair Powell & U.S. retail sales data headlining the calendar.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
May-25 | 4.204 | -25.4 |
Jun-25 | 4.111 | -34.7 |
Aug-25 | 3.915 | -54.3 |
Sep-25 | 3.803 | -65.5 |
Nov-25 | 3.657 | -80.2 |
Dec-25 | 3.603 | -85.5 |
USD: In the red against all the majors, Tariffs led
- The Dollar was under some Overnight pressure, as mentioned on previous comment Tariffs news have been driving cross assets, some Govie Desk might take that US Yield and the 10yr continues to push away from last Week's high print, the main cause for the Tariff delay announcement, as better news.
- The Swiss franc, and the Yen are the best performers in G10s, on Safer Haven flows, on both Currencies have seen some wider range Overnight, 100 pips in the USDCHF and 117 pips in the USDJPY.
- USDCHF is off the low at present, but the 0.8100 has so far provided some demand, printed a 0.8099 low last Friday, its lowest level since 2015.
SWEDEN: PES Unemployment Claims Rate Steady At 7.0%; Soon Likely To Fall Back
The Swedish Public Employment Service’s (PES) unemployment claims rate was steady at 7.0% for the fifth consecutive month in March. This suggests the labour market has reached its weakest levels, and should start to strengthen alongside the broader macroeconomy in the coming months (in line with Riksbank projections).
- Vacancies fell to 85k, down from February’s 89k and 92k in March 2024. That sees the PES vacancy-to-unemployment claims ratio fall to a four year low of 0.23, broadly in line with the 2010-2019 average.
- The number of people affected by redundancy notices was steady at 4.8k, helping the 3mma ease to 4.9k (vs 5.2k in February).
- Contextualising the impact of redundancy on broader labour market metrics, PES notes that “a new report shows that on average six out of ten people given notice are laid off, and only one out of four people given notice register as unemployed with the Swedish Public Employment Service within six months of the notice”. The full report is here.
- As such, small increases in redundancies are not necessarily indicative of labour market weakening, but may just represent healthy reallocations amongst workers and industries.
