Lower producer prices in the US have fueled speculation of an easing of monetary policy tightening by the Federal Reserve.
Will the resulting risk appetite be enough to support the Aussie against the Euro and pull EUR/AUD out of bearish territory?
Before moving on to ICYMI, yesterday’s watchlist looked for a possible breakout of the AUD/USD triangle after Australia printed strong jobs data while US inflation figures indicated slowing prices. Be sure to check if it’s still playable!
And now for the main headlines that rocked the markets in the last trading sessions:
Headlines and recent economic data for the market:
Major producer prices in the US fell 0.5% month over month in March while core PPI fell 0.1%. Annual prices fell 2.7% year-on-year, their smallest gain in two years, and supported sluggish prices seen in CPI data this week.
Initial jobless claims in the US increased by 11K to 239K in the week ending April 8th. California — the epicenter of recent tech layoffs — accounted for more than a third of the increase.
Bank of Canada Governor Macklem has pushed back against rate cut bets, saying there is still excess demand, tight employment and low unemployment in Canada.
An OPEC report cited rising OECD trade inventories, rising interest rates, rising inflation, and (in) stabilizing financial markets as potential threats to seasonal oil demand. However, the group expected demand to increase by 2.3 million barrels per day (+2.3%) in 2023.
New Zealand Finance Minister Grant Robertson: We may have a recession “but it will be a shallow recession.”
New Zealand’s manufacturing index fell into contraction, posting a reading of 48.1 in March after a reading of 51.7 in February.
Visitor numbers to New Zealand rose 0.6% month-on-month in February after falling 26.3% in January.
The Monetary Authority of Singapore (MAS) unexpectedly left its policies unchanged (instead of tightening) amid the appreciation of the Singapore dollar and the recent growth failure in the first quarter.
People’s Bank of China Governor Yi Gang reaffirms 5% growth forecast in 2023 as China’s real estate market improves
The Bank of Japan’s new governor, Kazuo Ueda, said he has told his G20 counterparts that he intends to keep policy very loose as he expects inflation to fall back below the 2% target in the latter half of the fiscal year.
Germany’s wholesale price index rose 2.0% year-on-year in March, down from February’s annual growth of 8.9% and the slowest since January 2021.
Swiss producer and import prices rose 2.1% year-on-year in March, the lowest reading since April 2021, as both import and producer prices fell.
The dollar falls to a one-year low as inflation rises in expectations of the Fed’s pause
Price action news
The biggest story of the hour is US print reports that inflation is falling and the Fed is likely to end the tightening cycle.
The prospect of steady and loose monetary policies in the US boosted demand for “risky” assets such as the Australian dollar. The commodity linked currency rallied against the majors and returned to US session highs in the middle of the Asian trading session.
However, the Australian dollar failed to make fresh weekly highs. The comedole gave up some of its gains on Thursday due to some profit taking and as traders focused on upcoming US bank earnings releases.
US retail sales data at 12:30pm GMT
FOMC member Christopher Waller delivers a speech at 12:45 PM GMT
US Industrial Production at 1:15pm GMT
Preliminary UoM Consumer Confidence data is due at 2:00 PM GMT
US Business Inventories at 2:00 pm GMT
Use our new file Currency heat map To quickly see a visual overview of the forex market price movement! 🔥 🗺️
EUR/AUD 15-minute trading chart by TradingView
Just when EUR/AUD was poised for fresh monthly highs, a stronger-than-expected labor market report from Australia boosted demand for the Australian dollar.
EUR/AUD fell to the 1.6570 region before some profit-taking hit the pair back to 1.6330 levels.
Is EUR/AUD catching a breather from its losses?
Remember, the strong jobs data in Australia only highlighted the difference in biases between the (still) hawkish RBA and the Fed which may soon end its hawkish ways.
Banking concerns in the European region may affect the euro soon and pull the EUR/AUD from the daily pivot point near the 38.2% Fibonacci level of the bearish swing on Thursday.
Selling the Euro or buying the Australian dollar could put a breakout and retest and pull the EUR/AUD to its weekly lows.