Softer U.S. producer prices fueled speculations of less monetary tightening from the Fed.
Will the resulting risk appetite be enough to boost AUD against EUR and drag EUR/AUD from a pullback area?
Before moving on, ICYMI, yesterday’s watchlist looked for a potential AUD/USD triangle breakout after Australia printed a strong jobs data while U.S. inflation numbers pointed to price deceleration. Be sure to check out if it’s still a valid play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
U.S. headline producer prices fell by 0.5% m/m in March while core PPI dipped by 0.1%. Annual prices fell 2.7% y/y, its smallest gain in two years, and supported the price deceleration seen in this week’s CPI data.
U.S. initial jobless claims rose by 11K to 239K in the week ended April 8. California – the epicenter of recent tech layoffs – accounted for more than a third of the increase.
BOC Gov. Macklem pushed back against rate cut bets, saying that there’s still excess demand, tight labor, and low unemployment in Canada.
An OPEC report cited a build in OECD commercial inventories, high interest rates, high inflation, and (in)stability of financial markets as potential threats to seasonal oil demand. Still, the group forecasted a 2.3 million bpd (+2.3%) demand increase in 2023.
New Zealand Finance Minister Grant Robertson: We might have a recession “but it will be a shallow one.”
BusinessNZ manufacturing index fell into contraction, printing at 48.1 in March after a 51.7 February reading.
New Zealand visitor arrivals tick 0.6% m/m higher in February after plummeting by 26.3% in January
The Monetary Authority of Singapore (MAS) unexpectedly left its policies unchanged (instead of tightening) amidst SGD appreciation and recent Q1 growth miss.
PBOC Gov. Yi Gang reaffirms 5% growth expectations in 2023 as China’s property market improves
New BOJ Gov. Kazuo Ueda said he told his G20 counterparts that he intends to keep policy ultra-loose as he’s expecting inflation to dip back below the 2% target in the latter half of the fiscal year.
Germany’s wholesale price index up by 2.0% y/y in March, down from February’s 8.9% annual growth and the slowest since January 2021
Switzerland’s producer and import prices rose by 2.1% y/y in March, the lowest reading since April 2021, as both import and producer prices eased.
Dollar sinks to one-year low as cooling inflation raises Fed pause expectation
Price Action News
Overlay of AUD Pairs 15-min
The biggest story of the hour is the U.S. printing reports that point to easing inflation and the Fed possibly ending its tightening cycle.
The prospect of steady to looser monetary policies in the U.S. propped up the demand for “risk” assets like AUD. The commodity-related currency shot higher against its major counterparts and even revisited its U.S. session highs in the middle of Asian session trading.
AUD failed to make new weekly highs, however. The comdoll gave up some of its Thursday gains on a bit of profit-taking and as traders focused on the upcoming U.S. bank earnings releases.
U.S. retail sales data at 12:30 pm GMT
FOMC member Christopher Waller to give a speech at 12:45 pm GMT
U.S. industrial production at 1:15 pm GMT
U.S. preliminary UoM consumer sentiment data at 2:00 pm GMT
U.S. business inventories at 2:00 pm GMT
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
EUR/AUD 15-minute Forex Chart by TradingView
Just when EUR/AUD was set to make new monthly highs, a stronger-than-expected labor market report from Australia propped up demand for AUD.
EUR/AUD fell to the 1.6570 zone before a bit of profit-taking bumped the pair back up to the 1.6330 levels.
Is EUR/AUD just taking a breather from its losses?
Remember that Australia’s strong jobs data only highlighted the difference in biases between the (still) hawkish RBA and the Fed that may soon end its tightening ways.
Banking concerns in the European region could soon weigh on EUR and drag EUR/AUD from the daily Pivot Point near the 38.2% Fibonacci level of Thursday’s downswing.
EUR-selling or AUD-buying could result in a break-and-retest situation and pull EUR/AUD to its weekly lows.
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