Currencies in search of fresh catalysts.

The rest of the week ahead

Today:

• US April Consumer Confidence and US March Jolts Job Openings survey. The former is not interesting for this market as we already know that US consumer sentiment is in the gutter, while the latter is both old and poor quality. The key data for the US likely starts with the May and even June data cycles for understanding whether a US recession is incoming.
• In corporate earnings, Visa reports after the US close today. Is the credit card giant seeing any spending patterns or momentum shifts that it is willing to share with the world in the earnings call today?

Tomorrow:

• The Australian Q1- and March CPI data could matter at the margin, with AUDUSD technicals quite interesting and the AUDNZD needing to do a lot of work to dig itself out of a bear trend.
• The US April ADP payroll change data. This is an important one on any significant negative surprises relative to expectations for +115k
• In corporate earnings, Microsoft and Meta Platforms report, two massive companies on the implications for the status of AI spending both for cloud infrastructure in the case of Microsoft and for leveraging the AI to target ads and content in Meta’s case.

Thursday:

• The Bank of Japan. Expectations are nil, but the BoJ could target the currency with indirect language.
• US April ISM Manufacturing. We have seen some spectacularly ugly readings from regional surveys this month, led by the Dallas Fed Manufacturing Outlook slamming to a new post-pandemic outbreak low of -35.8 for April yesterday. The ISM’s don’t tend to be market movers, but this is a market in search of a catalyst.
• In US Corporate earnings, Apple and Amazon report – two key companies on the China-exposure front (supply chain and as end market in the case of Apple), with Amazon also critical in announcing its expectations on AI spending in its cloud business, key for risk sentiment in equities.

Friday

• The US April jobs report (nonfarm payrolls change and unemployment rate). Again, is the April data cycle to early to expect lagging data like employment to show rising risks of a US recession?

FX Board of G10 and CNH trend evolution and strength.
Note: If unfamiliar with the FX board, please see a video tutorial for understanding and using the FX Board.

We are seeing some additional mean reversion as a quieter market means that most trend intensity readings are falling back. Note that USD and CNH remain joined at the hip directionally versus other currencies in aggregate, although we did see some USDCNH volatility overnight.

Table: NEW FX Board Trend Scoreboard for individual pairs.

USDCNH at current levels would tip the trending reading to negative, but the CNH has shown only eyes for following USD direction. The big level lower in USDCNH is near 7.22. Note AUDUSD attempted a new four-month high above 0.6439 yesterday before reversing – underlining the important of this area on the chart.