It looks like the Aussie dollar took the top spot thanks to heightened expectations of more rate hikes ahead from the Reserve Bank of Australia, while the pound fell to last place after a gloomy forecast on growth and inflation in the U.K.
Notable News & Economic Updates:
J.P.Morgan Global Manufacturing PMI for April: 52.2 vs. 52.9 in March
Solana suffered a seven-hour outage on Monday as NFT demand exploded
ISM U.S. manufacturing PMI fell to 55.4 in April (the lowest reading since Sept. 2020) from 57.1 in March
The Reserve Bank of Australia raised interest rates by 25 basis points on Tuesday to 0.35%
Federal Reserve raised interest rates by 0.50% to 0.75% – 1.00% range
Brazil Central Bank raises key rate to 12.75%
The Bank of England’s Monetary Policy Committee approved a 0.25% increase of the base interest rate to 1.00% by a majority vote of 6-3 on Thursday; forecasted an inflation at 10% and a recession for 2023.
Hong Kong central bank raised its base interest rate by 50 bps to 1.25%
Luna Foundation Guard acquires $1.5B in bitcoin to reinforce stablecoin reserves
Caixin: China’s services activity falls at second sharpest rate on record to 36.2 in April
China’s Xi urged officials on Friday to fight those who question zero-Covid policy
ECB Governing Council member Bostjan Vasle said it would be appropriate to start hiking interest rates before Summer
Intermarket Weekly Recap
Major currency performance was mixed this week thanks to a heavy calendar of top tier events, as well as continued fears of inflation and a coming recession. This is likely why it looks like the broad market leaned heavily towards risk-off once again with equities and crypto taking a dive, while the U.S. dollar and bond yields spent most of the week above water.
The risk-off vibes were likely due to a big round of business and consumer survey data releases week, most of which showed that economic activity may be peaking and consumer confidence is starting to wane.
We also got several central bank rate hikes this week from the likes of the Federal Reserve, the Bank of England and the Reserve Bank of Australia. And on top of that, the rhetoric from many central bankers continued to be very hawkish for interest rates, especially from the RBA. This is likely why we saw the Aussie outperform the rest of the majors on the week.
Unfortunately for Sterling bulls, we didn’t get the same kind of reaction after the Bank of England took the interest rate to 1.00%, likely due to a gloomy outlook on early 2023 inflation and growth expectations as mentioned above.
Oil was a big outlier in performance as it steadily rose despite growing recession fears and a stronger U.S. dollar. This was likely due to traders pricing in the prospect of a tightening oil supply on speculation the European Union will sanction Russian oil.
There were two big short-term moves that traders could have grabbed quick pips from. First was the big risk-on reaction on Wednesday after the Federal Reserve brushed off the idea of a 75 basis point hike as a possibility.
Unfortunately, that move was short-lived as risk sentiment quickly flipped back negative during the Thursday U.S. session. The sentiment shift correlated with disappointing U.S. productivity and wage data, which was likely combined with a terrible Caixin China Services PMI read during the Asia session and negative vibes from the BOE to bring back recession fears quickly.
USD Pairs

Overlay of USD Pairs: 1-Hour Forex Chart
S&P Global US Manufacturing PMI for April: 59.2 vs. 58.8 in March
U.S. Construction Spending rose by +0.2%
U.S. Job openings rose to 11.549M in March vs. 11M forecast
US factory orders for March 2022: +2.2% vs. +1.1% forecast; +0.1% in Feb.
U.S. Trade Balance for March: $109.8B deficit vs. -$89.8B deficit in Feb.
ADP Non-Farm Payroll change for April: +247K jobs vs. +479K jobs in March, below +382K forecast
The Federal Open Market Committee raised interest rates by 0.50% to 0.75% – 1.00% range
U.S. worker productivity fell 7.5% in Q1 2022 (the fastest decline since 1947); unit labor costs rose 11.6% vs. 0.9% previous
U.S. Weekly jobless claims increased to 200K vs. 180K forecast
U.S. Nonfarm payrolls for April: +428K vs. +400K forecast, unemployment rate held at 3.6% vs. 3.5% forecast
Ex-Fed Vice Chair Clarida says rates must rise to at least 3.5%
GBP Pairs

Overlay of GBP Pairs: 1-Hour Forex Chart
U.K. Manufacturing PMI rose to 55.8 in April vs. 55.2 in March
U.K. mortgage approvals slightly fell to 70K in March as house prices continue to rocket higher
The Bank of England’s Monetary Policy Committee approved a 25 bps increase by a majority vote of 6-3, taking the base interest rate up to 1.00%
U.K. Services PMI Business Activity Index posted 58.9 in April
U.K. Halifax HPI up by 1.1% vs. projected 0.7% increase
U.K. Construction PMI slowed to 58.2 in April vs. 59.1 in March
EUR Pairs

Overlay of EUR Pairs: 1-Hour Forex Chart
German retail sales slipped by 0.1% vs. projected 0.3% gain
Eurozone April final consumer confidence -22.0 vs -16.9 prelim
Eurozone April final manufacturing PMI 55.5 vs 55.3 prelim
Germany manufacturing PMI was 54.6 in April from 56.9 in March
German unemployment fell 13K to 2.287M in April
Euro area unemployment at 6.8% in March 2022; EU at 6.2%
Industrial producer prices were up by 5.3% m/m in the euro area and by 5.4% m/m in the EU in March
S&P Global Germany Services PMI: rose to 57.6 in April vs. 56.1 in March
Volume of retail trade down by -0.4% in the euro area in March; -0.2% the EU
Eurozone retail sales drop by 0.4%, more than expected 0.1% dip in March
German industrial production slipped by 3.9% vs. projected 1.3% drop
ECB‘s Villeroy says rates above 0.0% is ‘reasonable by year end; suggested an end to bond-buying in June
CHF Pairs
Swiss consumer sentiment index fell to -27 in April 2022, the biggest fall since the onset of the COVID-19 pandemic in 2020.
Switzerland CPI for April: +2.5% y/y as expected vs. 1.4% previous
Swiss Manufacturing PMI: 62.5 in April v.s 64.0 previous
Swiss jobless rate ticked lower in April to 2.3% from 2.4% in March
CAD Pairs

Overlay of CAD Pairs: 1-Hour Forex Chart
S&P Global Canada Manufacturing for April: 56.2 vs. March’s survey-record high of 58.9
Canada Trade Balance: C$2.49B in March vs. C$3.1B previous
Canada Unemployment rate ticks lower to 5.2% in April; +15.3K net job adds in April vs. 55K forecast
Canada Ivey PMI showed a slower pace of economic activity in April: 66.3 vs. 74.2 in March
NZD Pairs

Overlay of NZD Pairs: 1-Hour Forex Chart
NZ new housing consents hits new record highs (50,858 units) in March
New Zealand GDT dairy prices down by 8.5%
New Zealand employment change up by 0.1% as expected in Q1 2022
New Zealand unemployment rate unchanged at 3.2% as expected
New Zealand labor cost index up by another 0.7% as expected
Commodity prices in New Zealand slipped by 1.9% in April – ANZ
AUD Pairs

Overlay of AUD Pairs: 1-Hour Forex Chart
Australia AIG manufacturing index up from 55.7 to 58.5
Australian ANZ job advertisements down by 0.5% in April
Reserve Bank of Australia raised interest rates by 25 basis points to 0.35%
- RBA: it’s the “right time” to begin withdrawing pandemic-related support
- RBA noted higher wage growth, resilient economy, and inflation picking up “more quickly and to a higher level”
- RBA Lowe: expects further hikes will be needed in the months ahead; more normal rates around 2.50%
Australian retail sales jumped 1.6% vs. projected 0.4% uptick
S&P Global Australia Services PMI for April: 56.1 vs. 55.6 in March; improvement likely due to easing of COVID-19 disruptions
AU building permits dropped by -18.5% in March after a 40.2% jump in February
AU trade surplus widened from 7.43B AUD to 9.31B AUD in March amid imports decline
RBA Quarterly Statement on Monetary Policy: warned that core inflation could hit 4.6% by December (previously forecasted at 2.0% in Feb.)
JPY Pairs

Overlay of Inverted JPY Pairs: 1-Hour Forex Chart
Japanese commodity prices up from 39.6% to 39.9%
Tokyo Core Consumer Prices rose +1.9% y/y vs. +1.8% y/y forecast; expectations of prices to rise above 2% rate in coming months
Japan’s monetary base increased at a slower rate in April at 6.6% vs. 7.9% in March