Muted Markets Await ECB Cut, While US-Japan Trade Talks Show Tentative Progress
| Action Insight Daily Report 4-17-25 |
Muted Markets Await ECB Cut, While US-Japan Trade Talks Show Tentative Progress |
The forex markets held steady in tight ranges during Asian session, with investors treading cautiously ahead of the Easter long weekend. Market mood has been mildly lifted by signs of progress in US-Japan trade negotiations. In a surprise move, US President Donald Trump joined preliminary talks and later declared “Big Progress!” via social media, injecting some optimism into an otherwise quiet session. While Trump's gesture lifted sentiment briefly, Japanese Economy Minister Ryosei Akazawa remained measured, describing the meeting as a first step with a second round planned for later this month. He also confirmed that exchange rates were not part of the discussions, indicating Tokyo’s desire to keep talks focused on trade and investment. Markets will now turn their attention to the ECB’s policy decision later today, where a 25bps cut in deposit rate to 2.25% is widely anticipated. The focus will be on ECB’s guidance and choice of language. In its last meeting, the Governing Council avoided declaring whether policy was still restrictive, and instead said it had become "meaningfully less restrictive". This strategy is expected to continue, particularly as internal divisions within the ECB remain over forward guidance amid elevated uncertainty. While some may hope for clearer signals on the future rate path, ECB is unlikely to oblige. According to the minutes of the previous meeting, several members stressed the need to avoid committing to even any directional bias on future moves. That caution is likely to persist, especially as external risks, including US trade actions and global demand uncertainty, still loom large. As a result, markets should expect a rate cut accompanied by continued strategic ambiguity..... |
USD/CAD Daily Outlook Daily Pivots: (S1) 1.3817; (P) 1.3896; (R1) 1.3936; More... USD/CAD is still bounded in consolidations above 1.3827 and intraday bias remains neutral. While stronger recovery cannot be ruled out, outlook will stay bearish as long as 1.4150 support turned resistance holds. On the downside, break of 1.3827 will resume the fall from 1.4791 to 100% projection of 1.4791 to 1.4150 from 1.4414 at 1.3773. | |
| GMT | Ccy | Events | Actual | Forecast | Previous | Revised |
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| 22:45 | NZD | CPI Q/Q Q1 | 0.90% | 0.70% | 0.50% | | 22:45 | NZD | CPI Y/Y Q1 | 2.50% | 2.30% | 2.20% | | 23:50 | JPY | Trade Balance (JPY) Mar | -0.23T | -0.25T | 0.18T | 0.19T | | 01:30 | AUD | Employment Change Mar | 32.2K | 41.2K | -52.8K | -57.5K | | 01:30 | AUD | Unemployment Rate Mar | 4.10% | 4.20% | 4.10% | 4.00% | | 06:00 | CHF | Trade Balance (CHF) Mar | 5.22B | 4.80B | | 06:00 | EUR | Germany PPI M/M Mar | -0.10% | -0.20% | | 06:00 | EUR | Germany PPI Y/Y Mar | 0.40% | 0.70% | | 12:15 | EUR | ECB Main Refinancing Rate | 2.40% | 2.65% | | 12:15 | EUR | ECB Deposit Rate | 2.25% | 2.50% | | 12:30 | USD | Building Permits Mar | 1.45M | 1.46M | | 12:30 | USD | Housing Starts Mar | 1.42M | 1.50M | | 12:30 | USD | Initial Jobless Claims (Apr 11) | 224K | 223K | | 12:30 | USD | Philadelphia Fed Manufacturing Apr | 6.8 | 12.5 | | 12:45 | EUR | ECB Press Conference | | 14:30 | USD | Natural Gas Storage | 24B | 57B |
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