Markets Trade in Risk-off Fashion, AU CPIs Accelerate, BoJ Enters the Limelight

Investors Keep Reducing their Risk Exposure on Economic Fears and Tightening Expectations

The US dollar traded higher against all but one of the other G10 currencies on Tuesday and during the Asian session Wednesday. It gained the most versus NOK, GBP, and SEK, in that order, while it lost ground only versus JPY.

DAX — Technical Outlook

The German DAX index traded lower yesterday, after it hit resistance at 14165 and managed to break below the 13875 barrier, marked by the low of April 12th, thereby confirming a forthcoming lower low. This, combined with the fact that the index remains below the downside line drawn from the high of January 5th, makes us believe that some more declines may be on the cards for the near future.

AU CPIs Accelerate, but the Aussie Stays in a Downtrend

Staying in the FX world, the Aussie was found lower against its US counterpart this morning, but it was much lower before the Australian CPIs were out. The headline rate rose to 5.1% yoy in Q1, from 3.5% in the last quarter of 2021, exceeding expectations of a rise to 4.6%. The Trimmed mean rate also rose by more than expected, and while the Weighted mean rate missed its own forecast by a fraction, it was still half a percentage point higher than it was in Q4.

AUD/USD — Technical Outlook

AUD/USD traded lower yesterday, but today, during the Asian session, it hit support slightly below 0.7135 and rebounded somewhat. Overall though, the pair remains well below the downside line drawn from the high of April 5th, and even if the rebound continues for a while more, we will still see a negative short-term picture.

Will BoJ Policymakers Discuss Changes to YCC?

Tonight, market participants may turn their attention to the BoJ decision. Usually, meetings of this Bank pass unnoticed as they provide little action or important information to excite the markets. However, things may be different this time around. With the benchmark Japanese government bond yield keep rising to the upper limit of the central bank’s range, many are eager to hear what policymakers have to say.

As for the Rest of Today’s Events

After the Australian CPIs and ahead of the BoJ decision, the only release worth mentioning is the US pending home sales for March, with the forecast pointing to a 1.5% mom slide, after a 4.1% decline in February.



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