The day kicked with a round of data from Australia and the interest rate decision from the Reserve Bank of Australia (RBA). The consensus was that the RBA was going to cut interest rates by 25 basis points to 1.25% from 1.50%. But, they left interest rates unchanged this time and the Aussie jumped 60 pips higher. Perhaps the positive retail sales and trade balance reports that were released a few hours in advance this morning made the RBA officials change their mind.

European Session

• German Factory Orders – Factory orders have been declining for the last four months in Germany and in February they posted a massive decline of 4.2% as the report released last month showed, which was revised higher today to -4.0%. Although, a reversal was expected for March and finally we saw some positive numbers. But factory orders still missed expectations of 1.6% and only grew by 0.6% instead. But one step at a time, I guess.
• French Trade Balance – The trade deficit has been narrowing in the last several months from -€5.1 billion in November to -€4.1 billion in February. Although, the deficit was expected to widen again in March to -€4.5 billion but it missed expectations coming at -€5.3 billion.
• UK’s Hunt Doesn’t Believe in Customs Union – The UK foreign secretary, Jeremy Hunt, doesn’t believe in a customs union with the EU but wants to look at whatever deal might be reached with Labour party. He said that “we need a compromise on all sides on Brexit” and notes that he doesn’t want customs union as a long-term Brexit outcome.
• China Commenting on Trade – China’s foreign ministry spokesperson, Geng Shuang, commented earlier this morning that raising tariffs won’t resolve issues. It is normal to have differences during discussions but notes that they have seen US threaten to raise tariffs ‘many times’. He hopes that US works hard with China to resolve each other’s concerns and that US will meet China halfway on trade talks.
• Juncker Has Trust on Trump – European Commission President, Jean Claude Juncker, commented a while ago saying that we can trust Trump on trade relations with the EU and nothing has changed on trade since last July’s visit to White House. I suppose he must be drunk again since he likes a drink or 10.

US Session

• • Italy 2019 GDP growth seen at 0.1% (previously 0.2%)
  • Italy 2020 GDP growth seen at 0.7% (previously 0.8%)EU Economic Forecasts – The European Commission releases its latest economic forecasts of the region. Below are the figures:
    • Eurozone 2019 GDP growth seen at 1.2% (previously 1.3%)
    • Eurozone 2020 GDP growth seen at 1.5% (previously 1.6%)
    • Eurozone 2019 inflation seen at 1.4% (unchanged)
    • Germany 2019 GDP growth seen at 0.5% (previously 1.1%)
    • Germany 2020 GDP growth seen at 1.4% (previously 1.5%)
    • France 2019 GDP growth seen at 1.3% (unchanged)
    • France 2020 GDP growth seen at 1.5% (unchanged)

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• Canadian Ivey PMI – The Ivey PMI indicator which shows where the business stands in Canada fell pretty close to flat on February but jumped back up in March, as the report released last month showed. It was expected to fall back close to stagnation for April, but the report which was just released beat expectations and increased further to 55.9 points which is a good sign for the Canadian economy.
• FED’s Clarida Speaking – Clarida is speaking on Bloomberg saying that he sees temporary factors in recent soft inflation. The US economy is in a good place but we must look at the outlook on both sides of the baseline. Trade has not had a big impact on the economy so far so we don’t see a strong case to move in either direction. Our focus right now is to get inflation up to 2%.

Bearish USD/JPY

1. The trend has turned bearish
2. Fundamentals keep going against this pair

The 50 SMA can’t even catch up with the price

USD/JPY has been on a bullish trend during the first few months of this year, but in the last weeks this pair traded in a range. That seems to have changed now after the bearish gap over the weekend. Now the trend has shifted to bearish and the pressure is increasing since the pullbacks higher look very weak. The fundamentals have shifted the sentiment to negative which benefits safe havens, so this pair should remain bearish until the sentiment changes, probably by next week if it doesn’t get worse.

In Conclusion

So, here we are waiting for an answer regarding the new tariffs that Trump promised to impose on China. Everything is on hold now as traders wait for the US-China meeting over the coming weekend, apart from Oil which is tumbling lower and the JPY which has turned bullish as a safe haven.