<p class="text-align-start">Société Générale assesses the potential for USD/JPY to test the Japanese Ministry of Finance's intervention limits due to persistent US rate expectations and recent market dynamics. The bank highlights upcoming US economic data as critical to future currency movements.</p><p>Key Points:</p><ul><li><p>US Yield Curve Dynamics: The correlation between Fed funds futures and 10-year yields is notably high, reflecting a flat yield curve. This correlation significantly influences the USD/JPY exchange rate, with current US rate expectations supporting continued yen weakening.</p></li><li><p>Potential for Yen Intervention: Given the strong correlation and current trends in US rate expectations, SocGen suggests that USD/JPY may soon test the MoF's willingness to intervene significantly in the currency market to support the yen.</p></li><li><p>Impact of US Economic Data: The recent market response to US PMI data indicates that positions in long dollar and short Treasury trades might be becoming overstretched. This situation sets the stage for next week’s US ISM and payroll data, which are expected to be crucial in determining short-term directions for USD/JPY.</p></li><li><p>BoJ Meeting Expectations: While the upcoming Bank of Japan (BoJ) meeting is not anticipated to bring significant surprises, it remains a variable that could influence yen dynamics. Any unexpected shifts or statements from the BoJ could impact market expectations and potentially affect USD/JPY trends.</p></li></ul><p>Conclusion:</p><p>SocGen emphasizes the importance of upcoming US economic indicators in shaping market expectations and influencing USD/JPY movements...Additionally, the potential for large-scale intervention by Japan's MoF adds a layer of uncertainty and importance to the monitoring of these developments.</p><p dir="ltr"> For bank trade ideas, <a href="https://plus.efxdata.com/ad/track/4655172E54F06040571CD0AB083845AD" rel="nofollow" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://plus.efxdata.com/ad/track/4655172E54F06040571CD0AB083845AD&amp;source=gmail&amp;ust=1714166574020000&amp;usg=AOvVaw32w8bmNH3gXoUiQHETQ2tl">check out eFX Plus</a>. For a limited time, get a 7 day free trial, basic for $79 per month and premium at $109 per month. <a href="https://plus.efxdata.com/ad/track/4655172E54F06040571CD0AB083845AD" rel="nofollow" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://plus.efxdata.com/ad/track/4655172E54F06040571CD0AB083845AD&amp;source=gmail&amp;ust=1714166574020000&amp;usg=AOvVaw32w8bmNH3gXoUiQHETQ2tl">Get it here</a></p> This article was written by Adam Button at www.forexlive.com.

<ul><li><a href="https://www.forexlive.com/news/its-the-perfect-day-and-its-also-bank-of-japan-decision-day-20240425/">It's the perfect day, and it's also Bank of Japan decision day</a></li><li><a href="https://www.forexlive.com/news/broader-us-indices-closed-lower-for-the-first-time-after-three-days-higher-20240425/">Broader US indices close lower for the first time after three days of gains</a></li><li><a href="https://www.forexlive.com/news/alphabet-eps-189-versus-151-estimate-revenues-8054b-versus-7859b-estimate-20240425/">Alphabet EPS $1.89 versus $1.51 estimate. Revenues $80.54B versus $78.59B estimate</a></li><li><a href="https://www.forexlive.com/news/microsoft-eps-294-vs-282-estimate-revenues-6186-vs-6082-estimate-20240425/">Microsoft EPS $2.94 vs $2.82 estimate Revenues: $61.86 vs $60.82 estimate</a></li><li><a href="https://www.forexlive.com/centralbank/wsj-timiraos-the-dream-of-a-fed-rate-cuts-is-slipping-away-20240425/">WSJ Timiraos: "The Dream of a Fed rate cuts is slipping away"</a></li><li><a href="https://www.forexlive.com/news/crude-oil-settles-at-8357-20240425/">Crude oil settles at $83.57</a></li><li><a href="https://www.forexlive.com/centralbank/ecbs-panetta-we-must-weigh-risk-of-monetary-policy-becoming-too-tight-20240425/">ECBs Panetta: We must weigh risk of monetary policy becoming too tight</a></li><li><a href="https://www.forexlive.com/news/us-treasury-auctions-off-44-billion-of-the-seven-year-notes-at-a-high-yield-of-4716-20240425/">U.S. Treasury auctions off $44 billion of the seven year notes at a high yield of 4.716%</a></li><li><a href="https://www.forexlive.com/news/major-european-indices-close-lower-us-stocks-lower-yields-are-20240425/">Major European indices close lower. US stocks lower. Yields are higher.</a></li><li><a href="https://www.forexlive.com/news/goldman-sachs-the-composition-of-the-gdp-report-was-not-as-soft-as-it-looked-20240425/">Goldman Sachs: The composition of the GDP report was not as soft as it looked</a></li><li><a href="https://www.forexlive.com/news/us-pending-home-sales-for-march-34-versus-08-estimate-20240425/">US pending home sales for March 3.4% versus 0.8% estimate</a></li><li><a href="https://www.forexlive.com/news/us-treas-secretary-yellen-gdp-data-shows-straight-a-consumer-investment-spending-20240425/">US Treas Secretary Yellen: GDP data shows straight a consumer investment spending</a></li><li><a href="https://www.forexlive.com/news/us-yields-move-to-new-at-session-highs-20240425/">US yields move to new session highs. The 2 &amp;10 year yields at highest level since November</a></li><li><a href="https://www.forexlive.com/technical-analysis/kickstart-the-fx-day-for-april-25-with-a-technical-look-at-eurusd-usdjpy-and-gbpusd-20240425/">Kickstart the FX day for April 25 with a technical look at EURUSD, USDJPY and GBPUSD</a></li><li><a href="https://www.forexlive.com/centralbank/reportboj-to-reportedly-consider-measures-to-reduce-its-government-bond-purchases-20240425/">REPORT:BOJ to reportedly consider measures to reduce its government bond purchases</a></li><li><a href="https://www.forexlive.com/centralbank/fed-rate-hike-pricing-plunges-after-gdp-data-20240425/">Fed rate hike pricing plunges after GDP data</a></li><li><a href="https://www.forexlive.com/news/canada-feb-average-weekly-earnings-453-vs-388-prior-20240425/">Canada Feb average weekly earnings 4.53% vs 3.88% prior</a></li><li><a href="https://www.forexlive.com/news/us-march-wholesale-inventory-advanced-04-versus-04-revised-from-05-last-month-20240425/">US March wholesale inventory advanced -0.4% versus 0.4% (revised from 0.5%) last month</a></li><li><a href="https://www.forexlive.com/news/us-march-advanced-goods-trade-balance-9183-billion-versus-911-billion-estimate-20240425/">US March advanced goods trade balance $-91.83 billion versus $-91.1 billion estimate</a></li><li><a href="https://www.forexlive.com/news/us-q1-advance-gdp-16-vs-24-expected-20240425/">US Q1 advance GDP +1.6% vs +2.4% expected</a></li><li><a href="https://www.forexlive.com/news/us-initial-jobless-claims-207k-versus-215k-estimate-20240425/">US initial jobless claims 207K versus 215K estimate</a></li><li><a href="https://www.forexlive.com/technical-analysis/the-aud-is-the-strongest-and-the-jpy-is-the-weakest-as-the-north-american-session-begins-20240425/">The AUD is the strongest and the JPY is the weakest as the North American session begins</a></li><li><a href="https://www.forexlive.com/news/forexlive-european-fx-news-wrap-dollar-stocks-down-awaiting-us-gdp-data-20240425/">ForexLive European FX news wrap: Dollar, stocks down awaiting US GDP data</a></li></ul><p>The market got a scare after Q1 advance GDP growth came in lower than expected at 1.6% versus 2.4% expected. Meanwhile core PCE data for the quarter was higher-than-expected and 3.7% versus 3.4% expected. That scared traders further ahead of the monthly core PCE data scheduled for release tomorrow at 8:30 AM ET. There were whispers that the core PCE month-to-month could rise by closer to 0.5% versus the 0.3% expected when announced tomorrow. The YoY is expected at 2.7% and would be higher given numbers higher than 0.3%. </p><p>Lower growth and higher inflation is not the recipe for markets. As a result, stocks fell, bond prices fell (yields rose), and the US dollar moved higher. Yields across the curve moved to their highest level in 2024 with the 2-year yield moving above 5% (in his trading at 4.999% currently). </p><p>In the US equity market, the Dow Industrial Average average was down over -700 points at session lows. The S&amp;P index fell as much as 81.04 points (-1.6%), and the NASDAQ fell as much as -368.83 points (-2.31%).</p><p>However, markets steadied. US stocks started to move higher. At the end of the day:</p><ul><li>Dow Industrial Average average closed down -378.12 points or -0.98% at 38085.81</li><li>S&amp;P index fell -23.21 points or -0.46% at 5048.41</li><li>NASDAQ index fell -100.99 points or -0.64% at 15611.76.</li></ul><p>The small-cap Russell 2000 fell -14.308 points or -0.72% at 1981.11. At session lows, the index was down as much as -37.6 points or -1.8%.</p><p>In the Forex, the US dollar moved higher but retraced most of the declines versus the the EUR, GBP, CHF, CAD. Although the AUDUSD and the NZDUSD recovered off of session lows, they could not move up to pre-GDP release levels. </p><p>The GBP is ending the session as the strongest of the major currencies followed by the AUD. The JPY was the weakest followed by the USD.</p><p>The USDJPY moved to yet another high for the year and highest level since 1990. Tha BOJ will announce their latest rate decision in the new trading day. Technically,, it would take a break of its 100-hour moving average at 154.977 followed by a break of the 200 hour moving average at 154.717 to give the sellers some hope that a temporary high might be in place. The current price is trading at 155.64.</p><p>For the EURUSD its fall and low for the day stalled right at its 100-hour moving average before bouncing back up toward its 50% midpoint of the April trading range. That level comes in at 1.07425. A move above that level in the new trading day would be more bullish.</p><p>The GBPUSD's move lower stalled against its broken 38.2% retracement of the April trading range at 1.2455, and then snapped back higher toward its 100 bar moving average on the 4-hour chart at 1.2512. That level will be the barometer for trading in the new trading day.</p><p>Bank of Japan tonight. Core PCE data tomorrow.</p> This article was written by Greg Michalowski at www.forexlive.com.

<p>Eamonn is off today so I'll be filling in.</p><p>First of all, it's still April 25 in much of the world, so I'm going to enjoy this meme.</p><p>For those of you in Asia, it's now April 26, which is too bad. But it's also Bank of Japan decision day and we get Tokyo CPI and Australian PPI. So that's some consolation.</p><p>As for the Bank of Japan, the big news in US trade was a report from Jiji that said the BOJ will consider measures to reduce its government bond purchases. However the report didn't specify exactly when they would consider that, though maybe it's today.</p><p>There was some modest USD/JPY selling on the report but it did help to cap the pair at 155.74.</p><p>For the US dollar more broadly, it was a tumultuous one as it rose initially on the hot inflation indications in the GDP report, then slowly reversed completely, in part because of slowing growth.</p> This article was written by Adam Button at www.forexlive.com.

<p>The major US stock indices closed lower across the board today. The day got off to a negative start after Meta Platforms reported higher expenses and slightly lower revenues going forward after the close yesterday. </p><p>Declines were accelerated after stronger-than-expected inflation in the US GDP report. Although prices closed lower, the major indices did pare their losses into the close. Nevertheless the three-day win streak in the broader indices was snapped today:</p><p>A snapshot of the closing levels shows:</p><ul><li>Dow industrial average fell -375.14 points or -0.98% at 38085.79. At session low's, the index was down -706.55 points.</li><li>S&amp;P index fell -23.21 points or -0.46% at 5048.41</li><li>NASDAQ index fell -100.99 points or -0.64% at 15611.76</li></ul><p>The small-cap Russell 2000 fell -14.30 points or 0.72% at 1981.11</p><p>Shares of Meta Platforms still lost -$52.12 or -10.56% to $441.38. Caterpillar was also a big decline or with a fall of $-25.52 or -7.02% after their disappointing earnings yesterday.</p><p>Southwest Airlines reported disappointing earnings this morning fell -6.96%, as did Bristol-Myers Squibb whose price fell -8.51%.</p><p>Some winners today included:</p><ul><li>Chipotle, +6.47%. Their earnings expectations.</li><li>Tesla, +4.97%</li><li>Super MIcro Computers rebounded with a gain of 4.33%</li><li>Delta Airlines, +4.09%</li><li>Nvidia, +3.71%</li><li>Broadcom, was 2.99%</li><li>Merck, +2.92%</li></ul><p>In after-hours trading, large-cap tech are getting a boost from Alphabet and Microsoft earnings beat expectations. Alphabet shares are up 12.44%, and Microsoft shares are up 4.88%.</p><p> Nvidia and Super Micro Computers are riding the coattails, and are trading higher with Nvidia shares up 2.13% and SMCI trading up 2.24%. Amazon whose shares lost -1.65% in trading today has risen 3.49% in after-hours trading.</p> This article was written by Greg Michalowski at www.forexlive.com.

<ul><li>EPS $1.89 versus $1.51 expected</li><li>Revenues $8.54 billion versus $78.59 billion estimate</li><li>Cloud revenue comes at $9.6 billion</li><li>Alphabet issues a $0.20 per share dividend (its first ever dividend)</li></ul><p>Shares of Alphabet are up $19 or 12.18%.</p><p>Meanwhile Intel did not have such a great quarter with:</p><ul><li>Ddjusted earnings-per-share of $0.18 versus $0.14 expected. </li><li>Revenues messed at $12.7 billion versus $12.78 billion estimate. </li></ul><p>The not so great news is that they forecast EPS of $0.10 in the Q2 versus $0.24 expected. They also see Q2 revenues of $12.5 billion to $13.5 billion versus $13.63 billion expected.</p><p>Shares of Intel are trading down 7.04% at $32.64</p> This article was written by Greg Michalowski at www.forexlive.com.

<p>Microsoft is out with its earnings and beat on the top and bottom lines:</p><ul><li>EPS$2.94 versus $2.82 estimate</li><li>Revenues of $61.869 versus $60.82 billion estimate</li></ul><p>other details:</p><ul><li>productivity and business processes $19.57 billion versus $19.54 billion estimate</li><li>intelligent cloud $26.7 billion versus expected $26.25 billion</li><li>more personal computing $15.58 billion was expected $15.07 billion expected</li></ul><p>Microsoft shares are trading higher by $21 or 5.5% in after-hours trading</p> This article was written by Greg Michalowski at www.forexlive.com.

<p>Microsoft: Shares of Microsoft are trading down $-9.96 or -2.43% at $398.96</p><ul class="text-align-start"><li title="">Earnings per Share: Analysts expect $2.82 per share.</li><li>Revenue: Expected to be $60.80 billion, which would represent a 15.0% year-over-year growth. This is slightly above the 14.5% growth forecast provided by management in January.</li></ul><p title="">Other key insights include:</p><ul class="text-align-start"><li title="">PC Shipments: A 0.9% increase in PC shipments this quarter, influencing the sales of Windows licenses to PC makers.</li><li title="">Azure Cloud Services: Growth is expected to slow down to 28.8% from 30% in the previous quarter, with a consensus around 28.6%.</li><li>New Developments: Microsoft introduced Surface PCs with a special key for accessing the Copilot chatbot and started selling access to Copilot for small businesses through Microsoft 365 subscriptions. </li></ul><p>Both the shares of Microsoft and the S&amp;P index are up about 6% on the year. </p><p>Alphabet: Shares of Alphabet are currently trading down $3.04 -1.90% at $156.11</p><ul><li>Revenue (excluding traffic acquisition costs): Expected to be $66.07 billion, up from $58.07 billion in Q1 2023.</li><li>Adjusted EPS: Expected to be $1.51, up from $1.17 in Q1 2023.</li><li>Cloud Revenue: Expected to be $9.37 billion, up from $7.45 billion in Q1 2023.</li><li>Ad Revenue: Expected to be $60.18 billion, up from $54.55 billion in Q1 2023.</li></ul><p>Intel: Shares of Intel I trading up $0.73 or 2.13% at $35.23</p><ul class="text-align-start"><li>Earnings per Share (EPS): Expected to be $0.13, up from a loss of $0.04 per share in the same quarter last year. The earnings last quarter were at $0.62 </li><li>Revenue: Expected to be $12.7 billion, an increase from $11.7 billion in the same quarter last year. Last quarter, revenues were at $15.406B</li></ul> This article was written by Greg Michalowski at www.forexlive.com.

<p>Crude oil is settling at $83.57. That's up $0.76 or 0.92%.</p><p>Technically, looking at the price action on the hourly price below, like the USD, it too has been quite up and down volatile. Yesterday, the price found support against its 100-hour moving average (blue line). Today, the moving average was broken on its way to a low near $82 (low was at $81.99). </p><p>The subsequent bounce, now has the price breaking above its 200-hour moving average. That moving average stalled the rise both yesterday (on two separate occasions) and also earlier today. The 200-hour moving average comes in at $83.25.</p><p>Going forward if the 200-hour moving average can hold support the buyers can push higher with the 50% of the move down from the high currently at $84.19.</p> This article was written by Greg Michalowski at www.forexlive.com.

<p>The US is encouraging Europe and Asia allies to tighten restrictions on chip related technology and tools to China. Report says US is concerned about rising concerns about hallways development of advanced semi conductors.</p><ul><li>What other countries to make it harder for China to circumvent US restrictions specifically making it more difficult for companies from third countries to supply China with items that include technology produced in Japan and South Korea or the Netherlands</li></ul> This article was written by Greg Michalowski at www.forexlive.com.

<ul><li>High Yield: 4.716</li></ul><ul><li>WI level at the time of the auction: <ul><li>Actual: 4.716%</li></ul></li><li class="vertical-align-baseline"><p>Tail (the Tail is the difference between the WI level trading just prior to the auction and the auction high yield. A negative tail is indicative of a strong auction):</p><ul class="vertical-align-baseline"><li class="vertical-align-baseline">Actual: 0.0 basis points</li><li class="vertical-align-baseline">Six-auction average: +0.65 basis points</li></ul></li><li class="vertical-align-baseline"><p>Bid-to-Cover (the Bid to Cover is the number of bids from investors versus the supply of notes on sale. A higher number is indicative of stronger demand):</p><ul class="vertical-align-baseline"><li class="vertical-align-baseline">Actual: 2.48X</li><li class="vertical-align-baseline">Six-auction average: 2.57X</li></ul></li><li class="vertical-align-baseline"><p>Dealers (the Dealers provide Liquidity and are a backstop in the event of lower than anticipated domestic and international demand. A high % is indicative of low demand from the normal investors. :</p><ul class="vertical-align-baseline"><li class="vertical-align-baseline">Actual: 13.9% %</li><li class="vertical-align-baseline">Six-auction average: 15.1%</li></ul></li><li class="vertical-align-baseline"><p>Directs (the Directs are a measure of domestic US demand. A higher number than the six month average is indicative of strong domestic demand):</p><ul class="vertical-align-baseline"><li class="vertical-align-baseline">Actual: 21.0%</li><li class="vertical-align-baseline">Six-auction average: 17.1%</li></ul></li><li class="vertical-align-baseline"><p>Indirects (the Indirects are a measure of international demand. In higher number than the six month average is indicative of strong foreign demand for the issue. The vast majority of US debt is sold to foreign investors):</p><ul class="vertical-align-baseline"><li class="vertical-align-baseline">Actual: 65.1%</li><li class="vertical-align-baseline">Six-auction average: 67.8%</li></ul></li></ul><p>AUCTION GRADE: C</p><p>No tail. The WI level and the high yield was right on the screws. The Bid to cover was a bit low. The domestic demand was stronger, but the international demand was a bit weak vs historical average. </p> This article was written by Greg Michalowski at www.forexlive.com.

<p class="text-align-start vertical-align-baseline">The U.S. Treasury will auction off $44 billion of seven-year notes at the top of the hour. The auction will conclude the coupon issuance for the week. The two and five year note options were middle-of-the-road. Yields are higher today after the higher inflation data in the US GDP, but off the highs for the day. Nevertheless, yields are at their highest levels for the year across the curve.</p><p class="text-align-start vertical-align-baseline">Below is a review of the major components from the last 7-year auction along with the six month averages of those components. The auction results will be compared to those components. </p><ul class="text-align-start vertical-align-baseline"><li class="vertical-align-baseline"><p class="vertical-align-baseline">High Yield:</p><ul class="vertical-align-baseline"><li class="vertical-align-baseline">Previous: 4.185%</li><li class="vertical-align-baseline">Six-auction average: 4.298%</li></ul></li><li class="vertical-align-baseline"><p>Tail (the Tail is the difference between the WI level trading just prior to the auction and the auction high yield. A negative tail is indicative of a strong auction):</p><ul class="vertical-align-baseline"><li class="vertical-align-baseline">Previous: -0.8 basis points</li><li class="vertical-align-baseline">Six-auction average: +0.65 basis points</li></ul></li><li class="vertical-align-baseline"><p>Bid-to-Cover (the Bid to Cover is the number of bids from investors versus the supply of notes on sale. A higher number is indicative of stronger demand):</p><ul class="vertical-align-baseline"><li class="vertical-align-baseline">Previous: 2.61X</li><li class="vertical-align-baseline">Six-auction average: 2.57X</li></ul></li><li class="vertical-align-baseline"><p>Dealers (the Dealers provide Liquidity and are a backstop in the event of lower than anticipated domestic and international demand. A high % is indicative of low demand from the normal investors. :</p><ul class="vertical-align-baseline"><li class="vertical-align-baseline">Previous: 12.9%</li><li class="vertical-align-baseline">Six-auction average: 15.1%</li></ul></li><li class="vertical-align-baseline"><p>Directs (the Directs are a measure of domestic US demand. A higher number than the six month average is indicative of strong domestic demand):</p><ul class="vertical-align-baseline"><li class="vertical-align-baseline">Previous: 17.4%</li><li class="vertical-align-baseline">Six-auction average: 17.1%</li></ul></li><li class="vertical-align-baseline"><p>Indirects (the Indirects are a measure of international demand. In higher number than the six month average is indicative of strong foreign demand for the issue. The vast majority of US debt is sold to foreign investors):</p><ul class="vertical-align-baseline"><li class="vertical-align-baseline">Previous: 69.7%</li><li class="vertical-align-baseline">Six-auction average: 67.8%</li></ul></li></ul> This article was written by Greg Michalowski at www.forexlive.com.

<p>European indices are closing lower on the day:</p><ul><li>German DAX, -0.91%</li><li>France CAC, -0.93%</li><li>UK FTSE 100, +0.48%</li><li>Spain's Ibex, -0.40%</li><li>Italy's FTSE MIB, -0.97%</li></ul><p>European yields are also higher:</p><ul><li>German 10 year yield reached a high of 2.647%. That was the highest level going back to November 27. Current yield 2.67%</li><li>France's 10-year yield also moved to its highest level since the end of November. It currently yields 3.127% after reaching a high of 3.149%.</li><li>UK 10-year yields reach its highest level since November 3. It's high-yield today reached 4.396% (currently at 4.37%).</li><li>Italy 10-year reaches its highest level since December 12, 2023. The high-yield Ridge 4.035%. It is currently trading just below 4% at 3.998%.</li></ul><p>As London/European traders look to exit for the day, US stocks remain under pressure:</p><ul><li>Dow Industrial Average down -588.0 points or -1.53% at 37872</li><li>S&amp;P index -60.18 points or -1.19% at 5011</li><li>NASDAQ and that -256.24 points or -1.63% at 15456.34.</li></ul><p>The small-cap Russell 2000 index is down -28.54 points or -1.43% at 1966.85.</p><p>US yields are moving higher. The 2-year yield extended back about the 5% level but is just below that level at 4.991% currently. The U.S. Treasury will auction 7-year notes at 1 PM ET</p><ul><li>2-year yield 4.991%, +5.4 basis points</li><li>5-year yield 4.715%, +5.6 basis points</li><li>10 year yield 4.701%, +4.8 basis points</li><li>30-year yield 4.816%, +3.3 basis points.</li></ul> This article was written by Greg Michalowski at www.forexlive.com.

<p>Israel has increased airstrikes on the Rafah area.</p><p>The price of crude oil is still trading lower on a day at $82.20 that down around $-0.60 on the day..</p><p>Earlier today, Hamas official Abu Zuhri said:</p><ul><li>Hamas will not be swayed by US pressure on issue of Gaza hostages.</li><li>Firm on demand that Israel and the Gaza war as part of any deal to release hostages.</li></ul><p>The wonder is how many hostages are there to release?</p><p>Spot gold is a 1%, and in the process is extending back above its 100 hour moving average at $2335.14</p> This article was written by Greg Michalowski at www.forexlive.com.

<p>The fallout from today's first look at Q1 GDP continues to reverberate with the US dollar stronger and equities weaker because of hot inflation numbers.</p><p>Goldman Sachs highlights that the composition of growth wasn't as soft as the headlines (+1.6% vs +2.4% exp).</p><blockquote>"The contribution from inventories (-0.4pp vs. GS +0.2pp) and foreign trade (-0.9pp vs. -0.4pp) accounted for the bulk of the miss," economists at Goldman write. "Indeed, domestic demand growth proceeded at a strong pace of +2.8% annualized. This reflected a double- digit pace of residential investment growth (+13.9%) and solid growth in consumption (+2.5%) and business fixed investment (+2.9%), the latter reflecting gains in two of the three capex subcategories (equipment +2.1%, intellectual property +5.4%, structures -0.1%)."</blockquote><p>Goldman also highlights that government spending slowed more than they expected with federal spending contributing negatively to GDP.</p><p>However it was the pricing numbers in the PCE report that caught the market most off guard. The WSJ's Nick Timiraos calculates that it implies +0.48% core PCE in tomorrow's report versus the +0.3% consensus. Goldman Sachs doesn't appear to be convinced as they only boosted their core estimate to +0.33% from 0.30%. That would put core at 2.84% y/y, compared to the 2.7% consensus.</p><p>The numbers are due out Friday at 8:30 am ET.</p> This article was written by Adam Button at www.forexlive.com.

<ul><li>Prior month 1.6%</li><li>Pending home sales month on month change +0.4% versus 0.8% expected</li><li>Pending home sales index 78.2 vs 75.6 last month</li><li>Pending home sales +0.1% from March 2023</li></ul> This article was written by Greg Michalowski at www.forexlive.com.

<p>US Treasury Secretary Yellen in a interview with Reuters says:</p><ul><li>GDP data shows straight in consumer investment spending.</li><li>US economy shows robust growth, firing on all cylinders</li><li>There could be revisions to GDP data.</li><li>I still see in underlying core drivers of economic activity considerable strength.</li><li>We are on downward path for inflation.</li><li>Rents have stabilized, but a lot of people still experiencing the upward adjustment to higher levels.</li><li>I have no doubt that housing's contribution to inflation will be coming down this year.</li><li>Not seen that wage pressures are a source of inflation</li><li>Certainly don't see the economy as overheated.</li><li>We've got a good strong US economy, lifting growth all around the world.</li><li>Fed wants to see additional evidence of a sustainable decline in inflation.</li><li>Methods are concerned with high cost-of-living.</li><li>Biden's top priority is to address high cost of healthcare, bring down drug prices.</li><li>Feds first priority is to set monetary policy to be consistent with price stability</li><li>Dollar has been strong, there are divergences with other countries.</li><li>Key factor in dollars valuation is strength in the US economy, level of rates.</li><li>My position has been that currency intervention is acceptable only in very rare and exceptional circumstances.</li><li>We do have to have sustainable fiscal path</li><li>We have enacted some deficit reduction despite divisions in Congress.</li><li>Consumer spending in China is incredibly low.</li><li>China exporting its way to full employment is not acceptable to the rest of the world.</li><li>US experience China shock after China's export surged to the US following its admittance to WTO</li><li>China shock was a huge loss of manufacturing jobs in parts of the US that have not recovered.</li><li>Part of the US have really been left behind, free trade has to be something that benefits people throughout the country.</li><li>We would be prepared to use authority to sanction Chinese banks if necessary.</li></ul><p>With the Fed in the quiet period of their interest-rate decision on May 1, the ex-chair of the Federal Reserve will have to do. However, her hat as change to one of "Independent" Fed official to a political appointment from the Biden administration on</p> This article was written by Greg Michalowski at www.forexlive.com.

<p>Meta-announcer earnings after the close yesterday and warned about higher expenses due to AI buildout investment. Caterpillar revenues missed as well. IBM is also getting hit in premarket trading after they announced their earnings. So some earnings misses. pressured stocks coming into the day. </p><p>The US GDP then added another layer of negativity after it showed lower growth and higher inflation (stagflation). The markets do not like that word. The core PCE data for the current month will be released tomorrow at 8:30 AM ET with expectations of 0.48% MoM now being touted by some analysts.</p><p>A snapshot of the market currently shows:</p><ul><li>Dow Industrial Average average -500 points or -1.31% at 37958</li><li>S&amp;P index -70.83 points or -1.40% at 5000.34</li><li>NASDAQ index -350.0-2.25% at 15258</li></ul><p>The small-cap Russell 2000 is also lower by -25 points or -1.27% at 1970.10</p><p>Looking at some individual stocks:</p><ul><li>IBM -8.6%</li><li>Meta Platforms, -15.3%</li><li>ServiceNow -5.6%</li><li>Amazon -4.8%</li><li>Caterpillar -7.43%</li><li>Microsoft -4.30%</li><li>Alphabet -4.11%</li></ul><p>Microsoft, Alphabet, Intel, T-Mobile, Gilead all report after the close today.</p><p>Looking at the US yields, they are sharply higher with the 2-year yield trading above 5%:</p><ul><li>2-year yield 5.018%, +8.1 basis points</li><li>5-year yield 4.745%, +8.7 basis points</li><li>10-year yield 4.733%, +7.7 basis points</li><li>30-year yield 4.838%, +5.5 basis points</li></ul><p>Crude oil is trading down $0.20 at $82.61.</p><p>Bitcoin is moving lower on risk off (?) flows (I never know). The current price is trading at $63,262. The high-price today was at $64,708. The low price was $62,785.</p> This article was written by Greg Michalowski at www.forexlive.com.

<p>US yields are moving to new session highs with the 2-year yield now back above 5.0% as traders price out rate cuts in 2024 even more. </p><p> The 2-year yield is trading at its highest level since November 14, 2023. The high-yield in 2023 for the two-year note reached 5.259%.</p><p>The 10 year yield is at its highest level since November 1, 2023. The high yield for the 10-year bond in 2023 reached 5.021%.</p><ul><li>2-year yield 5.018%, plus a .1 basis points</li><li>5-year yield 4.745%, plus a .7 basis points</li><li>10 year yield 4.731%, +7.7 voice points</li><li>30-year yield 4.840%, +5.6 basis points</li></ul><p>Stocks continue to get hit with the NASDAQ leading the way:</p><ul><li>Dow Industrial Average average -474.0 or -1.23%</li><li>S&amp;P index -70 points or -1.39%</li><li>NASDAQ index -320 points or -1.82%</li></ul> This article was written by Greg Michalowski at www.forexlive.com.

<p>US stocks have added another like to that outside after US GDP came in weaker but the inflation measures were higher. The core PCE prices for the quarter rose 3.7% higher than the 3.4% estimate. That has investors worried about lower growth/ higher prices. Not good.</p><p>In premarket trading:</p><ul><li>Dow Industrial Average -436 points</li><li>S&amp;P index -56.3 point</li><li>NASDAQ index -249 point</li></ul><p>Looking at the US debt market, yields are higher as well:</p><ul><li>2 year yield 4.987%, +5.0 basis points</li><li>5-year yield 4.710%, +5.1 basis points</li><li>10 year yield 4.697%, plus or .4 basis points</li><li>30-year yield 4.812%, +2.9 basis points</li></ul><p>The US dollar has moved higher as well:</p><ul><li>EURUSD is trading back below the 1.0700 level at 1.0685. 100-day moving average comes at 1.06779 and is the next target on the downside.</li><li>GBPUSD was trading above it 100-day moving average on a 4-hour chart at 1.25149. The current price is trading at 1.2476. The broken 38.2% retracement of the April trading range is below at 1.2455. Earlier today, the price based against that level before moving higher.</li><li>USDJPY is moving back to the upside and trading at 155.64 after reaching a low of 155.30 on the initial reaction to the lower GDP. The bounce back off of the higher inflation, as a person back toward the high for the day near 155.734. That high represents the highest level since 1990.</li></ul><p>The markets are now discounting around 35 basis points of cuts between now and the end of the year. That compares to 42 basis points prior to the data dump today.</p> This article was written by Greg Michalowski at www.forexlive.com.

<ul><li> Prior was 3.88% (revised to +3.74%)</li></ul> This article was written by Adam Button at www.forexlive.com.

<ul><li>Wholesale inventories prior month +0.5% revised to 0.4%. Retail inventory ex air prior month +0.4% revised to +0.3%</li><li><p>Advance Wholesale Inventories -0.4%</p><ul><li>Wholesale inventories were $896.2 billion, a decrease of -0.4% from February 2024.</li><li>Year-over-year, wholesale inventories were down by -2.1% from March 2023.</li><li>The monthly change from January to February 2024 was revised slightly from a 0.5% increase to a 0.4% increase.</li></ul></li><li><p>Advance Retail Inventories ex air -0.1%</p><ul><li>advance retail sales ex air -0.1% versus +.3% last month</li><li>Retail inventories were $788.1 billion, an increase of 0.3% from February 2024.</li><li>Year-over-year, retail inventories were up by 4.4% from March 2023.</li><li>The monthly change from January to February 2024 remained unrevised at a 0.5% increase.</li></ul></li></ul> This article was written by Greg Michalowski at www.forexlive.com.

<ul><li>Prior month $-90.3 billion</li><li><p>International Trade in Goods:</p><ul><li>The international trade deficit increased by $1.5 billion to $91.8 billion.</li><li>Exports decreased by $6.1 billion to $169.2 billion.</li><li>Imports decreased by $4.6 billion to $261.0 billion.</li></ul></li></ul> This article was written by Greg Michalowski at www.forexlive.com.

<ul><li>Weakest since Q1 2023</li><li>Final Q4 <a href="https://www.forexlive.com/news/us-q4-gdp-final-reading-34-vs-32-expected-20240328/" target="_blank" rel="follow">reading </a>was +3.3% annualized (revised to +3.4%)</li><li>Q3 was +4.9% annualized</li></ul><p>Details:</p><ul><li>Consumer spending +2.5% vs +3.3% prior</li><li>Consumer spending on durables -2.1% vs +3.2% prior</li><li>GDP final sales 2.0% vs +3.9% prior</li><li>GDP deflator 3.1% vs 3.0% expected (1.7% prior)</li><li>Core PCE +3.7% vs +3.4% expected (+2.0% prior)</li><li>Business investment +3.2% vs +0.7% prior</li></ul><p>Percentage point changes:</p><ul><li>Net trade pp -0.86 vs +0.32 pp prior </li><li>Inventories -0.37 pp vs -0.47 pp prior</li><li>Govt +0.21pp vs +0.79 pp prior</li></ul><p>The market was pricing in 41.5 bps of Fed rate cuts this year with the July meeting priced roughly 50/50 ahead of the data. The market is focused on the hotter PCE numbers in the report afterwards and priced in a more-hawkish Fed at 36.5 bps. It's notable that tomorrow we get the PCE report and the market is adjusting to price in something a tad hotter.</p><p>As for GDP itself, inventories may help to explain some of the delta as the March wholesale inventory data released alongside this report fell 0.4%. Ultimately though, you take it at face value at 1.6% annualized growth isn't the kind of thing that's going to spur demand-driven inflation. With that, I think the market is too focused on tomorrow's PCE report here and no focused enough on a slowing economy and what it will mean for PCE report in the months beyond.</p><p>When you go through a lot of the details, it's healthcare spending (that's the USA) and non-residential fixed investment (IRA and CHIPS Act). Goods spending subtracted 0.09 pp from GDP.</p> This article was written by Adam Button at www.forexlive.com.

<ul><li>Prior week initial jobless claims 212K</li><li>initial jobless claims 207K vs 215K estimate</li><li>4-week moving average initial jobless claims 213.25K vs. 214.50K last week</li><li>Prior week continuing claims 1.812M revised to 1.796M</li><li>Continuing claims 1.781M vs. 1.805M estimate</li><li>4- week MA of continuing claims1.794M vs 1.802.25 last week</li></ul><p>Continuing claims fell and was revised lower. Initial jobless claims was lower as well indicative of a solid job market</p> This article was written by Greg Michalowski at www.forexlive.com.

<p>It's a busy slate on the US economic calendar today with Q1 GDP kicking things off along with initial jobless claims, advance goods trade balance for March, wholesale inventories and Canadian average weekly earnings.</p><p>The consensus on GDP is 2.4% while the Atlanta Fed tracker was at 2.7%. The high estimate is Goldman Sachs at 3.1% while Julius Baer is at 1.5%. The Q4 'final' reading was 3.3% but that could be revised as well.</p><p>The broader market is in a bad mood and the US dollar is moderate lower. Shares of META are down 16% in the premarket.</p> This article was written by Adam Button at www.forexlive.com.