Though the Thai Election's Done and Dusted, Political Uncertainty Remains

Political

Summary:

Pita Limjaroenrat's Move Forward Party may have won the Thai general election, but the party still faces several hurdles that threaten Pita's chance at the prime minister's chair, says Associate Professor Jacob Ricks.

There's a Thai proverb - "flee a tiger only to find a crocodile" - that describes a situation in Thai politics in the aftermath of this month's elections aptly. After the progressive anti-junta Move Forward Party's electoral victory on May 14, tigers and crocodiles abound.

In Thailand's second general election since the 2014 coup, Move Forward captured the largest number of parliamentary seats (152) based on unofficial Election Commission numbers, edging out its opposition ally Pheu Thai (141 seats).

The two parties' combined 293 seats dominate the seats won by parties supporting the former junta chief-turned-prime minister General Prayut Chan-o-cha and his ally General Prawit Wongsuwan. Their parties received much weaker support than expected, with only 36 and 40 seats respectively. For fans of Thai democracy, this was a long-overdue win.

On May 18, Pita Limjaroenrat, leader of Move Forward and its sole prime ministerial candidate, announced an agreement between eight parties to form a coalition government encompassing 313 parliamentarians. In most countries, this clear and convincing majority in the 500-seat lower house would provide an obvious mandate for Move Forward to form a government.

But not in Thailand.

The Battle Is Not Over

Under the 2017 Constitution, which was designed by the 2014 coup group to ensure its continued control in determining the country's leadership, both the 500-seat House of Representatives and the 250-seat junta-appointed Senate vote for prime minister - meaning that Pita must assemble an overwhelming 376 votes.

This is a difficult task. Despite winning the largest share of parliamentary seats and initially announcing a coalition in the 2019 election, the Pheu Thai party was unable to form a government.

Instead, Prayut became prime minister after the junta-appointed Election Commission allocated party list seats away from large parties to a series of small parties that supported the coup-maker.

While circumstances are different today, multiple dangers abound for Move Forward, threatening Pita's chance at the prime minister's chair. Before any vote for prime minister occurs, the Election Commission has 60 days to verify the election's official results. During the coming weeks, the Election Commission expects to receive more than 2,000 complaints of potential electoral violations.

If the Election Commission determines electoral rules were broken, new elections could be held in some districts. A shift in seat numbers could reduce or erase Move Forward's narrow lead over Pheu Thai or weaken the coalition.

Additional Hindrance

The Election Commission is also considering a complaint against Pita over ownership of shares in the now-defunct iTV broadcasting corporation, which he inherited from his father. Holding shares in a media company could violate electoral laws, which would mean Pita would be ineligible to hold political office.

A similar charge brought down Thanathorn Juangroongruangkit in 2019, who led the Future Forward party, Move Forward's predecessor.

The Election Commission will likely decide in the coming weeks whether to forward Pita's case to the conservative Constitutional Court, which could result in a conviction and ban from political office. As Move Forward nominated only Pita for the prime minister's seat, this result could dash hopes that the party would be able to head the government.

Pheu Thai, the second-place party which nominated three candidates for prime minister, could potentially step in and lead the coalition, provided it does not run afoul of the Election Commission.

Insufficient Support from The Senate

These considerations aside, obtaining 376 votes in the combined legislature remains elusive. As the Senate was hand-picked by a committee headed by General Prawit, most senators are expected to only support a prime ministerial candidate approved by the former junta chiefs.

While the Move Forward coalition will enjoy a strong majority in the lower house, the party does not have sufficient support to bypass the Senate.

Many senators have expressed opposition to Move Forward's progressive stance on reforming Section 112 of the penal code, or the lese-majeste law. Move Forward's coalition partners have demanded that the party moderate its policy goals, and potential extra-coalition votes are also reportedly contingent on Move Forward abandoning its plans on Section 112.

If Pita is unable to gather sufficient support, the prime ministership could fall into the hands of Pheu Thai - and Thai media has speculated that a Pheu Thai government may be willing to drop Move Forward from its coalition to secure senate support.

If Pita becomes prime minister, he would still face extreme antagonism from conservative sectors of Thai society who are infuriated by Move Forward's commitments to reform the military and repeal Section 112.

At a United Thai Nation rally in Bangkok on May 12, former deputy prime minister Trairong Suwankiri declared to cheers from the crowd that Thailand's true enemies are Thais who don't respect the three institutions of nation, religion and monarchy - a thinly veiled reference to Move Forward.

Accusations that Move Forward is too progressive or a threat to the military and monarchic institutions feed speculation of another coup. Though army chief General Narongpan Jitkaewthae publicly declared there would be no coup prior to the election, Prayut made the exact same promise when he was Army chief in 2014.

Even if Pita successfully survives these threats, it will likely be quite some time before he is able to breathe easily in this political scene.

Source: CNA

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Kevin Du

Cryptocurrency

Reports show that 72% of ethereum liquidity is concentrated in five major crypto exchanges. Digital assets data provider Kaiko published a report on May 29 that showed this figure of ETH liquidity is limited to Binance, Bitfinex, OKX, Coinbase, and Kraken.

FTX Collapse a Prime Reason for Consolidated Ethereum Liquidity

As some of the biggest crypto exchanges in the world, it's unsurprising that the concentration would be high, but analysts are raising eyebrows at the fact that it is to this extent. Other exchange's reserve wallets—which come to 41 in total—account for only 28% of ETH's liquidity.

5 Major Crypto Exchanges Control Lion's Share of Ethereum Liquidity_1

Kaiko states that the liquidity has moved to these exchanges as a result of the FTX collapse. It emphasized that "since the collapse of FTX last year, there has been little good news on the liquidity front for crypto assets."

Kaiko also explained that liquidity is moving away from the United States. The share of market depth in the country is about 40%, which is down from a peak of 54% in May 2022. The data provider believes there may be continued liquidity consolidation in a few exchanges for all assets and not just ETH.

Stablecoins Showing Resilience Amid US Debt Ceiling Drama

Kaiko also briefly went over the state of stablecoins in the crypto market. It noted that the two largest stablecoins, USDT and USDC, closed the week trading at a slight premium.

5 Major Crypto Exchanges Control Lion's Share of Ethereum Liquidity_2

Of particular note is the fact that there was little volatility with respect to these stablecoins. However, there was one occasion where stablecoins swung in price when Binance halted BTC withdrawals in May.

Kaiko states that the discussions about the U.S. debt ceiling negotiations, which are nearing resolution, have not affected stablecoin prices. It suggests that stablecoins have reached a state of safety.

Ethereum Balance on Exchanges Reaches 5-Year Low

Meanwhile, balances of ether on exchanges have hit a five-year low, which usually suggests that investors have confidence in the asset's growth. There is about 17.882 million ETH on centralized exchanges, which amounts to 14% of the total supply.

At the same time, staked ETH deposits also have hit a new all-time high. Ethereum's Shapella upgrade allowed the unstaking of ETH and helped boost adoption and prices. The cryptocurrency is currently trading at around $1,900.

Source: Be in Crypto

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Warren Takunda

Traders' Opinions

In a surprising turn of events, Bitcoin (BTC) and the wider cryptocurrency market experienced a notable surge over the weekend. Bitcoin's price rose by 2%, accompanied by a sea of green across various digital assets. This rally is widely attributed to the recent agreement in principle between United States President Joe Biden and Republican Kevin McCarthy to raise the federal government's multi-trillion dollar debt ceiling. Bitcoin Capital Inflow Surges as US President Urges Swift Passage of Debt Ceiling Deal_1

Bitcoin Capital Inflow Surges as US President Urges Swift Passage of Debt Ceiling Deal_1

The urgency to address the debt ceiling issue stems from growing concerns of a potential default by early June. To avert this looming crisis, President Biden and Republican leader Kevin McCarthy engaged in a 90-minute phone call just four days ahead of the end of May. The discussions led to a tentative agreement, as reported by Reuters and confirmed by two close sources familiar with the matter.

President Biden emphasized that the agreement reached would prevent the United States from plunging into a "catastrophic default." He further expressed his intention to swiftly send the deal to both the US House and Senate for immediate consideration. Urging both chambers to "pass the agreement right away," the President stressed the critical importance of avoiding a default situation.

House Speaker and Republican representative Kevin McCarthy took to Twitter to confirm the agreement while also placing blame on President Biden for "wasted time and refusing to negotiate for months." The tweet reflected the underlying tensions that have surrounded the debt ceiling debate, with both parties pointing fingers at each other regarding delays in reaching a resolution.

The impact of this political agreement on Bitcoin and the broader crypto market is notable. The cryptocurrency space has often positioned itself as an alternative investment option during times of economic uncertainty. As concerns over the debt ceiling crisis grew, investors sought refuge in digital assets, with Bitcoin being the prime beneficiary of this sentiment.

The capital inflow into Bitcoin following the debt ceiling agreement showcases the increasing recognition of cryptocurrencies as a hedge against traditional financial risks. Investors view Bitcoin as a potential safe haven asset that can provide stability and protection during times of economic turbulence. As a result, the weekend rally in Bitcoin's price serves as a strong indication of market confidence, bolstered by the resolution of the debt ceiling issue.

While it remains to be seen how the agreement will progress through the US House and Senate, the cryptocurrency market has already responded positively. Market participants are closely monitoring the developments surrounding the debt ceiling deal, as its passage would not only avert a potential default but also provide a sense of stability and assurance to investors.

The current state of affairs serves as a reminder of the interconnectedness between the political landscape and the cryptocurrency market. Decisions and agreements made by political leaders can have profound impacts on the financial markets, including cryptocurrencies. As the debt ceiling agreement progresses, market observers will continue to closely monitor the ensuing implications for Bitcoin and the wider crypto ecosystem.

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Devin

Bond

Once approved, the debt limit deal paves the way to a liquid crunch

The deal between President Biden and House leader McCarthy amounts to the removal of a tail risk for financial markets, that of a U.S. default. Even if this was a tiny probability event to begin with, it'll allow markets to focus on the more important debate: whether the Fed is indeed done with its hiking cycle. The budget deal, which lifts the debt limit for two years and caps some categories of government spending, still needs to be approved by the House tomorrow. The outcome of the vote is uncertain but the likely opposition by some Republicans means Democrat votes will be key. We expect the run-up to the vote to see Treasury Yields gradually climb higher if more lawmakers come out in favour of the deal.

Beyond tomorrow, U.S. rates will quickly look past the deal and turn their attention to the Treasury's task of rebuilding its cash buffer at the Fed. Two aspects matter here. On the liquidity front, money markets can expect a $500bn drain over the coming months as more debt is issued. In a context of $95bn/month Quantitative Tightening (QT) and of likely tightening of at least some banks' funding conditions, this should amount to an additional drag on financial conditions for the broader economy. This should ultimately draw a line under the U.S. Treasury selloff but, should the new borrowing come with an increase in maturity, some of that support may be weakened.

The case for a June hike has strengthened after Friday's higher than expected core PCE print and Treasuries are set to trade softly into Friday's jobs report as recent prints have demonstrated the labour market's resilience. 4% yield for 10Y now seems a more achievable level.

European rates back the hawkish ECB view but upside is more limited than in the U.S.

In Europe, this week's inflation data, starting today with a print from Spain, will play a major role in how European rates trade into the June European Central Bank (ECB) meeting. To be sure, a pick-up in Fed hike expectations for June or July has also opened some upside for EUR rates but the domestic swap curve already discounts a path for ECB policy rates that is consistent with its communication. This comes against a backdrop of soggy hard economic data, and against a softening of sentiment indicators, such as last week's German Ifo which should also prevent European markets from getting too upbeat.

The most likely outcome to this week's inflation releases, still unacceptably high core price dynamics, will lend a helping hand to ECB officials pushing for a hawkish line. Warnings that hikes may have to continue until September will stand a better chance of pushing longer term rates higher even if a subdued economic outlook, and growing doubts about the strength of China's post Covid recovery, should prevent European rates from rising as quickly as their U.S. peers in the coming weeks. Wider USD-EUR rates differentials should only be a temporary development, however, and one resulting from a rise in global rates. Market participants who, like us, expect lower rates into year-end, should also consider the possibility of U.S. rates falling faster than their European peers, perhaps to sub-100bp levels for 10Y Treasury-Bund spreads.

This is all the more true since European markets have to contend with another dollop of political uncertainty in the form of early Spanish general elections on 23 July. The prime minister called for a vote after local elections defeat at the weekend and the opposition party PP is on the front foot, although it would likely rely on a coalition with another party due to the fragmented nature of the Spanish political landscape. Spain's still wide budget deficit (the European commission forecasts 4.1% of GDP this year and 3.3% next) mean a period of uncertainty is an unwelcome development and could lead to underperformance of Spanish government bonds vs peers such as Portugal and Italy.

Today's events and market view

Spain kicks off this week's inflation releases. This will come on top of Eurozone monetary aggregate data and the European Commission's confidence indicators for the month of May. One theme in European macro releases has been the softening of survey-based data, such as Germany's Ifo (see above).

U.S. releases feature house prices, the conference board's consumer confidence, and the Dallas Fed manufacturing activity index.

Bond supply will take the form of Italian 5Y, 10Y fixed rate bonds, as well as 5Y floating rate bonds.

Source: ING

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Warren Takunda

Economic

The World's Most Valuable Chipmaker, Nvidia, Continues to Push the Boundaries of AI Innovation

In a bid to capitalize on its recent astounding $184 billion rally and maintain its position as the world's most valuable chipmaker, Nvidia has unveiled a range of groundbreaking AI products. With an unwavering commitment to pushing the boundaries of technological advancement, Nvidia aims to revolutionize industries ranging from gaming to data centers. This article explores Nvidia's latest offerings and their potential impact on the world of AI and high-performance computing.

Expanding AI Processor Portfolio

Nvidia is renowned for its powerful AI processors that cater to diverse computing needs. The company's AI processor lineup includes the A100, Orin, and Grace. The A100, a GPU-derived chip designed to accelerate deep-learning applications, works seamlessly with Intel Xeon processors, enabling enhanced performance and efficiency. The Orin, on the other hand, is a system-on-chip tailored specifically for autonomous cars and robotics, promising significant advancements in these fields. Lastly, the Grace data center CPU, built with Arm-based cores, delivers an impressive tenfold increase in performance compared to existing servers when handling complex AI and high-performance computing workloads.

Introducing the DGX GH200 AI Supercomputer

A highlight of Nvidia's recent product announcements is the DGX GH200 AI supercomputer, a game-changer in the realm of AI computation. Powered by the NVIDIA GH200 Grace Hopper Superchips and the NVIDIA NVLink Switch System, this supercomputer offers an astounding 144 terabytes (TB) of shared memory, enabling the handling of terabyte-class models for recommender systems, generative AI, and graph analytics. With its linear scalability, the DGX GH200 ensures compatibility with massive AI models, ushering in a new era of AI research and development. Combining 256 GH200 superchips into a singular GPU, this supercomputer boasts an incredible 1 exaflop of performance, setting a new benchmark in processing power.

Revolutionizing Networking with the MGX System

In addition to the DGX GH200, Nvidia has introduced the MGX system, a networking technology that facilitates high-speed data transfers between multiple DGX GH200 systems. This cutting-edge system enables seamless scalability, allowing up to 64 DGX GH200 systems to be interconnected. The result is a staggering 64 exaflops of combined performance and a shared memory capacity of 9.2 petabytes. With the MGX system, Nvidia empowers organizations to harness the full potential of AI by providing unmatched computational power and data transfer capabilities.

Driving Realism in Video Games

Nvidia's ambitions go beyond data centers and supercomputers. The company aims to make video game characters more realistic through the application of AI. By leveraging their expertise in AI processors, Nvidia seeks to push the boundaries of graphics technology, enabling game developers to create immersive virtual worlds with lifelike characters. This undertaking is expected to further solidify Nvidia's dominant position in the gaming industry and provide gamers with unparalleled experiences.

Nvidia's relentless pursuit of AI innovation has culminated in the unveiling of a series of remarkable products, showcasing their commitment to transforming industries and driving technological progress. From the DGX GH200 AI supercomputer, with its mind-boggling processing power and memory capacity, to the MGX system, revolutionizing data transfer capabilities, Nvidia is at the forefront of the chipmaking industry. With their comprehensive range of AI processors and their aspiration to revolutionize video games, Nvidia continues to redefine what is possible in the realm of artificial intelligence.

To stay updated on all economic events of today, please check out our Economic calendar

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Samantha Luan

Forex

USD: Progress on debt deal allows markets to focus on another Fed hike

After long weekends in many parts of the world, FX markets are returning to some progress on the U.S. debt ceiling. President Joe Biden and House Speaker Kevin McCarthy have reached a two-year deal. That deal will be assessed by the House Rules Committee today and, if approved, will likely go to a vote in the House tomorrow. Both Democrat and Republican leaders feel they have the votes to get the deal through Congress – although at times like these, there may be a few holdout politicians who like their day in the sun.

Progress on the debt deal has seen some declines in yields for U.S. Treasury Bills maturing in June, although it has had little impact on FX markets. We said last week that FX markets had already been trading in a de-stressed fashion on the assumption a deal would go through. Assuming there are no hiccups in the deal's passage, FX markets can return to the most pressing issue of sticky inflation and what central bankers plan to do about it.

Last Friday's U.S. data set made the firm case for one additional 25bp Fed hike – now fully priced by the time of the 26 July meeting. Money markets price a 63% chance of that hike coming earlier at the 14 June meeting – a meeting which will likely see the Fed have to raise its inflation forecasts. The default view, therefore, seems to be that the dollar can hold its recent gains at least into that June meeting. That is unless U.S. price and activity data start to fall away sharply.

On that front, this week sees U.S. JOLTS job opening data (Wed), ADP (Thurs.), and the May NFP (Friday). Barring any major downside miss in these releases, it looks like the market will support another 25bp hike from the Fed, continued inversion in the U.S. yield curve, and a strong/stronger dollar.

DXY looks comfortable above 104.00 and could extend recent gains to 104.65 or even 105.30 this week.

EUR: Can China come to the euro's rescue?

EUR/USD has quietly slipped below support at 1.0700/1.0720 and may be gently making its way to the March lows at 1.0515/0530. As we mentioned last week, we think EUR/USD is relatively cheap given the massive reversal in energy prices over the last year and that, in time, the 1.05/1.07 area will come to be seen as a summer base. Helping that proposition would be some kind of recovery in China. The release of the China Beige Book has shown some recovery in the China manufacturing sector in May. Official May Chinese PMI figures are released later this week. A bounceback here, helping to reverse the recent run-up in USD/CNH, could provide the euro with some support.

For today, the eurozone focus will be on the release of industrial and consumer confidence figures for May. Consensus expects some further deterioration here and if so this should keep EUR/USD on the soft side. We will also hear from a raft of ECB speakers today. Expect more hawkish rhetoric especially in advance of the May eurozone CPI data on Thursday. Consensus expects core eurozone CPI to edge lower to 5.5% year-on-year in May. Another upside surprise here – feeding the sticky inflation narrative – warns that investors could return to pricing a 4.00% ECB deposit rate.

GBP: Hard to fight the aggressive BoE pricing

Money markets now price 100bp of Bank of England tightening by November. This would put the Bank Rate at 5.50%. Our team's view is that such an amount of tightening is highly unlikely and that the usually reticent Bank of England may try and verbally push back against it. However, UK data is doing the most of the talking and it will probably be the jobs/wages data (13 June) or the May CPI data (21 June) which will be the key determinant on whether the market reins in aggressive tightening expectations.

Until then, EUR/GBP can probably press support at 0.8650, below which 0.8600/8610 is the next target. GBP/USD can better resist the stronger dollar. Support around the 1.2275/2300 area may hold temporarily.

CEE: U.S. dollar remains the region's nightmare

The second print of first quarter GDP in the Czech Republic will be published today. Besides the GDP breakdown, we will also see the wage bill, which has been mentioned several times by the Czech National Bank as a potential reason for a rate hike in June. Tomorrow, inflation for May and the details of first quarter GDP in Poland will be published. We expect headline inflation to fall from 14.7% to 13.0% YoY, below market expectations, mainly due to fuel and energy prices. On Thursday, we will see PMI numbers across the region, where we expect a slight deterioration in sentiment across the board. Later, we will see state budget data in the Czech Republic, which posted its worst-ever result in April, raising questions about additional government bond issuance. The European Parliament is also scheduled to hold a session on Thursday, which is expected to cover the Hungarian EU presidency and is also likely to touch on the topic of EU money and the rule of law.

The FX market, as usual in recent weeks, will be dominated by the global story and the U.S. dollar. So, even this week, CEE FX will not be in a bed of roses. We still see the Polish zloty as the most vulnerable, which despite some weakening in the past week remains near record highs. The market has built up a significant long position in PLN over the past two months. Plus, we may hear more election noise. Moreover, the significant fall in inflation should push the interest rate differential lower. Thus, we see EUR/PLN around 4.540.

The Czech koruna remains the most sensitive currency in the region against the U.S. dollar, which should be the main driver this week. On the other hand, the reversal in the rate differential has been indicating a reversal in EUR/CZK for a few days now. Thus, at least a stable EUR/USD could allow the koruna to move toward 23.600. The Hungarian forint can expect a headline attack from the European Parliament this week, and given the current strong levels, we could easily see weaker levels again closer to 375 EUR/HUF. However, we believe the market will use any spike to build long positions in HUF again.

Source: ING

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Samantha Luan

Forex

Trading has remained muted as major markets recuperate from a lengthy weekend. Investors are not reacting dramatically to the agreement regarding U.S. debt ceiling. Instead, they are casting a cautious eye towards Congress, awaiting indications of how the deal will be received. Compounding the apprehension, a slew of significant economic data is slated for release in the latter half of this week. Reports such as Eurozone CPI flash and U.S. non-farm payrolls are bound to generate increasing market volatility as the week progresses.

In the midst of these developments, the currency markets are seeing Yen emerge as one of the stronger performers this week, alongside the Swiss Franc. However, it's important to note that Yen's strength seems to be a result of digesting the deep losses incurred earlier in the month. This suggests a resumption of the sell-off could occur at any time, contingent on the broader trends in equity and bond markets.

Meanwhile, commodity currencies are bearing the brunt of the downturn, led by Australian Dollar, which is succumbing to the weight of faltering Chinese equities. Dollar and Euro are straddling a middle ground, showing a mixed performance.

Technically, AUD/CAD is now extending recent down trend from 0.9545, with break of last week's low. Near term outlook will stay bearish as long as 0.8941 support turned resistance holds. Next target is 61.8% projection of 0.9545 to 0.8941 from 0.9104 at 0.8731. A simultaneous focus is when AUD/USD would break through 0.6489 temporary low to resume the corresponding down trend from 0.7156 too. Markets on Standby; Aussie Down, Yen Recovers, as Traders Brace for Key Economic Data_1

Markets on Standby; Aussie Down, Yen Recovers, as Traders Brace for Key Economic Data_1

In Asia, at the time of writing, Nikkei is up 0.42%. Hong Kong HSI is down -0.75%. China Shanghai SSE is down -0.92%. Singapore Strait Times is up 0.04%. Japan 10-year JGB yield is down -0.001 at 0.435.

ECB De Cos: Closer to end of tightening, prolonged restrictive rates necessary

ECB Governing Council member, Pablo Hernandez de Cos, expressed his thoughts on the direction of ECB's monetary policy during a speech yesterday.

In his remarks, de Cos stated, "We think that we still have some way to go in tightening monetary policy, although we also think that we are closer to the end." This suggests a continued commitment to ECB's policy of monetary tightening, albeit with the recognition that this phase might be nearing its completion.

Furthermore, de Cos underscored the necessity of maintaining restrictive interest rates over a substantial duration. The intention behind this strategy, he explained, is to ensure ECB's objectives are achieved in a consistent manner over time.

BoJ Ueda: Will patiently continue monetary easing

In today's parliamentary address, BoJ Kazuo Ueda laid out the central bank's approach to an evolving inflation scenario in Japan. Governor Ueda announced, "We expect inflation to quite clearly slow below 2%" as we move further into the current fiscal year.

Despite this imminent deceleration, BoJ is forecasting a subsequent rebound, albeit with a degree of caution. Ueda added, "Inflation is likely to rebound thereafter … though there is high uncertainty" about the future direction of inflation rates.

In response to these trends, BoJ plans to remain patient and maintain its current approach to monetary policy. Ueda affirmed the central bank's commitment to its strategy, stating, "(We) will patiently continue monetary easing as there's still distance to achievement of sustainable and stable 2% price hikes together with continued rises in wages."

U.S. NFP and ISM; Eurozone CPI and ECB accounts

As speculation intensifies around the possibility of a Fed rate hike in June, all eyes will be on the forthcoming non-farm payroll data. The report could be a significant determining factor for both traders and Fed officials, as it provides insight into the state of the labor market and potential need for further monetary tightening. Aspects such as headline job growth, unemployment rate, and wage growth will be scrutinized closely. Moreover, the ISM Manufacturing Index, which showcases the ongoing challenges in the sector, is also anticipated with interest.

Turning to the Eurozone, two key events are expected to make headlines – CPI flash estimate and ECB meeting accounts. ECB has been explicit about its intention to continue tightening its monetary policy, with the apex expected to be reached by the summer. However, uncertainty prevails over the specific month and rate of this peak, largely depending on the pace at which core inflation decelerates.

Elsewhere, much attention will also be on Australia CPI and China PMIs.

Here are some highlights for the week:

· Tuesday: New Zealand building permit; Australia building approvals; Japan unemployment rate; Swiss GDP, KOF; Eurozone M3 money supply; Canada current account; U.S. house price index, consumer confidence.

· Wednesday: Japan industrial production, retail sales, consumer confidence, housing starts; New Zealand ANZ business confidence; Australia CPI. China PMIs; Germany import prices, unemployment, CPI flash; Swiss retail sales, Credit Suisse economic expectations; France GDP, consumer spending; Canada GDP; U.S. Chicago PMI, Fed’s Beige Book.

· Thursday: Japan capital spending, PMI manufacturing final; Australia private capital expenditure, retail sales; China Caixin PMI manufacturing; Germany retail sales; Swiss trade balance, PMI manufacturing; Eurozone PMI manufacturing final, CPI flash, unemployment rate, ECB accounts; UK PMI manufacturing final, M4 money supply, mortgage approvals; U.S. ADP employment, jobless claims, ISM manufacturing.

· Friday: New Zealand terms of trade; Japan monetary base; U.S. non-farm payrolls.

AUD/USD Daily Report

Intraday bias in AUD/USD remains neutral first as consolidation from 0.6489 temporary low is extending. Upside of recovery should be limited by 0.6604 support turned resistance to bring another decline. Break of 0.6489 will resuming larger down trend, and target 61.8% projection of 0.7156 to 0.6563 from 0.6817 at 0.6451. Firm break there will target 100% projection at 0.6224. Markets on Standby; Aussie Down, Yen Recovers, as Traders Brace for Key Economic Data_2

Markets on Standby; Aussie Down, Yen Recovers, as Traders Brace for Key Economic Data_2

In the bigger picture, rejection by 55 W EMA (now at 0.6822) keeps medium term outlook bearish. Current development suggests that down trend from 0.8006 (2021 high) is possibly still in progress. Retest of 0.6169 (2022 low) should be seen next. Firm break there will confirm down trend resumption. For now, this will remain the favored case as long as 0.6817 resistance holds.