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• Manufacturing PMI 45.4 vs 44.0 prelim
• Prior 44.9

Key details:

• New orders and employment all decrease.
• Input cost inflation at 28-month high.

Comment:

Rob Dobson, Director at S&P Global Market Intelligence

“The start of the second quarter saw UK manufacturing
buffeted by adverse global market conditions, rising cost
pressures, deteriorating supply chains and increased
trade uncertainty. April saw further contractions in
output, new orders and exports, as well as a slump in
business confidence to its lowest ebb since November
2022.

“Although domestic demand remains soft, overseas
demand is especially weak. New export business fell
at the quickest pace for nearly five years, with demand
from clients in the US, Europe and mainland China all
declining. Surveyed manufacturers noted that US tariff
announcements were having a noticeable impact on
global markets as trading partners adapt to increased
trade volatility.

“Manufacturers are also seeing an increasingly harsh
cost environment, with purchase price inflation hitting
a 28-month high. Alongside general raw material price
increases on global markets, UK producers are also facing
domestic inflationary pressure from increases to National
Insurance, minimum wages and the knock-on impact of
the latter on higher pay grades. These increased costs
are resulting in a combination of higher selling prices
and cutbacks to non-essential spending on staffing
and purchasing, potentially reinforcing the ‘rising costs,
declining demand’ backdrop.”

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• Prior 65.48k; revised to 65.09k
• Net consumer credit £0.9 billion vs £1.2 billion expected
• Prior £1.3 billion

After a decrease of £1.0 billion in February, net borrowing of mortgage debt by UK individuals rebounded sharply in March by by £9.7 billion to £13.0 billion. Meanwhile, net consumer credit is seen falling with the annual growth rate also easing further to 6.1% – down from 6.4% in February.

This article was written by Justin Low at www.forexlive.com.

The stock market bottomed a week after the April 2 announcement when President Trump paused the reciprocal tariffs for 90 days on April 9. That week we reached the peak in trade escalation and from that moment onwards, the risk/reward picture favoured the upside for the de-escalation trend.

The negative data continues to be faded because it’s old news and the market is looking forward to positive resolutions and eventually higher economic activity as the trade uncertainty wanes. This trend is likely to remain intact until we get the details of the first trade deal. If the average tariff rate is 10% or lower, we should see the market continuing higher and eventually make new all-time highs.

Conversely, a rate above 10% would likely be a disappointment and the market could go back pricing in slower growth with the stock market selling off again.

On the daily chart, we can see that the S&P 500 broke above the key resistance level and the major trendline. We got a retest of the broken resistance yesterday when the US GDP triggered some short-term weakness, but eventually we got back to the highs and even made new ones. The next target is the swing level around 5,800 price region.

On the 1 hour chart, we can see the short-term selloff triggered by the US GDP that eventually bottomed around the key 5,480 level where the dip buyers piled in and got some support from good US Core PCE data. Later in the day, we also got the news that the US reached to China for tariff talks which supported further upside. And everything culminated with strong tech earnings.

We now have the 5,596 level as the closest support where the buyers could step in with a defined risk below the level to position for further upside. In case of a break though, the sellers will likely push the price all the way back to the 5,520 level where we will find a minor upward trendline. That will be the next support for the dip-buyers.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

Rate cuts by year-end

• Fed: 100 bps (91% probability of no change at the upcoming meeting)
• ECB: 64 bps (86% probability of rate cut at the upcoming meeting)
• BoE: 96 bps (96% probability of rate cut at the upcoming meeting)
• BoC: 53 bps (55% probability of rate cut at the upcoming meeting)
• RBA: 118 bps (92% probability of rate cut at the upcoming meeting)
• RBNZ: 78 bps (75% probability of rate cut at the upcoming meeting)
• SNB: 33 bps (81% probability of rate cut at the upcoming meeting)

Rate hikes by year-end

• BoJ: 10 bps (97% probability of no change at the upcoming meeting)

We can see that since the last update, the biggest moves in interest rate expectations happened with the Fed and the BoJ. The market increased the easing bets for the Fed following the weaker than expected US Q1 GDP yesterday. and decreased the tightening bets for the BoJ following the dovish policy decision and Governor Ueda’s comments.

These expectations hinge on the trade deals though. If the details of the first trade deal show that the average tariff rate will be at or below 10%, then we can expect the market to reprice the expectations on a more hawkish side. Markets tend to overshoot expectations and that’s what provides traders with mean reversion opportunities.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

In the bigger picture, the pair is seeing a neat double-bottom bounce off the 140.00 mark. And the jump higher today sees the pair now move to its highest in three weeks. It’s largely a yen move here as the BOJ left interest rates unchanged, before governor Ueda came out to deliver some less hawkish (more dovish) messaging.

Ueda said that there’s a lot of uncertainty now stemming from US tariffs and how that is impacting the global outlook. He adds that inflation and wage pressures are now expected to cool and that there will be a delay to reaching their 2% price target. On the latter, Ueda says that it is “not simple” anymore to just talk about hitting the inflation target as such.

Overall, it points to a further pause in the current monetary policy stance. As things stand, that is likely to extend to June at the very least.

This article was written by Justin Low at www.forexlive.com.

London markets will be open for trading though but the other major hubs in Europe are all closed in observance of Labor Day. As such, there will be lighter flows in general but that won’t stop an already busy-looking market to start the new month. The dollar is keeping steadier across the board, keeping with overnight gains. But was it all just month-end?

That comes after a dismal Q1 advance GDP report, owing largely to trade, one which Trump is shifting the blame away from. Equities also staged a neat comeback yesterday, before US futures are seen advancing today after earnings beat from Meta and Microsoft. Tech shares are leading the charge with S&P 500 futures up 0.9% and Nasdaq futures up 1.4% on the day.

Earlier, the BOJ left interest rates unchanged as expected but the yen is down on some minor disappointment. Ueda’s press conference will be up next at 0630 GMT.

Besides that, there’s not much else on the agenda in European trading besides the UK mortgage/credit conditions report for March at 0830 GMT.

This article was written by Justin Low at www.forexlive.com.

• Bank of Japan leaves policy unchanged, as widely expected

–

• Tesla sales fell nearly 60% in April in France
• Tesla board begins quiet search for possible Musk successor – more on this
• Tesla has opened a search for a CEO to succeed Elon Musk

–

• Defense Secretary Pete Hegseth threatens Iran: “You will pay the CONSEQUENCE”
• Australian March exports +7.6% m/m (prior -4.2%) & Imports -2.2% (prior +1.8%)
• Australian Export Q1 price index +2.1% q/q (prior +3.6%) & import +3.3% q/q (prior +0.2%)
• Reminder – Chinese markets are closed for holidays, will reopen on Tuesday next week
• Japan Jibun Bank PMI Manufacturing April 2025 Final 48.7 (prior 48.4, preliminary 48.5)
• “China Is Right Behind Us”: Nvidia CEO Warns AI chip race is neck and neck
• South Korean exports rose in April vs. fall expected
• BNP Paribas on another likely catalyst for a higher EUR/USD
• April UK business confidence improved to its highest level since September 2023
• Australia S&P Global PMI Manufacturing April 2025, final 51.7 (prior 52.1)
• U.S. Senate narrowly rejects bipartisan measure to block Trump tariffs
• Ford has abandoned its project to develop Tesla-like electronic brain
• United States trade representative admits there are no official talks with China on trade
• US Trade Rep Greer says ‘initial’ trade deals are still weeks away
• US equity index have gapped higher upon Globex reopening for evening trade
• US Treasury announces agreement to establish US-Ukraine reconstruction investment fund
• Trump repeats himself, says Fed should cut interest rates
• US & Ukraine have signed the closely watched minerals deal – Bloomberg cite unnamed source
• Forexlive Americas FX news wrap: US GDP dips into negative territory
• The European Union will present new trade proposals to us negotiators next week
• Trade ideas thread – Thursday, 1 May, insightful charts, technical analysis, ideas

The
Bank of Japan kept its short-term interest rate at 0.5%, a widely
exp4ected on hold decision. The BoJ cited growing headwinds from
higher US tariffs. The Bank cut its 2025 and 2026 economic growth
forecasts in its quarterly outlook report. This was a not unexpected
move. A cautious BoJ today.

USD/JPY has risen towards 143.50 with the net dovish statement
and report.

Dialling
back the clock a little to before that focal point for the session.

In
late US time United
States trade representative Greer
admitted
that
there are no official talks with China on trade, He
said also that ‘initial’ trade deals with some other countries
are still weeks away.

Australia
published March trade data, showing a widening surplus on a surge in
exports, up 7.6% m/m on gold (26% rise in non-monetary gold
shipments) and other commodity shipments. Iron ore exports recovered
from weather disruptions.

Exports
to the US jumped. Australia runs a trade deficit with the US but in
March recorded a surplus ahead of tariffs.

Imports
dropped by 2.2% m/m, capital goods showing a notable drop.

Also
from Australia today were export and import price indexes. Consumer
goods import prices rose, which may impact inflation ahead if such
rises continue.

Of
note for those with an interest in equities, the Wall Street Journal
reported that Tesla’s board has begun discussions with search firms
to explore potential successors to CEO Elon Musk. In the reports the
Journal noted that Some directors, including Tesla co-founder JB
Straubel, have been meeting with major investors to reassure them the
company is in good hands. This will be in reference to the damage
Musk has inflicted on the brand through his political and ideological
activities. Data from France released today gave some insight into
this. While new
car registrations in France fell 5.64% in April from a year earlier
the figure for Tesla was an order of magnitude worse, Tesla sales
fell 59.45%.

US
equity indexes rose in ‘overnight’ Globex trade, adding to their
solid bounce during Wednesday RTH trade.

This article was written by Eamonn Sheridan at www.forexlive.com.

NOTE: MY BAD. i HAD THIS WRITTEN BUT DIDN’T REALISE I HAD FORGOTTEN TO PUBLISH THIS EARLIER. APOLOGIES.

—

Australia Trade Balance for March 2025: AUD6900mn surplus

• expected +3200mn, prior +2968mn

Exports +7.6% m/m

• prior -3.6%

Imports -2.2% m/m

• prior +1.6%

Earlier:

• Australian Export Q1 price index +2.1% q/q (prior +3.6%) & import +3.3% q/q (prior +0.2%)

This article was written by Eamonn Sheridan at www.forexlive.com.

The news broke earlier that Tesla is replacing Elon Musk as CEO:

• Tesla board begins quiet search for possible Musk successor – more on this

The data release from France earlier gives an indication to the urgency of this.

While new
car registrations in France fell 5.64% in April from a year earlier the figure for Tesla was an order of magnitude worse:

Tesla
sales fell 59.45%

Year to date figures paint a similar picture:

• French market shrunk by 7.28%
• Tesla’s sales have declined by 43.98%

The picture of Musk’s Nazi salute flashed to screens globally and have done damage to Tesla’s brand, along with other Musk missteps.

This article was written by Eamonn Sheridan at www.forexlive.com.

Defense Secretary Pete Hegseth issued a stern warning to Iran over its support for Yemen’s Houthi rebels, who have been targeting Red Sea shipping in support of Palestinians.

• On social media, Hegseth wrote: “You will pay the CONSEQUENCE at the time and place of our choosing.”

• The warning comes just days before U.S. and Iranian negotiators are set to resume nuclear talks in Rome on Saturday.

• Hegseth also reposted a message from former President Trump, reinforcing that Iran would be held accountable for Houthi attacks.

• Iran maintains that the Houthis act independently, denying direct control.

• The U.S. has already conducted over 1,000 airstrikes against Houthi targets since March.

• To bolster regional military presence, the Pentagon has:

  • Deployed six B-2 bombers to Diego Garcia, strategically located for Middle East operations.

  • Stationed two U.S. aircraft carriers in the region.

  • Shifted air defense systems from Asia to the Middle East.

Oil traders will be watching for escalation in the Middle East. It may be sooner than we think?

This article was written by Eamonn Sheridan at www.forexlive.com.

Australian terms of trade data for Q1 2025

AUD barely changed.

This article was written by Eamonn Sheridan at www.forexlive.com.

China is out for a 5-day holiday, beginning today, Thursday, May 1, 2025.

Markets are closed.

There will be no PBOC CNY reference rate setting for the trading sessions ahead.

Chinese markets reopen on Tuesday, May 6.

This article was written by Eamonn Sheridan at www.forexlive.com.