Commodity Interest Boosts Australian Dollar, Swiss Franc

Last week brought the news in line with expectations, except for the fallout between President Donald Trump and Elon Musk, which rattled the markets late. Commodities rallied, helping commodity currencies like the Australian and Canadian dollar.

Both the Canadian central bank and its European counterpart met the consensus, with the former holding steady while the latter cut rates and signaled it is nearing the end of this fiscal cycle.

Non-farm payroll numbers slightly exceeded expectations on Friday, recording 139,000 added jobs vs. a 130,000 consensus. The unemployment rate remained steady at 4.2%, but it is worth noting that 65,000 jobs were revised down in the data for March, while for April, it was reduced by 30,000.

Bank of Japan Governor Kazuo Ueda stated that the bank is prepared to raise interest rates once it is confident that economic and price growth will reaccelerate.

“If we’re convinced our forecast will materialize, we will adjust the degree of monetary support by raising interest rates,” Ueda said to the parliament.

Despite the BOJ's hawkish stance and Switzerland’s official elimination of inflation and discussion of negative interest rates, the CHF/JPY broke out of the major flag pattern as we anticipated last week, signaling that the market's macro uncertainty drives capital towards the safety that the Swiss franc provides.

The news-light week ahead will feature the latest US inflation data, with a consensus expectation of a 2.5% year-over-year rise.

Key News:

• Wednesday: USD – CPI
• Thursday: GBP – GDP, USD – PPI
• Friday: USD – Prelim UoM Consumer Sentiment, Inflation Expectations

Pairs In Focus

1. GBP AUD

A renewed commodity rally signals a positive near-term outlook for the Australian dollar, which has surpassed a key 2.08400 level against the pound. The weekly candle has printed a clear lower high, signaling waning bullish momentum and a potential turnaround.

GBP/AUD daily chart, Source: TradingView

The nearest key downside level is around 2.07, but if it doesn’t hold, the price could decline as far as 2.04800.

2. CHF JPY

This pair has broken out of its long-forming bullish flag. The support is now around 50 pips below the previous week’s close price, around 175.800.

CHF / JPY daily chart, Source :TradingView

A sound plan would be to wait and see how the price behaves if the pullback occurs, and look for long positioning with the ultimate goal of reaching the previous year’s high at 180. Retail sentiment is nearly 70% short, making this a quality contrarian opportunity.

 Notes:

• AUD NZD: Found support and rebounded after a week of ranging. A daily close above 1.08100 would indicate a potential bullish reversal.
• AUD CAD: Indecisive price movement around the 0.88750 key level. Strong resistance lies at 0.89700.
• AUD CHF: Keeps ranging after a bearish breakout. The price must close below 0.53 for a potential bearish move to occur.
• AUD SGD: Starting to creep up higher, but it is early to say whether it is a genuine trend reversal.
• AUD JPY:  Rebounded higher owing to a materialized weakness in yen. Strong resistance is around 95.200.
• CHF SGD: Failed to close above the 1.56980 level, which coincides with a 38.2 Fibonacci. The downside support is around 1.55270.
• CAD JPY: Breaking out of the range and showing a bullish momentum. The short-term upside potential is around 120 pips to the 107 level.
• EUR JPY: Shows indication of a genuine bullish move. The next strong resistance is 150 pips higher at 166.670.
• EUR NZD: Breaking from the range to the downside. The critical support is at 1.88100.
• GBP NZD: Broke below the key level of 2.25070. The bias has turned bearish, with strong support around 2.22.
• GBP JPY: A bullish base is building, as is the case with many currencies against the yen. A bullish breakout could sweep the December 2024 highs around 199.
• NZD JPY: Broke out higher, and the potential for the upside is nearly 250 pips, with a key level to watch at 89.700.

Disclaimer: Any opinions expressed in this article are not to be considered investment advice and are solely those of the authors. Singapore Forex Club is not responsible for any financial decisions based on this article’s contents. We provide research and promote forex trading in Singapore, and readers may use this data for information and educational purposes only.