EUROPEAN SESSIONIn the European session, the main highlight was the UK jobs report. The data showed a meaningful drop in the unemployment rate, lower than expected job gains and an easing in wage growth (although the data was higher than forecasts). All in all, the data isn't urging for rate cuts, so the BoE is more likely to remain neutral. Ahead of the data, the market was pricing in just an 8% chance of a rate hike at the upcoming meeting with a total of 30 bps of tightening expected in 2026. Looking ahead, we will also get the German ZEW which is expected to drop further to -5 vs -0.5 prior. The data isn't going to change anything for the ECB though, so the market reaction will likely be muted. AMERICAN SESSIONIn the American session, we have the US Retail Sales data for March and Fed Chair Nominee Warsh confirmation hearing. The Retail Sales M/M is expected at 1.4% vs 0.6% prior, while the Ex-Autos M/M is seen at 1.4% vs 0.5% prior. The Control Group M/M is expected at 0.2% vs 0.5% prior. Retail Sales is a market-moving release but the reaction is usually faded due to the volatile nature of the data. The data isn't going to change anything for the Fed, so the market reaction will likely be muted. We also have Fed Chair Nominee Warsh confirmation hearing. This is likely to be a non-event as it won't have any impact on current growth, inflation or interest rates expectations which are mainly driven by the US-Iran headlines at the moment, and will likely continue to do so until the war is officially over. Warsh might not get confirmed today as Senator Tillis has vowed to block Fed nominees until the DoJ investigation into Powell is resolved or dropped. If Warsh isn't confirmed by May 15, 2026, Powell has already explicitly stated that he intends to remain as Chair pro-tempore until a nomination is confirmed.Having said that, the market focus remains solely on the US-Iran negotiations. Talks are expected to start on Wednesday in Islamabad. Trump has already shifted the ceasefire deadline from today to tomorrow at midnight allowing for an extra 24 hours of talks before he chooses whether make good on his threat to blow up Iranian bridges and power plants. He's been repeating that it was “highly unlikely” that he would extend the deadline further, but everyone has been betting on an extension given his track record.CENTRAL BANK SPEAKERS06:30 GMT/02:30 ET - ECB's Nagel (neutral - voter)07:00 GMT/03:00 ET - ECB's de Guindos (neutral - voter)07:30 GMT/03:30 ET - ECB's Kocher (neutral - voter)08:00 GMT/04:00 ET - ECB's Rehn (neutral - voter)14:00 GMT/10:00 ET - Fed Chair Nominee Warsh confirmation hearing16:15 GMT/12:15 ET - SNB's Tschudin (neutral - voter)18:30 GMT/14:30 ET - Fed's Waller (dovish - voter) This article was written by Giuseppe Dellamotta at investinglive.com.

Prior 5.2%Employment change 25k vs 35k expectedPrior 84kAverage weekly earnings +3.8% vs +3.6% 3m/y expectedPrior +3.9%; revised to +4.1%Average weekly earnings (ex bonus) +3.6% vs +3.5% 3m/y expectedPrior +3.8%March payrolls change -11kPrior 20k; revised to -6kMore to come.. This article was written by Justin Low at investinglive.com.

There are just a couple of expiries to take note of on the day, as highlighted in bold below.They are both for EUR/USD at the 1.1760 and 1.1800 levels. The technical snapshot for the currency pair right now is that price action is settling between some key near-term levels. The floor is set out by the 200-hour moving average, seen at 1.1752 currently. Meanwhile, the daily ceiling is at the 1.1800 mark.As such, the expiries above may play a role in keeping that technical cage for EUR/USD price action, barring any headline surprises in the session ahead.As mentioned time and time again for many weeks now, the main driver of trading sentiment remains the US-Iran conflict and its impact on the dollar and broader risk mood in particular. That means headline risks are paramount and will be the biggest influence on price action, no matter what the expiry size or levels might dictate.So, just keep that in mind when viewing the expiries board and how to take that into consideration when studying price action.If we are to see the cautious optimism hold and a steadier tone, the technical cage and the expiries above may help to keep things more limited in European trading later. But on any headline shocks or surprises, that will be the bigger factor in play to move prices no matter what - especially on a week like this one.For more information on how to use this data, you may refer to this post here. This article was written by Justin Low at investinglive.com.

With the amount of headlines crossing, the misinformation and disinformation, I'm not sure we managed to gather all too much yesterday. The bottom line is that Iran has returned to maintaining a de facto closure of the Strait of Hormuz since the weekend. And after, Tehran officials are maintaining a hard line in their negotiating position ahead of any talks. It looks to be the typical grandstanding before the next round of negotiations though.As for the US camp, president Trump continues to talk up hopes for a deal and continues to proclaim that "I am winning this war by a lot". He even went as far as saying that the deal that will be struck will be far better than the JCPOA before this. So, that's how confident he is that something will be done. And for now, markets are continuing to feed off that for the most part.After nudging up yesterday, oil prices are sitting back down today with Brent crude lower by 0.7% to $94.82 while WTI crude is down 1.0% to $86.50 currently. Meanwhile, the US dollar continues to be rather constricted amid a lack of conviction and the mixed geopolitical messages. As for equities, S&P 500 futures are up 0.2% after a mild drop of the same magnitude to start the new week overnight.All in all, the broader market reaction continues to signal that things are not that bad. And come what may, traders and investors are expecting a positive outcome sooner rather than later.As a reminder, the initial ceasefire agreement will expire tomorrow. However, another round of talks is poised to take place in Islamabad in the coming two days. I would expect the ceasefire to be extended as such, with both sides still feeling each other out in trying to fit the pieces for a potential deal.While risk trades might warm to the idea that a ceasefire extension is a good thing, let's be reminded that this just means a further prolonging of the closure of the Strait of Hormuz. This was an issue that was supposed to be resolved in "four to five weeks", as per Trump's initial timeline.A further two weeks extension will mean that the crucial waterway will stay closed for ten weeks. And with each passing day, the toll that is paid by every day consumers and businesses will continue to stack up. This article was written by Justin Low at investinglive.com.

Trump tweeting, is he laying the ground work for a deal not involving getting the dust?Operation Midnight Hammer was a complete and total obliteration of nuclear dust sites in Iran Digging nuclear dust sites in Iran out will be a long and difficult process This article was written by Eamonn Sheridan at investinglive.com.

Westpac sees US dollar weakening as markets look through energy shock and tensionsRecapping - NZD rises after CPI beat as markets price higher odds of May RBNZ rate hikeJapan fin min says closely monitoring financial markets, will take measure if neededChina shows resilience to energy shock but weak demand limits growth outlook, Fitch saysVance heads to Islamabad as Iran gets Supreme Leader approval for talks before deadlinePBOC sets USD/ CNY central rate at 6.8594 (vs. estimate at 6.8112)Bank of Korea flags oil shock risks to inflation and growth, signals cautionChina signal push to upgrade Switzerland FTA, expanding trade to services, digital sectorsBOJ survey shows flat loan demand, highlighting fragile Japan growth and cautious outlookBOJ likely to hold rates in April but signal readiness to hike as inflation risks riseNZ CPI holds at 3.1% as electricity and petrol drive inflation above RBNZ target bandNew Zealand Q1 2026 inflation: CPI q/q 0.9% (expected 0.8%) CPI 3.1% y/y (expected 2.9%)NZ business confidence slumps as Hormuz disruptions weigh on outlook and demandFed nominee Kevin Warsh says central bank independence depends on discipline, not politicsIEA calls for Iraq-Turkey pipeline to bypass Hormuz and boost Europe’s energy securityIran's top negotiator says does not accept negotiations under threatsTrump invokes Defense Production Act to boost US oil supply and infrastructure capacityPakistan may announce US-Iran ceasefire extension of 2 weeksApple's Tim Cook to become Exec. Chairman. New CEO is John Ternus.investingLive Americas market news wrap: The market stays constructive on peaceAt a glance:Iran signals mixed messaging: rejects talks under pressure but approves negotiators (Axios) US–Iran talks set for Islamabad as ceasefire deadline approaches White House says deal “close,” but Trump retains military options Oil steady, USD edges higher on geopolitical uncertainty NZ CPI beats, lifting rate hike expectations and supporting NZD NZ business confidence weakens sharply despite firm inflation backdrop Trump invokes Defense Production Act to boost US energy capacity South Korea’s KOSPI hits record highGeopolitical headlines dominated, with mixed signals out of Iran complicating the outlook for negotiations. Iranian Parliament Speaker Mohammad Bagher Ghalibaf said Tehran would not engage in talks while the US blockade remains in place, rejecting negotiations conducted under pressure and accusing Washington of turning diplomacy into a “table of surrender.”However, sentiment shifted later after Axios reported that Iranian negotiators had received approval from the Supreme Leader to attend talks in Pakistan, though there has been no official confirmation from Tehran.The diplomatic push continues to build, with US Vice President JD Vance expected to travel to Islamabad for negotiations. Pakistani media suggest a potential deal could be reached as soon as Wednesday, while White House Press Secretary Karoline Leavitt said the US has “never been closer” to an agreement, though Donald Trump still retains options if talks fail.Market reaction was relatively contained. Oil prices were little changed, while the US dollar edged modestly higher across most major FX, reflecting cautious positioning into the ceasefire deadline.In New Zealand, inflation data surprised to the upside, with Q1 CPI rising 0.9% q/q and 3.1% y/y, keeping inflation above the Reserve Bank of New Zealand’s target band. Non-tradables inflation remained firm, reinforcing domestic price pressures and increasing the likelihood of a near-term rate hike. Markets are now pricing close to three hikes this year.However, business confidence deteriorated sharply in Q1, highlighting the growing drag from geopolitical uncertainty and higher energy costs. The divergence between firm inflation and weakening activity underscores a challenging policy backdrop. The NZD initially jumped on the data before trimming gains, though it remains stronger against the AUD.In the US, Trump invoked the Defense Production Act to channel federal support into energy production and infrastructure, including oil, LNG, coal and grid capacity, underscoring a strategic push to boost domestic supply.Elsewhere, South Korea’s KOSPI hit a record high, while attention now turns to Trump’s scheduled interview on CNBC’s Squawk Box at 08:30 ET (12:30 GMT) on Tuesday, April 21, 2026. This article was written by Eamonn Sheridan at investinglive.com.

Westpac sees the US dollar weakening as markets look through Middle East risks, with improving trade flows and global growth expected to support EUR, GBP and emerging market currencies.Summary:USD struggling to rally despite Middle East tensions Markets pricing gradual normalisation in shipping flows Westpac sees sustained USD downtrend ahead Euro, sterling, yen and CAD expected to strengthen RMB resilient, supported by energy access and manufacturing Emerging markets seen benefiting from global growth shiftThe US dollar’s recent inability to rally despite heightened geopolitical tensions suggests markets may already be looking through the worst of the Middle East crisis, according to analysis from Westpac. Westpac notes that even as tensions escalated, including disruptions to shipping and direct conflict risks, the dollar has struggled to gain sustained upward momentum. Instead, it has drifted lower against a broad range of developed and emerging market currencies, particularly as expectations build for a gradual normalisation in global trade flows.The bank argues that markets are increasingly pricing in a “slow but steady” resumption of shipping through the Strait of Hormuz over the coming months. Combined with efforts by global policymakers to stabilise supply chains, this has helped ease some of the initial risk premium embedded in the dollar.Against this backdrop, Westpac expects a broader weakening trend in the greenback over the medium term. Its forecasts show the US dollar index (DXY) declining from current levels near 98 toward the mid-90s by late 2026, before settling closer to long-run averages thereafter.The anticipated decline is expected to be driven by gains in major currencies such as the euro and sterling, alongside a recovery in the Japanese yen and Canadian dollar. Westpac also highlights the resilience of China’s renminbi, which has remained relatively stable through the crisis, supported by diversified energy supply and its strategic role in global manufacturing.Looking further ahead, the bank sees emerging market currencies benefiting from improving global growth conditions and rising demand for industrial and green technology exports. This shift could mark a broader rotation away from traditional safe-haven currencies as investors increasingly focus on long-term opportunities in developing markets.While the timing remains uncertain, Westpac argues the balance of risks for the US dollar is skewed to the downside, particularly following an extended period of US economic outperformance and ongoing debate around US fiscal and geopolitical policy setting This article was written by Eamonn Sheridan at investinglive.com.

NZD rose after a stronger CPI print lifted expectations for a May RBNZ hike, while bond yields jumped and business confidence weakened, highlighting a growing tension between inflation pressures and slowing growth.Summary:NZD rises after stronger-than-expected CPI Q1 inflation beats, annual CPI holds above target Markets price ~45% chance of May RBNZ hike Bond yields jump as policy outlook shifts Business confidence drops sharply AUD/NZD falls as rate differentials shiftThe New Zealand dollar strengthened after a stronger-than-expected inflation print prompted markets to reassess the outlook for near-term monetary policy, with investors increasingly pricing in the risk of a rate hike as soon as May.Data showed consumer prices rose 0.9% in the March quarter, exceeding expectations and leaving annual inflation at 3.1% — above the Reserve Bank of New Zealand’s 1–3% target range for a second consecutive quarter. While the release only partially reflects the inflationary impact of the Middle East conflict, it was sufficient to shift market expectations materially.Interest rate markets moved quickly, lifting the implied probability of a May hike to around 45%, up sharply from roughly 25–30% previously. Expectations for the broader tightening cycle were also revised higher, with cumulative hikes now seen exceeding prior projections.The shift in policy expectations drove moves across markets. The New Zealand dollar advanced, recovering from recent lows, while government bond yields rose sharply, reversing a multi-day decline as investors adjusted to a more hawkish policy outlook.However, the inflation surprise comes against a backdrop of deteriorating business sentiment. A separate survey showed confidence dropped sharply in the first quarter, with firms increasingly cautious as geopolitical tensions and higher energy costs weigh on the outlook. The divergence between firm inflation and weakening confidence highlights the challenge facing policymakers.Across the Tasman, the Australian dollar was little changed, though it lost ground against the kiwi as rate differentials moved in New Zealand’s favour. The cross retreated from recent multi-year highs, reflecting the shift in relative monetary policy expectations.Markets now face a complex mix of rising inflation pressures and softening growth signals, with developments in the Middle East, particularly around the ceasefire deadline, likely to play a key role in shaping both central bank decisions and broader risk sentiment. This article was written by Eamonn Sheridan at investinglive.com.

Japan finmin Katayama: Seeing high volatility in financial markets, closely watching with high sense of vigilance Continue to closely monitor financial markets, will take measures if needed This article was written by Eamonn Sheridan at investinglive.com.

Fitch says China remains resilient to global energy shocks but weak consumer demand is limiting growth, with fiscal deficits staying elevated and risks rising if energy disruptions hit trade and manufacturing.Summary:China seen resilient to global energy shock Domestic consumption remains weak, confidence subdued No near-term acceleration in household demand Fiscal deficit to remain elevated at ~7.3% of GDP Energy shock risks spillover into trade and manufacturing Growth outlook remains unevenChina’s economy is showing resilience to the global energy shock, but weak domestic demand remains a key constraint on the growth outlook, according to analysis from Fitch Ratings.The agency notes that while China has been relatively insulated from the worst of the energy disruption — helped by diversified supply sources and policy support — the external shock still poses risks, particularly if elevated energy prices persist. Prolonged disruption could spill over into China’s trade and manufacturing sectors, which remain sensitive to global demand conditions and input cost pressures.Despite this resilience, Fitch highlights that domestic consumption continues to lag. Consumer confidence remains subdued, limiting the prospect of a meaningful acceleration in household spending in the near term. This suggests that China’s recovery remains uneven, with external sectors and policy support doing more of the heavy lifting than domestic demand.On the fiscal side, Fitch expects China’s budget deficit to narrow slightly in 2026 but remain elevated at around 7.3% of GDP. This reflects ongoing government support measures aimed at stabilising growth, even as authorities attempt to gradually normalise fiscal settings.The combination of resilient external positioning and soft domestic demand underscores the challenges facing policymakers. While China is better placed than many economies to manage energy shocks, the lack of a strong consumption rebound continues to weigh on the broader recovery.Looking ahead, the trajectory of global energy markets will be a key variable. A prolonged period of elevated prices could erode China’s relative resilience, particularly through its impact on manufacturing competitiveness and export performance. This article was written by Eamonn Sheridan at investinglive.com.

Vance heads to Islamabad for Iran talks as ceasefire nears expiry, with Axios reporting Iran’s Supreme Leader approved negotiators, boosting chances of a deal but leaving markets sensitive to escalation risks. Summary:Vance to lead US delegation to Islamabad for Iran talks Ceasefire nearing expiry, raising urgency Trump threatens renewed strikes but open to extension Iran initially delayed amid IRGC pressure Supreme Leader now approves negotiators attending (Axios) Ghalibaf rejects talks under pressure and blockadeUS Vice President JD Vance is set to travel to Islamabad for high-level talks with Iranian officials as efforts intensify to secure a deal to end the conflict, with the current ceasefire approaching its expiry.According to US sources cited by Axios, Vance is expected to depart Tuesday morning, joined by senior envoys including Steve Witkoff and Jared Kushner, in a renewed diplomatic push to reach an agreement before the deadline. The talks come amid mounting pressure from Donald Trump, who has warned of renewed strikes on Iranian infrastructure if negotiations fail, though he has indicated he may extend the timeline if meaningful progress is made.On the Iranian side, participation has been complicated by internal divisions. Iranian negotiators had initially delayed engagement amid pressure from the Islamic Revolutionary Guard Corps, according to Axios. However, Axios also reports that negotiators have now received approval from the Supreme Leader to attend the talks in Pakistan, clearing a key political hurdle and allowing diplomacy to proceed.The tensions underscore the fragile nature of the negotiations. Iranian Parliament Speaker Mohammad Bagher Ghalibaf has publicly rejected negotiations conducted under pressure, insisting Tehran will not engage while the US maintains its blockade. He also accused Washington of attempting to turn diplomacy into what he described as a “table of surrender,” highlighting the domestic constraints facing Iranian officials.With the ceasefire deadline fast approaching, the Islamabad talks represent a critical juncture. While both sides appear willing to engage, the outcome remains highly uncertain, with internal political pressures and external military risks continuing to shape the negotiating environment. ---The added confirmation that Iran’s Supreme Leader has approved participation marginally increases the probability of a near-term deal, which could ease oil prices if progress materialises. However, with deadlines looming and military risks still present, markets remain highly sensitive to headline flow. This article was written by Eamonn Sheridan at investinglive.com.

The PBOC allows the yuan to fluctuate within a +/- 2% range, around this reference rate.Injects 5bn yuan via 7-day reverse repos in open market operates today. Unchanged rate of 1.4%. This article was written by Eamonn Sheridan at investinglive.com.

BOK Governor Shin said policy will remain cautious and flexible as Middle East oil shocks lift inflation and weigh on growth, highlighting rising uncertainty and financial stability risks in South Korea.Summary:BOK governor flags rising inflation and growth uncertainty Middle East conflict driving oil-led supply shock South Korea highly exposed due to energy imports Stagflation-like pressures emerging Financial stability risks also rising Policy to remain cautious and flexibleThe new governor of the Bank of Korea has struck a cautious tone on monetary policy, warning that rising geopolitical tensions are complicating both the inflation and growth outlook for South Korea.In his inaugural remarks, Governor Shin Hyun-song said policymakers must adopt a “cautious and flexible” approach as the economy faces a supply shock stemming from the Middle East conflict. The surge in oil prices linked to the Iran war is simultaneously pushing inflation higher while weighing on economic activity, a classic stagflationary dynamic.South Korea’s heavy reliance on imported energy leaves it particularly exposed to global supply disruptions. Elevated oil prices feed directly into consumer inflation through fuel and transport costs, while also raising input costs for manufacturers and exporters. At the same time, higher energy costs act as a drag on household consumption and corporate margins, creating downside risks to growth.Shin highlighted that the current environment is also contributing to increased financial market volatility and rising risks to financial stability. This adds another layer of complexity for policymakers, who must balance price stability against broader macroeconomic risks.The comments come as central banks across the region grapple with the fallout from energy-driven inflation shocks, even as domestic demand conditions remain uneven. For South Korea, the policy challenge is particularly acute given its export-oriented economy and sensitivity to global trade and commodity cycles.Shin, who has begun a four-year term, will chair his first policy meeting in late May. Markets will be closely watching for signals on how the Bank intends to navigate the trade-off between inflation control and growth support. This article was written by Eamonn Sheridan at investinglive.com.

China signalled readiness to advance talks on upgrading its Switzerland FTA, aiming to expand cooperation into services, digital trade and investment, reinforcing support for open trade amid global protectionist pressures. Summary:China signals willingness to advance China–Switzerland FTA upgrade Talks aim for “high-standard” agreement covering services and digital economy Existing 2014 FTA already removes most tariffs Bilateral trade around $60bn annually Upgrade negotiations ongoing since 2024 Move reinforces support for free trade amid global protectionismChina has signalled its readiness to advance negotiations on upgrading its existing free trade agreement with Switzerland, in a move aimed at deepening economic ties and reinforcing support for open trade amid a more protectionist global backdrop.In a weekend statement following a bilateral meeting in Bern, China’s Commerce Ministry said it is willing to push forward talks toward a “high-standard” upgrade of the current pact, with a focus on expanding cooperation across trade, investment and innovation. The upgrade is expected to broaden the scope of the agreement beyond traditional goods trade into areas such as services, e-commerce, intellectual property protection and the digital economy.The China–Switzerland free trade agreement, which came into force in 2014, was China’s first such deal with a continental European country and remains a key pillar of bilateral economic relations. The existing agreement has already eliminated the vast majority of tariffs, covering nearly all Chinese exports to Switzerland and a substantial share of Swiss exports to China, helping to lift bilateral trade to around $60 billion annually in recent years.Efforts to modernise the pact have been underway for some time. Feasibility discussions began in early 2024, with formal upgrade negotiations launching later that year. Multiple rounds of talks have since taken place, with officials describing progress as constructive.The proposed upgrade reflects a broader push by both countries to strengthen economic cooperation in higher-value and technology-driven sectors. It also underscores a shared commitment to maintaining open trade channels at a time when global trade tensions and geopolitical fragmentation are weighing on cross-border flows.For China, advancing the agreement offers an opportunity to reinforce economic links with Europe through a stable and cooperative partner. For Switzerland, it provides further access to one of the world’s largest markets, particularly in services and advanced manufacturing.-The move is modestly supportive for global trade sentiment, particularly in Europe-facing sectors. While immediate market impact is limited, it reinforces China’s commitment to trade liberalisation at the margin, supporting export-linked equities and improving the medium-term outlook for cross-border investment flows. This article was written by Eamonn Sheridan at investinglive.com.

The People’s Bank of China is due to set the daily USD/CNY reference rate at around 0115 GMT (2115 US Eastern time), a fixing that remains one of the most closely watched signals in Asian foreign exchange markets. China operates a managed floating exchange rate system, under which the renminbi (yuan) is allowed to trade within a prescribed band around a central reference rate, or midpoint, set each trading day by the PBOC. The current trading band permits the currency to move plus or minus 2% from the official midpoint during onshore trading hours. Each morning, the PBOC determines the midpoint based on a range of inputs. These include the previous day’s closing price, movements in major currencies, particularly the US dollar, broader international FX conditions, and domestic economic considerations such as capital flows, growth momentum and financial stability objectives. The midpoint is not a purely mechanical calculation, allowing policymakers discretion to guide market expectations. Once the midpoint is announced, onshore USD/CNY is free to trade within the allowable band. If market pressures push the yuan toward either edge of that range, the central bank may step in to smooth volatility. Intervention can take the form of direct buying or selling of yuan, adjustments to liquidity conditions, or guidance through state-owned banks. As a result, the daily fixing is often interpreted as a policy signal rather than just a technical reference point. A stronger-than-expected CNY midpoint is typically read as a sign the PBOC is leaning against depreciation pressure, while a weaker fixing for the CNY can indicate tolerance for a softer currency, often in response to dollar strength or domestic economic headwinds.In periods of heightened global volatility, such as shifts in US rate expectations, trade tensions or capital flow pressures, the fixing takes on added significance. For investors, it provides insight into Beijing’s currency priorities, balancing competitiveness, capital stability and financial market confidence. This article was written by Eamonn Sheridan at investinglive.com.

BOJ survey shows flat loan demand and stable credit conditions, pointing to weak domestic momentum and supporting a cautious, gradual policy tightening path despite persistent inflation pressures.Summary:Loan demand broadly flat across firms, households and governments Credit conditions stable, neither tightening nor easing materially Manufacturing relatively resilient; smaller firms weaker Household demand mixed, consumer lending still soft Loan growth outlook remains subdued Signals fragile growth backdrop despite inflation pressuresEarlier:BOJ likely to hold rates in April but signal readiness to hike as inflation risks riseThe latest Bank of Japan Senior Loan Officer Survey points to a broadly stable but subdued credit environment, reinforcing the view that Japan’s economic recovery remains fragile despite persistent inflation pressures. Demand for loans across firms, households and local governments was largely unchanged in the March–April survey period, with the majority of banks reporting stable borrowing conditions. While there were modest increases in loan demand from firms and households, the overall signal is one of stagnation rather than acceleration, suggesting limited momentum in private sector activity.Sector detail shows a mixed picture. Manufacturing demand remains relatively resilient, while smaller firms and parts of the services sector exhibit weaker dynamics. Household demand, particularly for housing loans, showed some improvement, but consumer lending remains soft, reflecting cautious household behaviour in the face of rising living costs and uncertainty.Crucially, lending standards remain broadly unchanged, with banks neither materially tightening nor easing credit conditions. This indicates that financial conditions are still accommodative, but not actively stimulating stronger growth. At the same time, banks reported a slight increase in loan rate spreads, signalling early signs of tightening financial conditions at the margin.Looking ahead, banks expect loan demand to remain largely flat over the next three months, reinforcing the view that economic activity is unlikely to reaccelerate meaningfully in the near term.Taken together, the survey suggests Japan’s economy is stabilising but lacks strong growth drivers. Domestic demand remains soft, and credit growth is not providing a meaningful impulse to activity.For policymakers, the implications are nuanced. While inflation remains around target and cost pressures persist, the lack of strong credit demand and subdued economic momentum argue for caution. The data supports the case for a gradual and measured tightening path, rather than an aggressive rate hiking cycle, as the BOJ balances inflation risks against a still-fragile growth backdrop. --The survey leans dovish at the margin. While inflation supports further tightening, weak credit demand and soft domestic momentum argue against aggressive rate hikes. This reinforces expectations of a gradual BOJ normalisation path, limiting upside in JPY and keeping policy divergence with other central banks in focus. This article was written by Eamonn Sheridan at investinglive.com.

BOJ is likely to hold rates in April amid Middle East uncertainty, Reuters reports, but signal readiness to hike as soon as June as inflation rises and growth risks increase.Summary:BOJ seen holding rates in April amid Middle East uncertainty Decision viewed as close call, dependent on geopolitics Market pricing for April hike drops below 20% Bank likely to retain hawkish bias, eye June hike Growth forecasts seen lowered, inflation projections raised Energy shock complicates policy pathThe Bank of Japan is increasingly likely to hold interest rates steady at its upcoming April meeting, according to sources familiar with its thinking, as policymakers assess the fallout from the ongoing Middle East conflict, Reuters reports.Officials are said to view the decision as a close call, with the outcome still dependent on developments in US-Iran negotiations and broader geopolitical conditions. However, the balance of opinion within the Bank appears to favour a pause, allowing more time to evaluate the economic and inflation impact of elevated energy prices and heightened uncertainty.The shift reflects a move away from earlier expectations of a near-term rate hike. Market pricing for an April increase has declined sharply, falling below 20% following cautious remarks from Governor Kazuo Ueda, who emphasised the importance of monitoring the scale and duration of the energy shock.Despite the likely pause, the Bank is expected to maintain a hawkish bias. Sources indicate the BOJ will signal its readiness to resume rate hikes as early as June, particularly as inflationary pressures build. Oil price gains linked to the conflict are pushing up import costs in Japan, complicating the policy outlook for an economy heavily reliant on external energy supply.At the same time, the BOJ is expected to revise down its growth forecasts while lifting its inflation projections in its upcoming quarterly outlook report. While the central bank still sees the economy on track for a moderate recovery, risks to activity have increased, particularly through the impact on manufacturing and household costs.With policy rates still below estimated neutral levels and real rates deeply negative, the case for further tightening remains intact. However, the timing has become more uncertain as policymakers balance rising inflation risks against a fragile growth backdrop.---A hawkish hold is broadly neutral for rates but supportive for JPY in the near term if guidance leans toward June tightening. However, delaying hikes risks renewed yen weakness, particularly if global yields remain elevated. The balance of risks keeps JGB yields biased higher while FX remains sensitive to energy-driven inflation dynamics. This article was written by Eamonn Sheridan at investinglive.com.

NZ CPI held at 3.1% y/y in Q1, above target, with electricity and petrol driving gains. Quarterly inflation rose 0.9%, underscoring persistent price pressures and supporting expectations for a cautious RBNZ policy stance. This is January - March data, ahead of the fuel shock. Bear that in mind... Summary:Annual CPI holds at 3.1%, above RBNZ target band Electricity prices key driver, up 12.5% Quarterly inflation at 0.9%, led by petrol Underlying inflation remains firm even excluding fuel Rent growth slows to weakest pace in 16 years Data reinforces cautious RBNZ policy outlookNew Zealand inflation held above the central bank’s target band in the March quarter, with the latest New Zealand Consumer Price Index data from Stats NZ highlighting persistent cost pressures despite some pockets of easing.Annual CPI rose 3.1% in the year to Q1 2026, unchanged from the previous quarter and sitting just above the Reserve Bank of New Zealand’s 1–3% target range. The result underscores the stickiness of inflation, particularly in household essentials and administered prices.Electricity costs were the dominant driver, rising 12.5% over the year and accounting for more than a tenth of the annual increase. This marks the third consecutive quarter in which electricity has been the largest contributor, pointing to ongoing pressure from energy-related costs.Other key contributors included local authority rates, up 8.8%, alongside strong increases in food categories such as meat and poultry. Rent also continued to rise, although at a notably slower pace, with the 1.2% annual increase marking the weakest gain in 16 years, a sign that some domestic inflation components may be easing at the margin.On a quarterly basis, inflation came in at 0.9%, with petrol prices the primary driver. Fuel costs rose 3.5% in the quarter, reversing earlier declines and reflecting renewed volatility in energy markets. Petrol alone, alongside a sharp rise in pharmaceutical costs linked to policy resets in prescription charges, accounted for more than a quarter of the quarterly increase.Excluding petrol, CPI still rose 0.8% in the quarter, indicating that underlying inflation pressures remain firm. Additional upward pressure came from food and electricity, while declines in international airfares provided some offset.Overall, the data suggest that while certain inflation components are moderating, core pressures remain resilient. The composition of the report, particularly the dominance of energy and administered price increases, is likely to keep policymakers cautious as they assess the timing and pace of further policy tightening. ---This summarion via Reuters:In CPI terms, tradables are goods and services whose prices are largely determined by global markets and can be imported or exported. This includes items like petrol, electronics, vehicles, clothing, and some food products. Because they are exposed to international competition and exchange rate movements, tradables inflation is heavily influenced by factors such as global commodity prices, shipping costs, and the strength of the New Zealand dollar. For example, a weaker NZD or higher oil prices typically push tradables inflation higher.By contrast, non-tradables refer to goods and services that are primarily produced and consumed domestically, with prices driven by local economic conditions rather than global markets. This category includes housing-related costs (like rent and construction), local government rates, electricity, and many services such as healthcare and education. Non-tradables inflation tends to reflect domestic demand, wage growth, and capacity constraints in the economy. Central banks, including the Reserve Bank of New Zealand, often focus more closely on non-tradables as a gauge of underlying inflation pressure because it is less volatile and more tied to the domestic policy setting.--The report is modestly hawkish for RBNZ expectations. Inflation holding above target, combined with firm underlying measures, supports the case for continued policy tightening or at least a delayed easing cycle. Energy-driven components add volatility, but persistence in core pressures is likely to keep front-end rates supported and limit downside in NZD. This article was written by Eamonn Sheridan at investinglive.com.

This is just a data post. New Zealand Q1 consumer price index +0.9% q/q (expected +0.8%, prior +0.6%) +3.1% vs year ago (expected +2.9%, prior +3.1%) Non-tradables +1.1% q/q Non-tradables +3.5% y/yA shorthand way of thinking about 'non tradeables' is domestically generated inflation. I'll have more to come on this separately, details and implications. ADED: result underscores the stickiness of inflationNZD jumped: This article was written by Eamonn Sheridan at investinglive.com.

NZ business confidence fell sharply in Q1 as Hormuz disruptions lifted uncertainty. Activity held steady but hiring and investment weakened. Inflation pressures remain contained, with RBNZ still expected to begin tightening later this year.New Zealand Q1 business confidence -4% vs 48% priorNew Zealand Q1 capacity utilisation 91.2% vs 89.8% priorSummary:Business confidence slumps sharply to near-flat levels Activity stabilises but remains weak Hiring and investment intentions turn negative Construction sector weakest; manufacturing more resilient Inflation pressures contained but uncertainty rising RBNZ still expected to begin tightening cycle around JulyNew Zealand business confidence deteriorated sharply in the March quarter, with the latest NZIER Quarterly Survey of Business Opinion highlighting growing caution among firms as geopolitical tensions and energy disruptions weigh on the outlook. A net 1% of firms now expect an improvement in economic conditions, down steeply from 39% in the prior quarter, pointing to a rapid loss of momentum in sentiment. The survey period coincided with escalating conflict in the Middle East and disruptions to shipping through the Strait of Hormuz, which have driven higher fuel costs and increased uncertainty across global supply chains.Despite the sharp drop in confidence, activity indicators were more resilient. Firms reported broadly flat trading conditions in their own businesses, suggesting the domestic economy is stabilising, albeit at subdued levels. However, forward-looking indicators paint a weaker picture, with firms pulling back on hiring and investment plans. A net 9% reduced staff in the quarter, and investment intentions for both buildings and machinery turned negative.Sector performance was uneven. Construction was the weakest area, with demand softening and profitability deteriorating amid rising costs and reduced pricing power. In contrast, manufacturing remained relatively upbeat, supported by export demand, while retail showed tentative improvement in sales despite ongoing margin pressure.Cost and pricing indicators suggest inflation pressures remain contained for now, even as fuel-driven cost shocks begin to filter through. While more firms reported raising prices, overall cost pressures were broadly steady, indicating limited immediate pass-through.Looking ahead, the survey highlights rising uncertainty tied to geopolitical risks and domestic political developments, including the upcoming election. While inflation risks from energy disruptions are seen as modest at this stage, policymakers will be closely monitoring forward-looking price indicators.The results reinforce expectations that the Reserve Bank of New Zealand will begin tightening policy later this year, with July pencilled in as a potential starting point for rate hikes, contingent on inflation expectations and the persistence of cost pressures. --The report presents a mixed signal for policy. Weak confidence and soft forward indicators argue for caution, but stable inflation pressures keep tightening expectations intact. Markets are likely to continue pricing a gradual RBNZ hiking cycle, with growth risks limiting the pace of tightening and capping NZD upside. This article was written by Eamonn Sheridan at investinglive.com.