Cautious Trade as APEC Cuts Growth View, Key UK and US Releases Awaited – Action Forex

Activity in the global stock markets remained relatively subdued, with US posting a mixed close overnight and Asian markets slipping modestly lower today. Despite China’s 50bps Reserve Requirement Ratio cut taking effect, expected to inject over USD 138B into the banking system, investor reaction has been muted. The cautious tone reflects lingering concerns over the global trade outlook, which continues to overshadow stimulus measures and upbeat economic data.

Trade-related uncertainty remains a key drag on sentiment, with APEC group issuing a stark warning about the deteriorating outlook. At its 2025 trade ministers meeting in South Korea, APEC projected regional exports to grow by just 0.4% this year, sharply down from 5.7% in 2024. The group also downgraded its regional economic growth forecast to 2.6%, from 3.3% previously, citing weakening external demand, particularly in manufacturing and consumer goods, as well as rising policy uncertainty across trade and services sectors.

In the currency markets, Yen and Swiss Franc are the strongest performer today so far, benefiting from mild pullback in risk-on sentiment and likely some short covering after recent weakness. Aussie is gaining ground as well, lifted by a stronger-than-expected employment report, which suggests that while the Reserve Bank of Australia is still on track for a rate cut next week, a more aggressive easing path may be off the table for now.

Conversely, Dollar is the weakest major today, although the downside lacks conviction so far. Loonie and Kiwi are also under some mild pressure. Euro and Pound are holding steady, awaiting further catalysts, with the UK GDP report due in the European session.

Technically, GBP/USD’s rebound from 1.3138 stalled well ahead of 1.3442 resistance. But for now, correction from 1.3442 is still seen as completed. Another rise would be in favor as long as 1.3138 holds. Retest of 1.3442 should be seen next, and firm break there will resume larger up trend.

In Asia, at the time of writing, Nikkei is down -1.01%. Hong Kong HSI is down -0.25%. China Shanghai SSE is down -0.42%. Singapore Strait Times is up 0.41%. Japan 10-year JGB yield is up 0.023 at 1.48. Overnight, DOW fell -0.21%. S&P 500 rose 0.10%. NASDAQ rose 0.72%. 10-year yield rose 0.029 to 4.528.

Looking ahead, UK GDP data will be the main focus in European session. Swiss PPI, Eurozone GDP revision and industrial production will also be released. Later in the day, US retail sales and PPI will take center stage. Jobless claims, Empire state manufacturing, Philly Fed manufacturing, industrial production will also be released.

Fed’s Daly: Economy doing fairly well, patience key amid uncertainties

At an event overnight, San Francisco Fed President Mary Daly said Fed is in a “good position” to respond to evolving conditions and uncertainties. She emphasized, “patience is the word of the day,”

“We’ve got solid growth, a solid labor market and declining inflation,” she said. Despite lingering uncertainties, overall sentiment remains constructive, with people feeling the economy is performing “fairly well.”

“It’s just a matter of resolving the uncertainty so we can continue to do very well,” Daly added.

Australia jobs surge 89k in April, unemployment rate unchanged at 4.1%

Australia’s labor market delivered a strong upside surprise in April, with employment rising by 89k, sharply above expectations of 20.9k. Full-time jobs accounted for 59.5k of the gain, while part-time employment rose by 29.5k.

Unemployment rate held steady at 4.1%, in line with forecasts, as the surge in employment was matched by a jump in labor force participation from 66.8% to 67.1%.

Despite the headline strength, hours worked were largely unchanged on the month. Nonetheless, the employment-to-population ratio rose by 0.3 percentage points to 64.4%, just shy of the record high reached in January.

USD/CAD Daily Outlook

Daily Pivots: (S1) 1.3928; (P) 1.3957; (R1) 1.4012; More…

Intraday bias in USD/CAD remains neutral for the moment. Further rise is in favor with 1.3898 minor support intact. Above 1.4014 will resume the rebound from 1.3749 to 1.4150 cluster resistance (38.2% retracement of 1.4791 to 1.3749 at 1.4147). However, break of 1.3898 minor support will indicate that the rebound has completed, and bring retest of 1.3749.

In the bigger picture, price actions from 1.4791 medium term top could either be a correction to rise from 1.2005 (2021 low), or trend reversal. In either case, further decline is expected as long as 1.4150 resistance turned support holds. Firm break of 38.2% retracement of 1.2005 (2021 low) to 1.4791 at 1.3727 will pave the way back to 61.8% retracement at 1.3069.