• GBP$ slips into NorAm close, -0.26% at 1.3272; NorAm range 1.3307-1.3251

• Pair whipsawed in NY after rise in US imp/exp data saw UST yields rise off lows

• Ultimately lower UST yields, provided boost off session lows in NY afternoon

• Recent upbeat UK data, reduced tariff angst tipping BoE less-dovish supports GBP

• Sterling once again fails above 1.33, nestles near its 10-DMA by 1.3280

• GBP$ res 1.3333 Friday's early high, 1.3361 May 14 high, 1.3423 upper 30-d Bolli

• Supt 1.3251 Friday low, 1.3227 rising 30-DMA, 1.3079 50% Fib of 1.2712-1.3445

• A close below 1.3079 shift momentum to bears, puts daily cloud 1.2960-1.2728 in view

GBP Chart:


(Paul.Spirgel is a Reuters market analyst. The views expressed are his own)

• NY opened near opened near 0.6420 after 0.6436 traded overnight, the drop extended

• US$ buying & commodity losses weighed on AUD/USD; USD/CNH rallied to 7.2130

• AUD/USD drop intensified as US yields rallied off their lows; pair fell below 10- & 21-DMAs

• AUD/USD hit 0.6388, pair neared 0.6400 late, pair traded down -0.06% in NY's afternoon

• Techs lean bearish; RSIs falling, three consecutive daily inverted hammers are in place
audusd


(Christopher Romano is a Reuters market analyst. The views expressed are his own)

Synopsis:

Goldman Sachs' asset allocation team maintains a neutral stance on equities and prefers to stay overweight in cash. Despite progress in US trade negotiations, tariffs remain significantly elevated and macroeconomic risks persist, capping equity upside and supporting a cautious positioning.

Key Points:

• Tariffs Remain Inflationary:
  Even after recent easing, the US effective tariff rate stands at 13%, well above pre-Liberation Day levels. This continues to pressure inflation and complicates the Fed’s rate cut timing.

• Shift in Fed Expectations:
  Goldman now sees the Fed beginning its rate cut cycle in December rather than July, with cuts spaced at alternate meetings—not sequentially—highlighting more cautious policy normalization.

• Equities Likely Range-Bound:
  The recent correction in equities fits the profile of an ‘event-driven’ bear market. Historically, such episodes result in flat returns in the near term, limiting upside potential.

• Recession Fears Linger:
  Hard data remains fragile, and any further deterioration could increase the perceived risk of recession, potentially triggering renewed equity market stress.

• Cash Over Equities:
  With their Risk Appetite Indicator (RAI) only modestly higher at 0.5%, Goldman prefers cash over equities, emphasizing flexibility and downside protection.

Conclusion:

Goldman Sachs sees limited upside for equities in the near term, given ongoing inflation risks, delayed Fed cuts, and fragile growth momentum. Their strategy reflects a defensive tilt, with a continued preference for cash in a volatile macro environment.

• $CAD firm into Europe close, +0.2% at 1.3989; Europe range 1.3989-36

• USD bid into London fix as UST yields slip from early NorAm lows

• Soft U.S. housing starts, building permits; above f/c imp/exp prices lifts USD

• CAD shrugs off CA yield rise; mixed commods oil up, copper dn tempers CAD dip

• Relative rate view, IRPR sees Fed ending 2025 at 3.99%, BoC 2.31% advantage USD

• $CAD res 1.4004 Thurs high, 1.4022 the 200DMA, 1.4083-50% Fib of 1.4414-1.3751

• Supt 1.3936 Friday low, 1.3914 rising 10-DMA, 1.3895 daily low May 12

• IMM positioning data at 3.30PM NYT in focus for clues on large CAD short

CAD Chart:


(Paul Spirgel is a Reuters market analyst. The views expressed are his own)

Synopsis:

Credit Agricole warns that EUR/USD has rallied too far, too fast, leaving it exposed to multiple downside risks. With market optimism running ahead of fundamentals, the Euro may struggle to hold its recent gains in the face of slowing inflows, geopolitical fragility, and macroeconomic headwinds.

Key Points:

1. Slowing Equity Inflows:
   European equity inflows have started to decelerate, reflecting persistent concerns over the Eurozone growth outlook, which could reduce demand for the EUR.

2. Ongoing Geopolitical Risks:
   A durable ceasefire in Ukraine remains elusive. Continued geopolitical uncertainty poses a structural headwind to confidence and economic stability in the region.

3. Stronger EUR = Softer Growth & Inflation:
   The EUR's year-to-date strength may itself become a drag on Eurozone growth and inflation, prompting the ECB to deliver deeper rate cuts than currently priced.

4. Overvaluation Risk:
   EUR/USD appears overvalued relative to both the EUR-USD rate spread and short-term fair value models, signaling potential for correction if sentiment shifts.

Conclusion:

Even with a packed week of Eurozone data and ECB speakers ahead, Credit Agricole expects the ECB to maintain a cautious tone. As the relative rate disadvantage persists and fundamentals catch up with sentiment, EUR/USD may be prone to a pullback in the near term.

• Shares of copper miners fall, tracking prices of the red metal [MTL/]

• Benchmark three-month copper on the London Metal Exchange down 0.8% at $9,501.50 a metric ton

• Prices fall as softer demand from price-sensitive consumers, such as China, pushed the growth-dependent metal down from its recent highs, sparked by the 90-day U.S.-China trade truce

• U.S.- listed shares of global mining giants Rio Tinto

and BHP Group fall 1.2% each

• Copper miners Southern Copper and Freeport-McMoRan down 3% and 3.2%, respectively

• Shares of Canadian miners Hudbay Minerals and Teck Resources dip 3.5% and 3%, respectively
(Reporting by Katha Kalia in Bengaluru)

Synopsis:

While a temporary truce between the U.S. and China has offered some relief to markets, BofA maintains a bearish outlook on the dollar. The recent bounce is seen as tactical rather than structural, with longer-term headwinds intact.

Key Points:

1. Policy uncertainty persists:
   The pause in trade tensions is temporary. Policy direction remains erratic and could reintroduce volatility later this summer as deadlines and tariff suspensions expire.

2. Lingering economic drag:
   Even with de-escalation, the U.S. economy is now on a slower growth path than pre-trade war due to delayed investment and weakened business confidence.

3. Current account deterioration:
   A narrowing U.S. current account surplus is reducing investment inflows and undermining support for the dollar.

4. Foreign asset reallocation:
   Institutional real money investors are reassessing exposure to U.S. assets and the dollar, contributing to persistent capital outflows.

5. Fiscal uncertainty:
   An unpredictable fiscal trajectory adds risk, with potential implications for long-term Treasury issuance, inflation expectations, and investor sentiment.

6. Weaker-dollar bias from policymakers:
   The Trump administration continues to favor lower rates and a softer dollar, which adds to long-term depreciation pressures.

Conclusion:

BofA remains bearish on the USD, despite tactical reprieves. Structural forces—ranging from weaker capital inflows to policy unpredictability—are seen as increasingly difficult to reverse, suggesting a lower dollar over the medium term with a choppier path forward.

Synopsis:

ANZ warns that gold could face a significant correction akin to its 1980s collapse if risk appetite returns and macro conditions stabilize. However, they argue that structural and strategic demand factors remain supportive and make such a collapse less likely this time.

Key Points:

• Profit-taking triggered: The recent drop from the USD 3,500/oz peak was driven by easing tariff concerns, stronger USD, and rising U.S. Treasury yields.

• ETF liquidations: Gold ETF holdings have declined by 33 tonnes since late April, removing a critical pillar of support as speculative positions unwind.

• Historical comparisons raise concern: Fears are rising of a repeat of the 1980s-style 40% gold correction post-record highs in real terms.

• Why it’s different now:

  • Central bank demand remains strong amid global de-dollarization and geopolitical realignments.

  • Investor skepticism toward U.S. assets is rising, evidenced by a divergence between Treasury yields and the USD.

  • Portfolio diversification into gold remains attractive as equities trade at high valuations during economic uncertainty.

• Downside risk scenario: If geopolitical tensions ease materially and the U.S. economy outperforms expectations, gold could correct further toward USD 3,000/oz.

Conclusion:

While ANZ acknowledges the risk of a deeper correction in gold—particularly if macro headwinds fade—they believe strong structural demand, especially from central banks and defensive investors, makes a 40% crash unlikely. Gold may face volatility, but its role as a portfolio hedge remains compelling.

• Option risk reversals charge a premium for strikes in one direction vs other

• That direction will be the most vulnerable and prone to volatility/demand

• Like EUR/USD, GBP/USD risk reversals trade 5-year highs for USD puts

• USD puts in GBP/USD give holders the right to sell USD and to buy GBP

• Premiums stay firm despite settled GBP/USD spot and lower implied volatility

• Highlights expectations/hedging for deeper USD declines to come

• Related comment FX options offer clues on the EUR/USD outlook
GBP/USD risk reversals

(Richard Pace is a Reuters market analyst. The views expressed are his own)

• The cash hedging of FX option strikes can draw/contain FX spot pre expiry

• There are a massive 7-billion euros of 1.1200-30 strikes expiring Friday

• Result is big hedging flows to help contain while little else excites FX

• Larger strikes expiring so far next week - May 20 1.1195-1.1200 (1.5bln)

• 1.1240-50 (1.8bln). May 21 1.1250 (1.8bln). May 22 1.1175 (2bln)

• Related comment - FX options offer clues on the EUR/USD outlook
EUR/USD FX option strike expiries - May 16-23

(Richard Pace is a Reuters market analyst. The views expressed are his own)

May 16 (Reuters) -

• Tepid price action in EUR/GBP as focus turns to UK-EU summit

• Range parameters unchanged. Support: 0.8387-0.8400. Resistance: 0.8450-73

• For now, cross struggles to breach 0.8400

• Harder EU-UK lines will favour EUR/GBP dip buyers

• Meanwhile, next week's UK CPI will be notable for current BoE pricing

• Rate cut pricing looks to be as hawkish as it can get

• Lowers bar for a dovish repricing 0#GBPIRPR
eugbp daily chart

(Justin McQueen is a Reuters market analyst. The views expressed are his own.)

May 16 (Reuters) - At the end of a week of comments from Bank of England Monetary Policy Committee members, the balance of risk tilts towards a 7-2 MPC vote for an interest rate hold next month.

The two dissenters will almost certainly be ultra-dove Swati Dhingra and Alan Taylor, both of whom wanted the BoE to cut rates by 50 basis points on May 8.

Huw Pill and Catherine Mann look certain to vote for a rate hold on June 19, having wanted rates kept unchanged last week. On Tuesday, hawk Pill said BoE rates might need to stay higher than investors are thinking.

This would leave the decision in the hands of the five MPC members, including Clare Lombardelli and Megan Greene, who voted for a 25 bps cut on May 8. On Monday, Lombardelli said "caution remains appropriate" over UK inflation risks, while Greene said she was worried about rising UK inflation expectations.

The duo's guidance, and Thursday's better than expected UK gross domestic product data, suggests the centrists may all vote for a rate hold next month.

The expectation of a BoE rate hold in June is lending support to the pound, with GBP/EUR near to Tuesday's five-and-a-half week high of 1.19.

Related comments:
GBPUSD

(Robert Howard is a Reuters market analyst. The views expressed are his own)

• USD/JPY options posted the biggest bounce amongst G10 FX peers this week

• 1-month implied volatility from 9.5 to 11.3 and holds firm for now

• 3-month expiry from 9.9 to 11.0 and 1-year 9.75 to 10.3

• Risk reversals recovered volatility premium for downside vs upside strikes

• 1-month expiry 25 delta from 1.5 to 2.55 and 3-month 1.7 to 2.65

• Shows market still wary of USD/JPY volatility and spot losses

• Much of the demand for options is 3-month - after 90 day China tariff truce

• FX options wrap - FX hedging opportunities abound
USD/JPY 25 delta risk reversals


USD/JPY FXO implied volatility

(Richard Pace is a Reuters market analyst. The views expressed are his own)

• Cable rises to 1.3333 as lower UST yields weigh on the dollar

• 1.3333 is highest level since Wednesday (1.3361 was one-week peak that day)

• Lower UST yields influenced by cooler than expected U.S. producer prices

• GBP/USD support points include 1.3300 and 1.3254 (Wednesday's low)

• Catalyst for Wednesday's rise to 1.3361 was South Korea-U.S. FX news

• Why China's neighbours may want currency deals with Trump

GBPUSD

(Robert Howard is a Reuters market analyst. The views expressed are his own)

• FX options expire at 10-am New York/3-pm London Friday May 16

• EUR/USD: 1.1130-35 (1.2BLN), 1.1150 (1.6BLN), 1.1200 (5.1BLN)

• 1.1225-30 (2BLN), 1.1300 (912M)

• USD/CHF: 0.8420 (390M)

• GBP/USD: 1.3305 (462M), 1.3330 (330M)

• AUD/USD: 0.6420 (900M), 0.6475 (603M)

• NZD/USD: 0.5875 (445M), 0.5935 (211M)

• USD/CAD: 1.3850 (1.2BLN), 1.3945-50 (926M), 1.3975-85 (1.8BLN)

• 1.4000 (2.5BLN)

• USD/JPY: 144.24 (400M), 145.00 (903M), 145.20 (460M), 145.40 (440M)

• 146.00 (400M)

• FX options wrap - FX hedging opportunities abound (Richard Pace is a Reuters market analyst. The views expressed are his own)

• Shares of Medallion Metals rise as much as 12.5% to A$0.27, their biggest intraday pct gains since April 10

• Stock hits highest level since May 8

• Gold and copper focused miner says received firm commitments to raise A$27.5 mln ($17.64 mln) to progress near-term gold and copper production opportunity for Ravensthorpe Gold Project with processing at Forrestania

• Placement at 21 Au cents/shr

• Says placement proceeds to de-risk and accelerate the proposed acquisition of the Forrestania nickel operation

**About 1.5 mln shares change hands, vs the 30-day average of 1.3 mln

• Stock up over 110% YTD, last up 7.3%
($1 = 1.5591 Australian dollars)

(Reporting by Sneha Kumar in Bengaluru)

May 16 (Reuters) -

AUD/NZD could extend its rally to levels not seen since 2022 following the recent easing of U.S.-China trade tensions. This month's central bank meetings in Australia and New Zealand offer a window of opportunity.

Despite fundamentals favouring AUD, NZD outperformed in the aftermath of President Donald Trump's 'Liberation Day' tariffs as China responded with measures that included restricting U.S. agricultural imports.

Both countries have limited direct exposure to the tariff conflict, but New Zealand's agriculture-led export mix makes it a viable alternative supplier for China. While AUD performed admirably post-'Liberation Day', its exports - predominantly mining commodities - are more sensitive to economic growth concerns.

As cooling trade tensions unwind this thematic, AUD is quickly reclaiming ground against NZD. A short-term rise above 1.10 is highly likely, with next target 1.1180 resistance.

The Reserve Banks of both Australia and New Zealand are anticipated to continue cutting interest rates throughout 2025. However, New Zealand's economy appears to require more stimulus, despite improvement. For instance, its 5.1% unemployment rate compares unfavourably to Australia's tight labour market.

The positive interest rate differential in Australia's favour (4.1% versus New Zealand's 3.5%) will support AUD/NZD in the months ahead. A deterioration in the U.S.-China trade situation would impact the cross, but if the status-quo is maintained, long-term resistance at 1.1490 becomes a distinct possibility.

With the RBA likely to cut rates by a quarter-point on May 20, there may be a short-lived opportunity to buy AUD/NZD before the RBNZ follows suit on May 28.
AUDNZD Daily Double-Top Resistance


AUDNZD Weekly Long-Term Resistance

(James Connell is a Reuters market analyst. The views expressed are his own. Editing by Sonali Desai)

• Australian gold stocks rise as much as 4.1% to 11,474.2; marks biggest intraday percent gain since May 6

• Gold prices gained more than 1% on Thursday on a softer dollar and weak U.S. economic data [GOL/]

• Evolution Mining rises 4.7%; among top pct gainers on local benchmark

• Northern Star Resources adds 3.5%; Bellevue Gold

advances 3.3%

• However, AXGD set to decline 10.4% for the week, if trends hold

• YTD, sub-index climbs 30.8%

(Reporting by Nichiket Sunil in Bengaluru)

• Steady after closing up 0.35%, with the USD off 0.2%, as UST yields fell

• After strong UK data, fin min Reeves warns economic headwinds are coming

• There is no UK data today of BoE events - the USD will likely lead sterling

• Charts - an inside day - neutral 5, 10, & 21-day moving averages

• Momentum studies conflict - 21-day Bollinger bands gently contract

• The daily charts remain neutral at levels seen since mid-April

• Trading the 1.3443/1.3163 range with tight stops makes sense

• Wednesday's 1.3361 high, then last week's 1.3402 top are first resistance

• Bears need a close below the resilient 1.3165, 0.3825 of the April rise
Andy

(Andrew Spencer is a Reuters market analyst. The views expressed are his own.)

• +0.05% after closing +0.1% with the U.S. dollar -0.2% with lower UST yields

• EU ministers aim for a much broader outcome than the British-US trade deal

• A more comprehensive EU/US trade deal will likely be a long process

• Charts- 21-day Bollinger bands ease, 5, 10 & 21-day moving averages slip

• Daily momentum studies conflict - daily charts retain a bearish setup

• A close above the 1.1304 21-day moving average would end the downside bias

• Monday's 1.1065 low then 1.1053 0.618% of the Mar/Apr rise initial supports

• This week's 1.1265 high, then last week's 1.1380 top, are first resistance

• 1.1150 1.593BLN, 1.1200 5.136BLN, 1.1225 1.641BLN close strikes for May 16th
Andy

(Andrew Spencer is a Reuters market analyst. The views expressed are his own.)

• AUD/USD -1.5% from Wed high, sits near daily lows despite wider USD selling

• Soft retail sales/producer prices sent UST yields/DXY lower on growth fears

• AUD has failed multiple attempts to sustain itself above 0.6454 200-DMA

• Focus on RBA May 20 OCR decision, 25 bps cut expected, statement will be key

• U.S. Apr import/export prices, Michigan consumer sentiment due Fri

• Overnight range 0.6391-0.6441, support 0.6355 0.6180, resistance 0.6550
AUD Daily 200-DMA & DXY Daily

(James Connell is a Reuters market analyst. The views expressed are his own.)

• USD/JPY slips for a third day as Trsy yields slide after US data

• Producer prices, manuf output fell in April; retail sales mixed

• Oil down over 2% on hope for a potential U.S.-Iran nuclear deal

• US equities reach 2-mo. high before large index expiries Friday

• US is considering revising Japan-US trade agreement: JIJI

• Risk reversals stay most bearish since April on USD/JPY put demand

• Pair finds intraday support at 200-HMA ahead of 145.35 Monday gap

• Sits below 9-day EMA, descending daily cloud at 147.42-149.95 caps

• Resist: 147.42 cloud base; 147.67 May 15 high; 148.02 upper Bolli

• Supp: 145.50 conversion line; 145.46 200-HMA, 145.00 psychological

• Japan GDP, BOJ's Nakamura Toyoaki slated for Friday
Yen

(Robert Fullem is a Reuters market analyst. The views expressed are his own.)

• NY opened near 0.6410 after 0.6457 traded overnight, the drop extended

• Flows into US assets like stock & US Treasuries helped drive US$ buying

• Bid for the Japanese yen drove AUD/JPY down below 93.15

• Those helped AUD/USD hit 0.6391, pair neared 0.6400 late, down -0.43% late

• Techs lean bearish; RSIs are falling, pair below the 10-, 21- & 200-DMAs

• May's monthly doji candle reinforces the bearish technical signals

• US May University of Michigan report is a key risk Friday
audusd


(Christopher Romano is a Reuters market analyst. The views expressed are his own)

Sterling resumed its climb, regaining the 1.33 handle, again, after mixed U.S. data weighed on U.S. Treasury yields and pressured the dollar lower, and for now despite several failed attempts to break higher, cable remains capped by the May 14 high at 1.3361 and anchored by its flat 10-day moving average near 1.3282..

Thursday's U.S. data came with notable revisions, reflecting the turbulent market environment since President Trump’s inauguration and the early-April “Liberation Day.” While trade tensions have eased following the U.S.-China tariff delay, recent data—skewed by front-loaded activity—should be interpreted cautiously.

In the yield curve, while the UST 3-month/10-year spread has flattened, the longer end continues to steepen amid lingering budget and debt ceiling concerns. These issues could keep long yields elevated, limiting dollar downside.

Technically, GBP/USD is unlikely to stray far from its current range, with short-term U.S.-UK rate expectations largely aligned for the rest of 2025, according to LSEG's IRPR.

Barring a fresh inflation shock or renewed tariff tensions, the 1.32–1.3450 range is likely to hold. This kind of environment may lead traders to gravitate toward straddle sales or strangle buys to manage risk within a range-bound market, avoiding the intermittent volatility and still-considerable Trump headline risk.
GBP Chart:


GBP Option View:


(Paul Spirgel is a Reuters market analyst. The views expressed are his own)