The Israel-Lebanon ceasefire on April 17 triggered the week's most violent repricing — Brent crude plunged over 10% to below $90 after Iran simultaneously announced the Strait of Hormuz was open, sending AUD/USD surging and EUR/AUD deeper into our tactical target zone. That euphoria lasted less than 24 hours: Iran reversed course and re-closed Hormuz on April 18 after the US maintained its naval blockade, pushing Brent back toward $97-98 by Friday and whipsawing every energy-sensitive position in the book. On Monday, the MAS delivered its first tightening since October 2022 — increasing the rate of appreciation of the S$NEER policy band — validating our SGD strength thesis more emphatically than the consensus expected, with MUFG's base case having called for a hold. BoJ Governor Ueda's speech via Deputy Himino on April 13 cooled hike expectations for the April 27-28 meeting, leaving the yen as the weakest leg of our framework.
How our views are tracking
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Short EUR/AUD — thesis strengthened Now +329 pips and deep inside our tactical target after the ceasefire-driven AUD surge and solid Australian March employment data (full-time jobs +52,500, unemployment steady at 4.3%) cemented the case for a May RBA hike. |
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Short USD/SGD — thesis strengthened At +158 pips and through the tactical target after MAS tightened into an environment where most analysts expected a hold — the SGD appreciation pathway is now structurally reinforced by policy. |
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Short CHF/JPY — thesis weakened Still deep offside at −446 pips, and Ueda's cautious April 13 speech has kept the BoJ hike probability near 44% — this trade now entirely depends on a coin-flip delivery at the April 27-28 meeting, and our recommendation to reduce by 50% has become more urgent. |
Invalidator watch
No invalidators have triggered, but the JPY positions are on a tighter leash. The BoJ hold probability sits near 56% — uncomfortably close to our threshold — while Ueda offered no hawkish signal this week to shift that pricing. On the constructive side, the Brent collapse from $104 to $90 has pushed the $120 and $130 oil thresholds further away, reducing energy-side risk for CAD/SGD, USD/SGD, and CHF/JPY. The Hormuz re-closure on April 18, however, introduces a new source of headline-driven binary risk: any announcement about strait status can swing Brent by $5-10 in minutes, adding noise to all energy-sensitive crosses. All non-JPY positions remain clearly valid.
Next week
| Mon Apr 20 | Canada March CPI | Affects: CAD/SGD, GBP/CAD, NZD/CAD |
| Tue Apr 21 | New Zealand Q1 CPI | Affects: AUD/NZD, NZD/CAD |
| Wed Apr 22 | UK March CPI | Affects: GBP/AUD, GBP/CAD, GBP/JPY |
| Wed Apr 23 | Eurozone Flash PMI (April) | Affects: EUR/AUD, EUR/SGD, EUR/JPY |
| Mon Apr 27 | BoJ MPM begins (decision Apr 28) | Affects: all JPY pairs |
The NZ Q1 CPI on Tuesday is the nearest high-stakes binary event — a dip below the RBNZ's forecast would compress hike expectations and support our long AUD/NZD thesis, while a hot print above 3.0% would challenge the Antipodean divergence trade just as it approaches our tactical target ceiling. Meanwhile, the BoE projected UK March CPI near 3.5% due to energy pass-through; a beat above that level on Wednesday would accelerate GBP weakness and benefit our short GBP/AUD and short GBP/CAD positions. But all eyes remain on the BoJ decision next Monday — the single most consequential event for the portfolio, arriving just as the Israel-Lebanon ceasefire's 10-day window expires around the same date.
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