The BoJ delivered a hawkish hold on Tuesday — rates unchanged at 0.75% but three dissenters voted for an immediate hike to 1.0%, the sharpest internal split in years — and USD/JPY dropped nearly half a percent to 158.95 as markets priced a 74% chance of a June move, breathing life back into our short JPY positions. Australia's March CPI surged to 4.6% headline with trimmed mean holding at 3.3%, and the RBA meets Monday-Tuesday with an 86% probability of hiking to 4.35% — a decisive catalyst for our short EUR/AUD and long AUD/NZD trades. The Fed held at 3.5-3.75% in a dramatic 8-4 split — the first four-dissenter decision since 1992 — tilting the statement hawkish, while the ECB held at 2% but Lagarde confirmed a rate hike was discussed "at length" and flagged June as the "right time" for a reassessment, keeping EUR under pressure. Brent hit $107.97 during the week as Iran sent a new diplomatic proposal through Pakistani mediators, keeping the oil risk premium elevated across all energy-sensitive positions.
How our views are tracking
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Short EUR/AUD — thesis strengthened Australia's 4.6% CPI print locks in the RBA hike case for Tuesday while the ECB's stagflationary paralysis deepens — at +364 pips this trade has hit its tactical target and we reiterate taking 50% profit now. |
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Short USD/CHF — thesis strengthened The hawkish Fed split pushed USD higher intraweek but CHF safe-haven demand from persistent Hormuz uncertainty and Brent above $107 has kept this pair anchored inside our tactical target zone at +147 pips. |
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Short CAD/SGD — thesis weakened, approaching stop The BoC held at 2.25% with no hawkish surprise while Brent's surge above $107 continues to supercharge CAD — at −92 pips and approaching our 0.9350-0.9400 stop zone, we recommend reducing by 50% immediately. |
Invalidator watch
The BoJ result was far better than feared. Our USD/JPY invalidator — "BoJ holds with dovish statement" — did not trigger: the hold came with a hawkish 6-3 split, a core inflation upgrade to 2.8%, and markets now pricing a June hike at 74%. The JPY leg has been reprieved. Our oil-sensitive invalidators remain on watch: Brent at ~$108 is closing in on the $120 WTI threshold that would trigger exits on CAD/SGD and USD/SGD. All other positions remain valid — the RBA hike case is intact, and the Swiss referendum is still six weeks away.
Next week
| Tue May 5 | RBA Rate Decision | Affects: EUR/AUD, AUD/NZD, GBP/AUD |
| Wed May 6 | NZ Q1 Employment Data | Affects: AUD/NZD, NZD/CAD |
| Thu May 7 | Caixin China Services PMI | Affects: AUD pairs, SGD pairs |
| Fri May 8 | US April Nonfarm Payrolls | Affects: USD/CHF, USD/JPY, USD/SGD |
| Ongoing | Iran-US diplomatic developments | Affects: All pairs via oil |
The RBA decision on Tuesday is the single most important event. A hike to 4.35% — now the consensus call — would be the third consecutive increase and should extend AUD strength across our EUR/AUD and AUD/NZD positions. A surprise hold would challenge the AUD leg materially. Our full analysis models both scenarios.
Full analysis with all pair rankings, carry landscape, risk dashboard, and catalyst calendar available for Edge and Dossier members.