One of the worlds most profitable Hedge Fund Managers Paul Tudor Jones called it in Tony Robbins Money Master Book " my #1 Trading indicator " and some of my colleagues in institutions and banks have referred to it as a key barometer for where substantial money flow often occurs. I am referring to the 200-Day Moving Average on a Daily chart and as the charts will demonstrate below the 200 MA (moving average) not only has the potential to reverse a currency market but can also be a general guide to where the overall trend is. So how can you use the 200 MA to potentially improve your strike rate in the currency markets?
It is generally viewed by most professional traders that if price is above the 200 MA they will not attempt to short a currency and will generally only look to use their trading system to buy into the market they are trading. The opposite when price is below the 200 MA, they will generally look to only short the currency pair they are trading. Trading systems that appear to have an edge on a higher time frame such as a 4-hour or daily chart can potentially be enhanced by applying this rule of thumb.
Following are 4 charts showing the 200 MA on a Daily Chart. If you’d like to apply a 200 MA to your MT4 platform simply go to the Menu at the top of the page, click on Insert, then click on indicators and then trend. You will see Moving Average listed there for you to click on and load.
Make sure you input 200 into the Period box under Parameters. Andrew Barnett | Director / Senior Currency Analyst Andrew Barnett is a regular Sky News Money Channel Guest and one Australia’s most awarded and respected financial experts, and is regularly contacted by the Australian Media for the latest on what is happening with the Australian Dollar. Connect with Andrew: Email
By
GO Markets
Disclaimer: Articles are from GO Markets analysts and contributors and are based on their independent analysis or personal experiences. Views, opinions or trading styles expressed are their own, and should not be taken as either representative of or shared by GO Markets. Advice, if any, is of a ‘general’ nature and not based on your personal objectives, financial situation or needs. Consider how appropriate the advice, if any, is to your objectives, financial situation and needs, before acting on the advice. If the advice relates to acquiring a particular financial product, you should obtain our Disclosure Statement (DS) and other legal documents available on our website for that product before making any decisions.
If you've spent any time looking at a trading terminal, you've seen it. A news headline breaks, a chart line snaps, and suddenly everyone is rushing for the same exit or the same entrance. It looks like chaos. In practice, it is often a chain of mechanical responses.
This matters for a couple of reasons. Many readers assume the story is the trade. It is not. The story, whether it is an interest rate decision, a supply shock or an earnings miss, is the fuel and the playbook is the engine.
Below are seven core strategies often used in contracts for difference (CFDs) trading. With CFDs, you are not buying the underlying asset. You are speculating on the change in value. That means a trader can take a long position if the price rises, or a short position if it falls.
Seven strategies to understand first
1. Trend following (the establishment play)
Trend following works on the idea that a market already in motion can remain in motion until it meets a clear structural obstacle. Some market participants view it as a chart-based approach because it focuses on the prevailing direction rather than trying to call an exact turning point.
The rationale: The aim is to identify a clear directional bias, such as higher highs and higher lows, and follow that momentum rather than position against it.
What traders look for: Exponential moving averages (EMAs), such as the 50-day or 200-day EMA, are commonly used to interpret trend strength, though indicators can produce false signals and are not reliable on their own.
Source: GO Markets | Educational example only.
How it works: The 50-period EMA can act as a dynamic support level that rises as price rises. In an uptrend, some traders watch for the market to make a new higher high (HH), then pull back towards the EMA before moving higher again. Each higher low (HL) may suggest buyers are still in control.
When price touches or comes close to the 50-period EMA during that pullback, some traders treat that area as a potential decision zone rather than assuming the trend will resume automatically.
What to watch: The sequence of HHs and HLs is part of the structural evidence of a trend. If that sequence breaks, for example if price falls below the previous HL, the trend may be weakening and the setup may no longer hold.
2. Range trading (the ping-pong play)
Markets can spend long stretches moving sideways. That creates a range, where buyers and sellers are in temporary balance. Range trading is built around this behaviour, focusing on moves near the bottom and top of an established range.
The rationale: Price moves between a floor, known as support, and a ceiling, known as resistance. Moves near those boundaries can help define the width of the range.
What traders look for: Some traders use oscillators such as the Relative Strength Index (RSI) to help judge whether the asset looks overbought or oversold near each boundary.
Source: GO Markets | Educational example only.
How it works: The support level is a price zone where buying interest has historically been strong enough to stop the market from falling further. The resistance level is where selling pressure has historically prevented further gains.
When price approaches support, some traders look for signs of a potential rebound. When it approaches resistance, they look for signs that momentum may be fading. RSI readings below 35 can suggest the market is oversold near support, while readings above 65 can suggest it is overbought near resistance.
What to watch: The main risk in range trading is a breakout, when price pushes decisively through either level with strong momentum. This may signal the start of a new trend and using a stop-loss just outside the range on each trade may help manage that risk.
3. Breakouts (the coiled spring play)
Eventually, every range comes under pressure. A breakout happens when the balance shifts and price pushes through support or resistance. Markets alternate between periods of low volatility, where price moves sideways in a tight range, and high-volatility bursts where price can make a larger directional move.
The rationale: Quiet consolidation can sometimes be followed by a broader expansion in volatility. The tighter the compression, the more energy may be stored for the next move.
What traders look for: Bollinger Bands are often used to interpret changes in volatility. When the bands tighten, a squeeze is forming. Some market participants view a move outside the bands as a sign that conditions may be changing.
Source: GO Markets | Educational example only.
How it works: Bollinger Bands consist of a middle line, the 20-period moving average, and 2 outer bands that expand or contract based on recent price volatility. When the bands narrow and come close together, the squeeze, the market has been unusually calm.
This is often described as a coiled spring. Energy may be building, and a sharper move can follow. Some traders treat the first move through an outer band as an early clue on direction, rather than a definitive signal on its own.
What to watch: Not every squeeze leads to a powerful breakout. A false breakout occurs when price briefly moves outside a band, then quickly reverses back inside. Waiting for the candle to close outside the band, rather than entering mid-candle, can reduce the risk of being caught in a false move.
4. News trading (the deviation play)
This is event-driven trading. The focus is on the gap between what the market expected and what the data or headline actually delivered. Economic data releases, such as inflation figures (CPI), employment reports and central bank decisions, can cause sharp, fast moves in financial markets.
The rationale: High-impact releases, such as inflation data or central bank decisions, can force a fast repricing of assets. The bigger the surprise relative to expectations, the larger the move may be.
What traders look for: Traders often use an economic calendar to track timing. Some focus on how the market behaves after the initial reaction, rather than treating the first move as definitive.
Source: GO Markets | Educational example only.
How it works: Before the news, price may move in a calm, tight range as traders wait. When the data is released, if the actual reading differs significantly from the consensus expectation, repricing can happen fast.
Gold, for example, may spike sharply on a CPI reading that comes in above expectations. However, the candle can also print a very long upper wick, meaning price reached the spike high but was then rejected strongly. Sellers may step in quickly, and price may retrace. This spike-and-retrace pattern is one of the more recognisable setups in news trading.
What to watch: The direction and size of the initial spike do not always tell the full story. Wick length can offer an important clue. A long wick may suggest the initial move was rejected, while shorter wicks after a data release may indicate a more sustained directional move.
5. Mean reversion (the rubber-band play)
Prices can sometimes move too far, too fast. Mean reversion is built on the idea that an overextended move may drift back towards its historical average, like a rubber band pulled too tight, then snapping back.
The rationale: This is a contrarian approach. It looks for stretches of optimism or pessimism that may not be sustainable, and positions for a return to equilibrium.
What traders look for: A common example is price moving well away from a 20-day moving average (MA) while RSI also reaches an extreme reading. In that setup, traders watch for a move back towards the mean rather than a continuation away from it.
Source: GO Markets | Educational example only.
How it works: The 20-period MA represents the market's recent average price. When price moves into an extreme zone, such as more than 3 standard deviations above or below that average, it has moved a long way from its recent trend.
An RSI above 70 can suggest the market is stretched to the upside, while below 30 can suggest the same to the downside. Some mean reversion traders use these combined signals as a sign that a pullback towards the 20-period MA may be possible, rather than assuming the move will continue to extend.
What to watch: Mean reversion strategies can carry significant risk in strongly trending markets. A market can remain extended for longer than expected, and a position entered against the short-term trend can generate large drawdowns. Position sizing and clear stop-losses are critical.
6. Psychological levels (the big figure play)
Markets are driven by people, and people tend to focus on round numbers. US$100, US$2,000 or parity at 1.000 on a currency pair can act as magnets. In financial markets, certain price levels can attract a disproportionate amount of buying and selling activity, not because of technical analysis alone, but because of human psychology.
The rationale: Large orders, stop-losses and take-profit levels can cluster around these big figures, which may reinforce support or resistance. This self-reinforcing behaviour is one reason these rejections can become meaningful for traders.
What traders look for: Traders often watch how price behaves as it approaches a round number. The market may hesitate, reject the level or break through it with momentum. Multiple wick rejections at the same level may carry more weight than a single one.
Source: GO Markets | Educational example only.
How it works: When price approaches a round number from below, some traders watch for long upper wicks, the thin vertical line above the candle body. A long upper wick means price reached that level, but sellers stepped in aggressively and pushed it back down before the candle closed.
One wick rejection may be notable. Three in a cluster may be more significant. Some traders use this accumulated rejection as part of the case for a short (sell) setup at that level.
What to watch: Psychological levels can also act as magnets in the opposite direction. If price breaks through with conviction, the level may then act as support. A decisive close above the level, rather than just a wick break, can be an early sign that the rejection setup is no longer holding.
7. Sector rotation (the economic season play)
This is a macro strategy. As the economic backdrop changes, capital may move from higher-growth sectors into more defensive ones, and back again. Not all parts of the sharemarket move in the same direction at the same time.
The rationale: In a slowing economy, discretionary spending may weaken while demand for essential services can remain more stable. Investors may rotate capital between sectors accordingly.
What traders look for: With CFDs, some traders express this view through relative strength, taking exposure to a stronger sector while reducing or offsetting exposure to a weaker one.
Source: GO Markets | Educational example only.
How it works: During a growth phase, when the economy is expanding, investors tend to prefer growth-oriented sectors like technology. As the economic environment shifts, perhaps due to rising interest rates, slowing earnings or increasing recession risk, a rotation point may emerge.
In the slowdown phase, the pattern can reverse. Technology may weaken while utilities may strengthen, as investors move capital into defensive, income-generating sectors. Early signals can include relative underperformance in growth sectors combined with unusual strength in defensives.
What to watch: Sector rotation is not usually an overnight event. It typically unfolds over weeks to months. Tracking the ratio between two sectors, often shown in a relative strength chart, can make this shift visible before it becomes obvious in absolute price terms.
Why risk management is the engine of survival
The headline move is one thing. The market implication for your account is another. If you do not manage the mechanics, the strategy does not matter.
Because CFDs are traded on margin, a small market move may have an outsized impact on the account. If leverage is too high, even a minor wobble may trigger a margin call or automatic position closure, depending on the provider's terms. This is not a theoretical risk. It is a common reason new traders lose more than they expected on a trade that was directionally correct.
The market does not always move in a straight line. Sometimes, price gaps from one level to another, especially after a weekend or major news event and in those conditions, a stop-loss may not be filled at the exact requested price. That is known as slippage. It is one reason large positions may carry additional risk into major announcements.
Bottom line
The vehicle is powerful, but the playbook is what helps keep you on the road.
The obvious trade is often already priced in. What matters more is understanding which market condition is in front of you. Is it trending, ranging, breaking out or simply reacting to a headline?
Readers assessing leveraged products often focus on position sizing, risk limits and product disclosure before deciding whether the product is appropriate for them. The headlines will keep changing. The maths of risk management does not.
Disclaimer: This article is general information only and is intended for educational purposes. It explains common trading concepts and market behaviours and does not constitute financial product advice, a recommendation, or a trading signal. Any examples are illustrative only and do not take into account your objectives, financial situation or needs. CFDs are complex, leveraged products that carry a high level of risk. Before acting, consider the PDS and TMD and whether trading CFDs is appropriate for you. Seek independent advice if needed. Past performance is not a reliable indicator of future results.
One day the ASX is drifting quietly... and the next, margin requirements rise, stops do not fill where expected, and portfolios open with uncomfortable overnight gaps.
If you have been searching for answers, you are not alone. Some of the most searched questions about volatility among Australian traders relate to margin calls, slippage, overnight gaps, leveraged exchange traded funds (ETFs), and tools such as average true range (ATR).
Here is what is happening.
Why this matters now
Global markets have become more sensitive to interest rates, inflation data, geopolitics and technology-driven flows. When liquidity thins and uncertainty rises, price swings widen. That is volatility.
And volatility doesn’t just affect price direction, it changes how trades are executed, how much capital is required, and how risk behaves beneath the surface.
Translation: Volatility is not just about bigger moves, rather, it’s about faster moves and thinner liquidity - that’s when the mechanics of trading matter most.
One of the most searched questions about volatility is why margin requirements increase without warning.
When markets become unstable, brokers may increase margin requirements on contracts for difference (CFDs) and other leveraged products. Larger price swings can increase the risk of accounts moving into negative equity thus raising margin requirements reduces available leverage and can help manage exposure during extreme conditions.
What this can mean in practice
-A margin call may occur even if price has not moved significantly. -Effective leverage can drop quickly. -Positions may need to be reduced at short notice.
Margin adjustments are typically a response to changing market risk, not a random decision. In highly volatile markets, it is prudent to assume margin settings can change quickly, therefore many traders choose to review position sizes and available buffers in light of that risk.
What is slippage and why didn’t my stop fill at my price?
Another frequently searched topic is slippage.
Slippage can occur when a stop order triggers and is executed at the next available price, the outcome can depend on the order type, market liquidity and gaps. In calm markets, the difference may be small whereas in fast markets, prices can gap beyond the stop level.
Illustration of price gap through stop-loss level | GO Markets
Stop-loss orders generally prioritise execution rather than price certainty and during periods of high volatility, this distinction becomes important. Adjusting position size and placing stops with reference to typical price movement may be more effective than simply tightening stops in unstable conditions.
How do I manage overnight gapping on the ASX?
Australia trades while the United States sleeps, and vice versa. This time zone difference is, sadly, one reason overnight gap risk is frequently searched by Australian traders. If US markets fall sharply, the ASX may open lower the following morning, with no opportunity to exit between the close and the open.
Examples of risk-management approaches market traders may use include
-Index hedging using ASX 200 futures or CFDs*. -Partial hedging during high risk events. -Reducing exposure ahead of major macro announcements.
Hedging can offset part of a move, but it introduces basis risk as individual stocks may not move in line with the broader index.
There is no perfect protection, only trade-offs between cost, complexity and risk reduction.
*CFDs are complex instruments and come with a high risk of losing money due to leverage.
What are the key risks of leveraged or inverse ETFs in volatile markets?
Leveraged and inverse ETFs are often searched during periods of heightened volatility.
While these products typically reset daily, they aim to deliver a multiple of the index’s daily return, not its long-term return. In a volatile, sideways market, daily compounding can erode value even if the index finishes near its starting level.
This occurs because gains and losses compound asymmetrically. A fall of 10 percent requires a gain of more than 10 percent to recover. When that effect is multiplied daily, outcomes can diverge materially from the underlying index over time.
Such instruments may be used tactically by some market participants. They are generally not designed as long-term hedging tools and understanding their structure is essential before using them in a strategy.
How can ATR be used to inform stop placement?
Average true range (ATR) is a commonly used indicator for measuring volatility.
ATR estimates how much an asset typically moves over a given period, including gaps. Rather than setting a stop at an arbitrary percentage, some traders reference ATR and place stops at a multiple, such as two or three times ATR, to reflect prevailing conditions.
When volatility rises, ATR expands and that can imply wider stops or smaller position sizes if overall risk is to remain constant. The shift is from asking, “How far am I willing to lose?” to asking, “What is a normal move in current conditions?"
Practical considerations in volatile markets
During periods of elevated volatility, traders may consider
Allowing for the possibility of margin changes
Sizing positions conservatively if volatility increases
Recognising that stop-loss orders do not guarantee a specific exit price
Reviewing exposure ahead of major economic events
Understanding the daily reset mechanics of leveraged ETFs
Using volatility measures such as ATR to inform stop placement
Maintaining adequate cash buffers
Volatility does not reward prediction alone. Preparation and risk awareness may assist traders in understanding potential risks, but outcomes remain unpredictable.
Australian markets face specific structural considerations cpmapred to Asian and US Markets. Overnight gap risk is influenced by US trading hours and resource heavy indices such as the ASX can respond quickly to commodity price movements and data from China. Currency exposure, including AUD and US dollar (USD) moves, can add another layer of variability.
Volatility is not uniform across regions. It behaves differently depending on market structure and liquidity depth.
Frequently asked questions about volatility
What causes sudden spikes in market volatility? Interest rate decisions, inflation data, geopolitical developments, earnings surprises and liquidity constraints are common triggers.
Why do brokers increase margin during volatile markets? To reduce leverage exposure and manage risk when price swings widen.
Can stop-loss orders fail during volatility? They can experience slippage if markets gap beyond the stop level, meaning execution may occur at a worse price than expected. In fast or illiquid markets, this difference can be significant.
Are leveraged ETFs suitable for long term hedging? They are generally structured for short-term exposure due to daily resets. Whether they are appropriate depends on your objectives, financial situation and risk tolerance.
How can volatility be measured before placing a trade? Tools such as ATR, implied volatility indicators and historical range analysis can help quantify prevailing conditions.
Risk warning: Periods of heightened volatility can lead to rapid price movements, margin changes and execution at prices different from those expected. Risk-management tools such as stop-loss orders and volatility indicators may assist in assessing market conditions but cannot eliminate the risk of loss, particularly when using leveraged products.
We are less than three weeks away from the ASX earning season and we are less than two weeks away from the earnings season in the US. So, we need to start prepping for trades and opportunities now. First and foremost, do not forget that confession season is well and truly upon us here in Australia.
Downgrades clearly have been coming from the discretionary sector; we've even seen companies hit the wall with the likes of Booktopia going into administration. There are some clear thematics that are growing in the Australian market. Energy, while the worst performing sector for the financial year 2024, may actually show you that earnings were slightly above expectation on higher than expected oil prices.
Materials led in the main by BHP, Rio and FMG Have once again benefited from higher than expected iron ore prices. It also benefited from a lower than expected AUD/USD where average FX prices were expected to be between $0.68 and $0.73 but instead have averaged between $0.63 and $0.67. What we're looking for is operational costs, overall margins and forward looking guidance, something that these firms have lacked in the last three financial updates.
Watch very closely for the excitement that will come from things like copper at the expense of the issues that are facing nickel lithium and other transition metals that have had really tough periods in FY24. Moving to the banks this is a sector people argue is fully valued. It's not hard to argue when through the financial year CBA made record all time highs several times and is still within a whisker of its record all time high.
Higher interest rates will indeed improve net interest margins. However, the unknown question and what we need to see at its August full year earnings is the impact higher rates are having on bad and doubtful debts, the possible increase in provisioning and more importantly the impact its having on new loans and refinancing. There is an argument to be made that banking is possibly fully priced and no matter what result is delivered won't necessarily create a leg further higher.
Finally, you can't go past consumer staples and discretionary. Retail sales numbers over the last 18 months have actually shown discretionary spending At or above 2022 levels although month on month figures have been erratic. The question that will come for discretionary spending is margins and how much sales revenue translates to the bottom line in earnings and profit.
Staples on the other hand have seen consistent movement on the revenue line but the question will be the margin and after the very targeted senate inquiry into supermarkets any sign profits are above trend may actually be met with concern as geopolitics raises its head. 33 times in 2024 the US 500 and the Tech 100 have made record highs – can it continue? Look into the US and the ending season that it is about to undertake. We have to look at several core thematics that are likely to be raised.
Artificial Intelligence (AI) The question you’ve got to ask is: is the time frame long or short? We raised this Mag 7 stocks etc Microsoft, Amazon, Alphabet, apple have clear potential. They are evolving their business models and see the integration of AI as the future of their individual businesses.
That will likely come up in their numbers but it will come with operational and initial upfront costs as the integration of AI begins. This is all long term may not fully capture short term opportunities which is still presenting very much in the semiconductor providers. NVIDIA and Advanced Micro Devices are taking full advantage and monetizing the compute cycle.
This clearly won't be forever because it will go from semiconductors to infrastructure to software and therefore the flows will move back towards the bigger end of town but overall the AI thematic still flows towards the semiconductors for now and that's likely to be shown in the earnings season that's coming. Data Centres That brings us to data centres because the potential for ensuring AI requires a heck of a lot of storage and a heck of a lot of processing. There are estimates the data centres will need to grow by 420% in Europe and 250% in the US by 2035 based on the rate of growth in AI right now.
Therefore, we need to watch providers like Dell Technologies and Intel which are big providers of data centres currently. We think the market hasn’t fully appreciated DC needs in the AI revolution. Cybersecurity The final key theme in the AI data centre technology space that we also think needs to be watched is cyber security.
It's been something along the lines of a 70% increase in ransomware attacks over the past 24 months. The regulatory requirements and the budgets required to deal with these increased threats is only just beginning. That brings players like Fortinet to the fore IT programmes and it's pensively to develop programs for enterprise makes it an interesting one going forward.
GLP-1 ‘Weight Loss’ Medicines Another theme of being a really strong driver of the S&P 500 is the rise of GLP-1 medicines. The weight loss craze that has come off the back of this Amazon has been incredible. Initially obviously developed for diabetes but having an additional effect of weight loss has created a product out of nowhere.
Eli Lilly and Co is a key player in this space with its GLP one class medicines already approved by the FDA. It's been launched in the US and its oral intake has posted adoption. It is not the only one in this space but shows very clearly the impact weight loss medicines are having on earnings.
The caveat we have though is side effects and long term impacts are still being found and could be said as a capping issue on price. Whatever way you look at it the US dating season however will be incredibly exciting and it is the reason The US markets continue to see huge capital inflows as they are much more exciting in this current environment than traditional value markets such as Australia.
Markets enter May with the federal funds target range at 3.50% to 3.75%, the Fed having concluded its 28-29 April meeting, and the next decision not due until 16-17 June. Brent crude is trading near US$108 per barrel, with the IEA describing the ongoing Iran conflict as the largest energy supply shock on record as the Strait of Hormuz remains effectively closed.
The macro tension this month is straightforward but uncomfortable: an oil-driven inflation impulse landing into a labour market that surprised to the upside in March, while Q1 growth came in soft.
The Federal Reserve has revised its 2026 PCE inflation projection to 2.7% and continues to signal one cut this year, though the timing remains contested. With no FOMC scheduled in May, every high-impact release may carry more weight than usual into the June meeting.
Fed Funds Rate
3.50% to 3.75%
Next FOMC
16-17 June 2026
Brent Crude
~US$108
Key data events
6+ high-impact releases
Growth: business activity and demand
The growth picture entering May is mixed. The Q1 GDP advance estimate landed on 30 April, while softer retail sales and inventory data have made the demand picture harder to read.
ISM manufacturing has been a quieter source of optimism, with recent prints holding in expansionary territory. Energy costs and tariff effects are now the variables most likely to shape the next move in business activity.
Key dates (AEST)
02
May
ISM Manufacturing PMI (April)
Institute for Supply Management · 12:00 am AEST
High
06
May
ISM Services PMI (April)
Institute for Supply Management · 12:00 am AEST
Medium
15
May
Retail Sales (April)
US Census Bureau · 10:30 pm AEST
High
What markets look for
Whether manufacturing PMI holds above 50, with the prices paid sub-index giving a read on input cost pressure
Services PMI as a check on the larger share of the US economy, particularly employment and prices
Retail sales control group, which feeds into consumption forecasts
Any sign that sustained Brent crude above US$100 is starting to affect household spending
How this data may move markets
Scenario
Treasuries
USD
Equities
Activity data prints firmer
↑ Yields rise
↑ Firmer
Mixed - depends on valuation stretch
Activity data softens
↓ Yields fall
↓ Softer
Support if inflation cooperates
Labour: payrolls and employment data
The April Employment Situation is one of the most concentrated risk events of the month. March payrolls came in stronger than expected, while earlier data revisions left the trend less clear. April will help show whether the labour market is genuinely re-accelerating or simply absorbing seasonal noise.
Key dates (AEST)
06
May
Job Openings and Labor Turnover Survey (JOLTS)
Bureau of Labor Statistics · 12:00 am AEST
Medium
06
May
ADP National Employment Report (April)
ADP Research Institute · 10:15 pm AEST
Medium
08
May
Employment Situation, April (NFP)
Bureau of Labor Statistics · 10:30 pm AEST
High
What markets may watch
Headline non-farm payrolls (NFP) and the size of any prior-month revisions
Average hourly earnings, with energy-driven cost pressure keeping wage growth in focus
Unemployment rate and labour force participation
Sector mix, including whether goods-producing payrolls show signs of disruption
Market sensitivities
Scenario
Treasuries
USD
Equities
Firm NFP/wage growth
↑ Yields rise
↑ Strength
Pressure on valuations
Soft NFP/weak print
↓ Yields fall
↓ Softer
Mixed - risk of growth scare
Inflation: CPI, PPI and PCE
April inflation lands as the most market-relevant data block of the month. The March consumer price index (CPI) rose 3.3% over the prior 12 months, with energy up 10.9% on the month and gasoline up 21.2%, accounting for almost three quarters of the headline increase. With Brent holding near US$105 to US$108 through the latter half of April, a further passthrough into the April CPI energy component looks plausible.
Core CPI and core personal consumption expenditures (PCE) remain the better read on underlying trend.
Key dates (AEST)
12
May
CPI (April)
Bureau of Labor Statistics · 10:30 pm AEST
High
15
May
Producer Price Index (PPI), April
Bureau of Labor Statistics · 10:30 pm AEST
Medium
29
May
Personal Income and Outlays/PCE (April)
Bureau of Economic Analysis · 10:30 pm AEST
High
What markets may watch
Headline CPI year on year, especially the gasoline component
Core CPI, including shelter, services excluding shelter and core goods
PPI as a read on producer-level passthrough from energy and tariffs
Core PCE, which remains the Fed’s preferred inflation gauge
Market sensitivities
Scenario
Treasuries
USD
Commodities
Inflation cools/surprises lower
↓ Yields fall
↓ Softer
Gold consolidation
Headline runs hot/core sticky
↑ Yields rise
↑ Strength
Gold supported on stagflation risk
Policy, trade and earnings
May has no FOMC meeting, so policy attention shifts to Fed speakers, the path of any leadership transition, and the dominant geopolitical backdrop. Chair Jerome Powell's term concludes around the middle of the month. President Donald Trump has nominated Kevin Warsh as the next Fed chair, with the Senate Banking Committee having held a confirmation hearing.
The Iran conflict, now in its ninth week, remains the single largest source of macro tail risk, with the Strait of Hormuz blockade and stalled US-Iran talks setting the tone for energy markets and broader risk appetite. Q1 earnings season is in its peak weeks, with peak weeks expected between 27 April and 15 May, and 7 May the most active reporting day.
What to monitor this month
Iran-US negotiations and the operational status of the Strait of Hormuz
Fed speakers and any change in tone between meetings
Q1 earnings, especially from retail, energy and cyclical names
Weekly EIA crude inventories
Any tariff-related announcements that may affect inflation expectations
Bottom line
May is not a quiet month just because there is no FOMC meeting. Payrolls, CPI, PPI, retail sales and PCE all land before the June policy decision, while oil remains the dominant external shock.
For markets, the key question is whether the data points to a temporary energy-driven inflation lift, or a broader inflation problem arriving at the same time as softer growth. That distinction may shape the next major move in bonds, the US dollar, gold and equity indices.
Asia-Pacific markets start May with a more complicated macro backdrop than earlier in 2026. Regional growth has shown resilience, but higher energy prices are testing inflation expectations, trade balances and policy flexibility across fuel-importing economies.
For traders, the month's focus is likely to sit across three linked areas.
China Focus
Activity data
April CPI, PPI and purchasing managers' index (PMI)
Japan Focus
BOJ signals
Corporate goods prices and April CPI
Australia Focus
RBA decision
Statement on Monetary Policy and April CPI
Main Regional Risk
Energy volatility
Trade-sensitive sentiment
China
China remains central to the May Asia-Pacific market drivers outlook because its data can influence commodity demand, regional equities and the Australian dollar. The April data round may help traders assess whether the early-year recovery is broadening or still reliant on production, exports and policy support.
Key Dates (AEST)
30
Apr
Official PMI
National Bureau of Statistics · 11:30 am AEST
Medium
11
May
CPI and industrial producer price index (PPI)
National Bureau of Statistics · 11:30 am AEST
High
18
May
April activity data
Industrial production, retail and property · 12:00 pm AEST
High
27
May
Industrial economic benefits
National Bureau of Statistics · 11:30 am AEST
Medium
What markets may look for
Whether CPI data suggest demand-led inflation or continued subdued household pricing power
Whether PPI data point to improving factory margins or cost pressure from energy and raw materials
Whether retail sales show a firmer household sector or continued reliance on production and exports
Whether property data continue to weigh on confidence, construction demand and local government revenue
Why China matters for the region
China data can influence sentiment toward Asian equities, iron ore, copper, energy markets and the Australian dollar. Stronger domestic demand may support commodity-linked sentiment, while softer retail or property figures may keep markets focused on policy support and downside growth risks.
Japan inflation and BOJ signals
Japan's May calendar is less about a fresh BOJ rate decision and more about how markets interpret the April policy meeting, inflation data and wage-sensitive price trends. That matters because Japanese government bond yields and the yen remain sensitive to any shift in policy normalisation expectations.
Key Dates (AEST)
07
May
Minutes of the March BOJ meeting
Bank of Japan · 8:50 am AEST
Medium
12
May
Summary of Opinions – April BOJ meeting
Most market-sensitive Japan event · 9:50 am AEST
High
15
May
Corporate goods price index
Tracks input cost inflation · 9:50 am AEST
Medium
22
May
National April CPI
Statistics Bureau · 9:30 am AEST
High
29
May
Tokyo May CPI
Leading indicator for national trends · 9:30 am AEST
High
What markets may look for
Whether the BOJ still sees conditions for gradual policy normalisation, or whether energy-driven inflation complicates the outlook.
Whether goods and services inflation remain consistent with the 2% inflation objective.
Whether corporate goods prices reflect energy cost pass-through into producer pricing.
Whether Tokyo CPI points to firm or easing near-term price pressure ahead of the June meeting.
Why Japan matters
Japan’s data can influence yen volatility, Japanese government bond yields and the Nikkei 225. A stronger inflation pulse may support expectations for tighter policy over time, but energy-driven inflation can also pressure households and corporate margins. That balance may keep yen and equity reactions data-dependent.
Australia and the RBA decision
Australia has one of the clearest domestic policy events in the region in May. The RBA's Monetary Policy Board meets on 4 and 5 May, with the decision statement and Statement on Monetary Policy due at 2:30 pm AEST on 5 May. The Governor's media conference follows at 3:30 pm AEST.
Key Dates (AEST)
29
Apr
March CPI
Final read before RBA decision · 11:30 am AEST
High
05
May
RBA decision and Statement on Monetary Policy
Key domestic volatility event · 2:30 pm AEST
High
19
May
Minutes of the May RBA meeting
Reserve Bank of Australia · 11:30 am AEST
Medium
27
May
April CPI
First read on energy pass-through · 11:30 am AEST
High
What markets may look for
Whether the RBA gives more weight to inflation persistence or household demand risks in its decision statement.
Whether the Statement on Monetary Policy adjusts inflation, growth or labour market assumptions from the February update.
Whether April CPI confirms or challenges the inflation narrative after the May decision.
Whether labour conditions remain firm enough, with unemployment at 4.3% in March, to keep services inflation in focus.
Why Australia matters
Australia’s May data may influence AUD/USD, ASX 200 rate-sensitive sectors and short-end bond yields. A firmer inflation profile could support expectations for a restrictive RBA stance, while softer activity or household signals may limit how far markets price additional tightening. For index CFDs and forex CFDs, this is the highest-signal domestic event of the month.
Regional swing factors
Energy remains the main cross-market risk for May. Higher oil and gas prices can lift inflation, widen trade gaps and reduce policy space, particularly for economies dependent on imported fuel such as Japan, South Korea and parts of South-East Asia.
Regional themes to watch
ASEAN purchasing managers' index releases may indicate whether manufacturing momentum is broadening or losing speed. The Australian dollar, New Zealand dollar and Asian FX may remain sensitive to China data and global risk appetite. Iron ore and energy prices may influence Australia and China-linked equities. The RBA, BOJ and People's Bank of China face different inflation and growth trade-offs, and energy supply concerns may continue to shape inflation expectations and risk sentiment across the region.
Key watchlist
01
Top China Data Point
18 May activity data, particularly retail sales and property indicators
02
Top Japan Event
12 May BOJ Summary of Opinions from the April meeting
03
Top Australia Event
5 May RBA decision and Statement on Monetary Policy
04
Main Regional Wildcard
Energy price volatility linked to Middle East developments
05
Most Sensitive Market
AUD/USD, given its link to China demand and RBA repricing risk
06
Key Condition Shift
Evidence that inflation pressure is becoming persistent rather than mainly energy-led
Bottom Line
May’s Asia-Pacific calendar gives markets several points to reassess the region’s inflation, growth and policy mix. China data may shape commodity and risk sentiment, while Japan’s inflation signals and the RBA decision will guide rate pricing.
Energy remains the primary regional risk. If inflation pressure appears more persistent rather than energy-led, markets will become increasingly sensitive to central bank communication and yield repricing.
ASIA SESSION IN FOCUS
Watching Asia-Pacific moves today?
Track Asia-Pacific themes and monitor moves as they unfold.
As we enter May 2026, the global FX market is attempting a difficult high-wire act. April was defined by "civilisation-ending" ultimatums and a Pakistani-brokered ceasefire that sent Brent crude on a rollercoaster from US$110 down to the mid-US$90s.
For traders, the connect-the-dots moment is this: the peak panic around the Iran conflict has faded, but it has been replaced by a structural regime shift. Markets may be moving from a war premium to a transition premium.
With Kevin Warsh nominated to take the Fed chair in mid-May and the Bank of Japan (BOJ) staring down a generational ceiling near 160.00, the calm in the headlines may be masking a major repricing of global yield differentials.
DXY context
Holding near 100.00 on the “Warsh hawk” floor
Strongest currency
USD, supported by safe-haven demand and yield advantage
Weakest currency
JPY, pressured by the rate gap and energy import exposure
Main central bank theme
The hawkish hold and Fed leadership transition
Main catalyst ahead
RBA (5 May) and US Non-Farm Payrolls (8 May)
Monthly leaderboard — biggest movers
01USD
Rose sharply on safe-haven demand and higher for longer yield expectations.
Strongest
02CHF
Advanced strongly as the preferred European refuge from Middle East risk.
Safe Haven
03AUD
Mixed; caught between domestic energy inflation and a hawkish RBA.
Mixed
04NZD
Under pressure; yield gap and capital outflows remains the primary narrative.
Down
05JPY
Fell to 20-month lows; pressured by the widening rate gap and energy import costs.
Weakest
Strongest mover: US dollar (USD)
The US dollar enters May with a new kind of ballast. While the ceasefire reduced the immediate need for a panic hedge, the nomination of Kevin Warsh, widely viewed as an inflation hawk, has provided a structural floor for the greenback.
Markets may be front-running a shift in Fed independence alongside a stricter approach to inflation targeting. That combination - a credible hawkish signal at the policy level - tends to support the dollar even when the near-term data is mixed.
Key drivers
The Warsh effect:
Markets may be front-running a shift in Fed independence and a stricter approach to inflation targeting.
Energy insulation:
As a net exporter, the US may be better cushioned against any fragile ceasefire-related flare-ups in oil than Europe or Japan.
Yield floor:
The federal funds rate at 3.50% to 3.75% remains a potential magnet for global capital.
What markets are watching next
Traders are watching the 101 level on the DXY. A sustained break above this high-volume area could signal a restart of the primary uptrend and a softer-than-expected US non-farm payrolls report on 8 May may challenge that view.
Weakest mover: Japanese yen (JPY)
If you wanted to design a currency to struggle in 2026, the yen fits the brief. Despite the "TACO" script, short for "Trump always chickens out", providing some relief to equities, the mathematical pressure on JPY remains significant.
The BOJ continues its delicate exit from long-term stimulus, but this process has been slower than many anticipated. The USD/JPY pair remains particularly sensitive to US Treasury yields. A move above 4.5% on the US 10-year could put additional pressure on the BOJ to act.
Key drivers
The yield chasm:
Even if the BOJ hikes to 1.00%, the spread against the US dollar would remain around 275 basis points (bps), which may keep the carry trade attractive.
Import vulnerability:
Japan’s heavy reliance on Middle East oil means energy costs may continue to weigh on its current account, even with oil near US$93.
Intervention fatigue:
Finance Minister Katayama has warned of “bold action”, but past interventions in 2022 and 2024 have tended to provide only short-lived relief.
Strategic outlook
USD/JPY is sitting near 159.80. The generational ceiling around 160.40, reportedly not breached in 35 years, remains the key battleground.
The pair to watch: AUD/USD
The Australian dollar sits at an interesting intersection.
Inflation in Australia has proven more persistent than in other developed economies, which may encourage the Reserve Bank of Australia (RBA) to maintain a cautious, higher-for-longer stance. This could create potential yield support for the AUD that does not exist in the same way for currencies where central banks are already cutting.
What could support the AUD
At the same time, the AUD remains deeply exposed to commodity markets and Chinese demand.
Iron ore and copper are critical inputs for the Australian economy. If global demand remains stable, the Australian dollar could find further support. Any shift in Chinese industrial data will be a key signal for this pair.
The EUR/USD comparison
The EUR/USD dynamic also warrants attention.
The European Central Bank (ECB) is balancing a cooling economy with regional inflation targets. Growth in Germany remains a concern for the eurozone, and markets are pricing in a potential rate cut that could narrow the interest rate differential with the US.
That shift may cause the euro to soften relative to the US dollar. Political developments within the European Union, particularly any fiscal disagreement, could add to volatility in that pair.
Data to watch next
Four events stand out as the clearest catalysts. Each has a direct transmission channel into rate expectations and, by extension, into forex CFDs.
Key dates and FX sensitivity
05
May
RBA Policy Decision
AUD pairs, ASX 200 · 02.30 pm AEST
Markets are pricing a 74% chance of a hike to 4.35% as domestic inflation remains persistent. The outcome may shape AUD direction over the following weeks.
08
May
US Labour Market (NFP)
USD pairs, Gold · 10:30 pm AEST
A second consecutive miss could create an uncomfortable narrative for the new Fed leadership transition. The NFP report provides the clearest picture of US labour market health.
12
May
US consumer price index (CPI), April
USD/JPY, EUR/USD · 10:30 pm AEST
The first clear read on whether the April oil price spike has flowed into core services and sticky inflation. It may influence the Fed’s tone for the remainder of the quarter.
20
May
NVIDIA Q1 Earnings
US Tech, AI Infrastructure · Morning AEST
A key pulse check for the AI infrastructure “invoice phase” and broader risk-on sentiment. It may influence risk-correlated currencies, including AUD and NZD.
Key levels and signals
◆
USD/JPY 160.00
A possible line in the sand for Ministry of Finance intervention. Actual or threatened action here has historically produced sharp reversals in the pair.
◆
AUD/USD 0.7000
A psychological handle that acted as a heavy pivot during the 2025 trade war; remains a near-term directional reference for positioning.
◆
Brent crude US$92.13
Technical resistance where a break lower could confirm the geopolitical floor has weakened, potentially easing pressure on importers.
◆
US 10-year yield 4.5%
A break above this level could create significant valuation pressure for growth-linked FX pairs and emerging market assets.
Bottom line
The FX moves heading into May are being shaped by a normalisation trap. Traders may be betting that the worst of the energy shock is over but a hawkish Fed leadership transition could still re-steepen the yield curve.
Moves are likely to remain highly data-dependent and sensitive to overnight gaps from the Middle East, where geopolitical shifts can gap markets before the next session opens.
The FX market heading into May is being shaped by a normalisation trap. Traders may be betting that the worst of the energy shock is over, but a hawkish Fed leadership transition could still re-steepen the yield curve. Moves are likely to remain highly data-dependent and sensitive to overnight gaps from the Middle East, where geopolitical shifts can gap markets before the next session opens.
Asia-Pacific Coverage
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