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The combination of: i) rampant monetary easing; ii) passive currency depreciations and; iii) disinflationary economic data and;  iv) soaring equities has produced the perfect storm against both gold and the Japanese yen. See full analysis here

JPY accelerates weakness as BoJ's Kuroda reiterates that Japan is not targeting FX but only conducting monetary policy. Rather than chasing any JPY cross in sight, we issued 2 tactical Premium trades in CADJPY ahead of the Canada jobs report as a partial hedge to our existing USDCAD trades and a play on JPY weakness regardless of any downside surprise in the jobs report. CAD jobs figures due at 8:30 ET (13:30 London) expected at +15K from prev -54.5K with the unemployment rate expected unchanged at 7.2%. Full trades are in the latest Premium Insights under the CADJPY section

USDJPY finally breaks the 100 level for the first time since April 14, 2009 amid a combination of prolonged risk appetite and relentless easing by the major central banks—Rate cuts in Australia, South Korea or currency intervention in New Zealand, traders are facing witness rampant currency deprecations and policy easing. AUDUSD breaks below 1.01, while EURUSD is 16 pips away from our final 1.3020 target signalled on May2nd. Our Premium Insights had called for renewed bearishness in AUDUSD, based on a unique combination of converging daily/weekly/monthly momentum indicators and deteriorating fundamentals covered last Friday. Wednesday's EURAUD longs are both in progress and so is our short in EURJPY and longs in USDCAD. Full details in our Premium Insights.

Risk trades once again climbed higher on Wednesday, led by stock markets. The euro was the top performer helped by comments from Mersch while the kiwi lagged. The Australian dollar has been on the sidelines of the risk rally but that could change with employment numbers and Chinese CPI. EURUSD nears its 100 DMA, which is a confluence with100 WMA. We added 2 new trades and shorts in EURAUD, which can be seen in the latest Premium Insights.

The ECB is building a new playbook as it looks for ways to restart lending. Governing Council member Mersch hinted that policymakers are brainstorming on programs and the German press said SME loans could be securitize. This is a new phase for the ECB and as long as the programs don't entail QE style money printing, the euro will respond positively.

EUR/USD rallied early in trading on upbeat German data but the rally was sustained by a hint at action from Mersch and it ran as high as 1.3193 before sliding back to 1.3155.

FX hasn't been overly correlated with stocks over the past month but traders should be aware of the risks of an equity market pullback if the newsflow worsens before the weekend. The S&P 500 has risen for 5 consecutive days and 12 of the past 14. In the past month, AUD/JPY has had a high correlation with stocks.

The other risk for the Aussie in the upcoming session is from the April employment report at 0130 GMT. Economists expect 11K new jobs and a steady 5.6% unemployment rate. The upside and downside risks are equal with this report and the full/part-time breakdown is an important secondary consideration.

At the same time, China will release April CPI numbers. The inflation index is expected up 2.3% y/y, accelerating from 2.1% in March. Rising inflation could lead China to tighten policy, which would hurt AUD. Alternatively, a steady 2.1% reading or lower could help to boost AUD.

With both releases scheduled for the same time, expect some volatile swings.

Mixed messages as to whether the ECB was buying asset backed securities were never confirmed, but the latest restatement by the various speakers at the central bank that it will do all that is necessary to maintain liquidity and stabilize the Eurozone economy were taken as the equivalent of Draghi's readiness to keep  the currency irreversible. The 100 DMA on EURUSD is a near confluence with its 100 WMA. We added 2 new trades and shorts in EURAUD, which can be seen in the latest Premium Insights.

The Aussie's decline dominated trading as the RBA surprised most economists through a 25-bp rate cut, dragging rates to 2.75%--their lowest since 1960. Our Premium Insights may not have predicted the rate cut, but Friday's special Premium note (following Aussie's Friday rebound) said the following “We are reaffirming our [Apr 17] shorts in AUDUSD despite the Friday afternoon recovery, which is largely a reflection of soaring equities commanding a rally in FX risk appetite at the expense of the USD and JPY following robust US jobs report. Please see our 3 new charts on AUDUSD below  and the trading note under AUDUSD section”. Indeed, the triple AUDUSD charts from Friday confirmed the shorts from Apr 17 due to the negative sentiment convergence in the daily, weekly and monthly charts. The euro's recovery remains within range despite gold's tumble to 1440s. There are 2 EURUSD trades in the Premium Insights, existing since Thursday's ECB meeting. See our latest Premium Insights for the rationale and methodology of trades and charts.

Only 4 of 22 polled by MNI expect the RBA to cut rates tonight, but this may not prevent the Aussie from extending losses in the event of a pause as the RBA is capable of issuing a dovish statement. Look for fireworks in Asia-Pacific trading as Japan returns from holiday and the RBA delivers a razor thin interest rate decision. The euro slipped on Monday when Draghi mentioned negative deposit rates. Premium clients were shown the Daily-Weekly-Monthly charts on the AUDUSD in the May 3 edition of the Premium Insights, with the rationale laid out for the convergence of momentum dynamics. Both EURUSD shorts remain in progress. Full access is shown on the latest Premium Insights.

A holiday in the UK and parts of Europe led to a less-enthusiastic day of trading. The highlight came when Draghi re-iterated comments at last week's press conference, he said the ECB was ready to act if economic data deteriorates. He also said the ECB will look openly into negative deposit rates and study the issue closely. Last week, Draghi tanked the euro when he said the Governing Council had an 'open mind' on sub-zero rates.

The latest comments led to a 50-pip drop in the euro to as low as 1.3054. Traders were somewhat confused about what Draghi said because he was ad-libbing the comments in Italian at a ceremony for an honorary degree and the official text of his speech was mundane.

The euro later recouped a portion of its losses to 1.3075. Overall, there is very little to take away from the latest comments but it might indicate the ECB is slightly more inclined to negative deposit rates but it's far from a settled issue.

A more decisive central bank move will come at 0030 GMT (1:30 am London time) with the RBA decision. The derivatives market is evenly split on decision with OIS implying a 52% chance of a cut. Economists are less dovish with 21 of 29 in the Bloomberg survey saying rates will remain at 3.00%.

AUD/USD will assuredly break the April low of 1.0221 on a cut and any type of dovish bias will lead to a test of the 9-month low at 1.0115. The speculative market is heavily long and a decline could lead to a race to the exits.

No rate cut might not have the same strong reaction. It depends how the RBA frames the decision. No change in the tone of the statement would erase the 60-pip decline on Monday and could set AUD on a path toward last week's high. If the RBA holds but is more dovish, indicating a cut next month, a rally might quickly fade.