Market Brief
With the exception of the Japanese yen, the Aussie and the Kiwi, which all moved substantially, FX markets traded sideways during the Asian session in response to an extremely light economic calendar. In Asia, the Australian dollar rose for a third straight day amid a strong improvement in business conditions and confidence (NAB report). According to the National Australian Bank, the business condition gauge jumped to 12 in March from 8 in the previous month, the highest level since October 2014, as all three components (trading, profits and employment) improved during the month. Similarly, business confidence surged to 6 in March from 3 in February, suggesting that the recovery in non-mining sectors is still on track. Overall, the Aussie economy seems to have weathered relatively well the financial market volatility and escalation in global economic concerns. This is due to the rally in most commodity prices and fading expectations for further rate hikes by the Federal Reserve this year. AUD/USD hit 0.7646 in Sydney but was unable to break the 0.7637 resistance (high from April 7th) to the upside. On the downside, the main support can be found at 0.7477 (low from March 24th). On the medium-term, the technical structure favours a bullish bias, however the pair will need a fresh boost to break the strong resistance that lies between 0.7850 and 0.80.
EUR/USD moved sideways in Tokyo and stayed within the 1.14-1.1420 range as traders await the next batch of economic data from the US. March’s retail sale, PPI and the Beige Book are due tomorrow. We will therefore get some action then - at least. From a technical standpoint, the closest resistance can be found at 1.1454 (high from April 7th). On the downside a support area lies between 1.1310 and 1.1350 (multi lows).
In the equity market, Asian regional markets were mostly trading in positive territory with the exception of mainland Chinese markets. The Shenzhen and Shanghai Composite were down 0.84% and 1.60%. In Hong Kong the Hang Seng edged up 0.27%. In Japan, equities reversed yesterday’s losses with the Nikkei and Topix indices surging 1.13% and 1.53% respectively as USD/JPY bounced back.
USD/JPY seemed to have bottomed out at around 108 as speculators failed to push the yen higher on fears that the BoJ would move to weaken the JPY. On the downside, a support lies at 107.63, while on the upside a resistance can be found at 109.10 (high from April 8th).
Today traders will be watching the inflation report from Sweden and the UK; RPI, PPI and ONS house prices from the UK; CPI and industrial production from India; retail sales from Brazil; monthly budget statement; speeches from Fed’s Lacker, Williams and Harker from the US.
Currency Tech
EUR/USD
R 2: 1.1714
R 1: 1.1454
CURRENT: 1.1434
S 1: 1.1144
S 2: 1.1058
GBP/USD
R 2: 1.4591
R 1: 1.4459
CURRENT: 1.4278
S 1: 1.3836
S 2: 1.3657
USD/JPY
R 2: 112.68
R 1: 109.90
CURRENT: 108.21
S 1: 107.61
S 2: 105.23
USD/CHF
R 2: 0.9913
R 1: 0.9788
CURRENT: 0.9513
S 1: 0.9476
S 2: 0.9259