Market Brief
Crude oil extended losses in Asia amid rising US stockpiles. The US gauge, the West Texas Intermediate, fell more than 2.5% to $41.25 a barrel as US crude inventories rose 6.6 million barrel, while the market was expecting an increase of 1 million barrels. Similarly, the international gauge, the Brent crude, fell 3% to $43.60. However, the price found a strong support at $43.39 (200dma). Buying pressure on crude should remain limited over the next few days as traders await a potential output freeze agreement between main oil producers in Doha on April 17.
The New Zealand dollar got slammed during the Asian session as traders brace themselves for this afternoon's inflation data from the US. Moreover, the market’s response to the release of the disappointing March manufacturing PMI from New Zealand was muted. The Business NZ manufacturing gauge contracted to 54.7 from a downwardly revised figure of 55.9 in the previous month, reaching the lowest level in five months. The employment gauge remained below the 50 mark, indicating contraction, while all the other components also contracted but remained above the 50 mark, suggesting that the sector will have to deal with slower growth. NZD/USD hit 0.6826 in Wellington, down 1.25% over the session. From a technical standpoint, the pair has lacked the required strength to break the key $0.70 resistance (Fibonacci 50% on March 2009 - July 2011, high from late March) and printed a double top. Given the clear easing bias of the RBNZ and the faltering global demand for NZ goods, we expect the Kiwi to continue moving lower, with 0.66 level as the next target.
After a period of stabilisation, GBP/USD has started to reverse the gains from last week as negative momentum returns. The pound sterling fell 0.58% against the US dollar in Tokyo as the US dollar gained momentum. The BoE rate decision is also due later this afternoon but will surely be a non-event as the central bank will remain on the sidelines ahead of the Brexit vote later in June. GBP/USD is on its way to testing the bottom of its 1-month range at around 1.40. The bias remains on the downside with the next support at 1.3836 (low from February 29).
On the equity market, Asian shares kept rallying on Thursday following the positive lead from Wall Street. Japanese equities rallied the most among Asian market, with the Nikkei rising 3.23%, while the broader Topix index surged 2.92%. Elsewhere, equities also took advantage of the upbeat mood, as the Shanghai Composite rose 0.41%, Australian shares jumped 1.27%, while in South Korea the Kospi index gained 1.75%.
Today traders will be watching producer & import prices from Switzerland; CPI from Italy and the euro zone; BoE rate decision from UK; initial jobless claims, CPI and Fed’s Lockhart speech from the US.
Currency Tech
EUR/USD
R 2: 1.1714
R 1: 1.1465
CURRENT: 1.1243
S 1: 1.1144
S 2: 1.1058
GBP/USD
R 2: 1.4591
R 1: 1.4348
CURRENT: 1.4106
S 1: 1.4006
S 2: 1.3836
USD/JPY
R 2: 112.68
R 1: 109.90
CURRENT: 109.44
S 1: 107.63
S 2: 105.23
USD/CHF
R 2: 0.9913
R 1: 0.9788
CURRENT: 0.9677
S 1: 0.9476
S 2: 0.9259