Market Brief
April was a disappointment. Despite encouraging housing data on Tuesday, all other indicators point toward a delay in economic recovery as the Philadelphia Fed survey (6.7 versus 8 expected) is adding uncertainty about economic activity in May. However, more is needed to awake dollar bears as EUR/USD is not reacting much to negative news from the US and is therefore moving sideways for the last two days. The pair found a strong support at 1.1105, which corresponds to the 38.2% Fibonacci level (on April 13 – May 15 rally) and will certainly wait next week’s US data to make an attempt as we expect today’s CPI data to remain low. However, Fed Chair Yellen is speaking at 5pm GMT and will have another opportunity to guide markets.
On the equity side, the S&P 500 is printing a new record almost every day. The blue-chip index close at record high yesterday in New York at 2,130.8, up 0.23% during the session as a June rate hike is being ruled out. Dow Jones closed flat while the NASDAQ added 0.37%.
In Asia, the Shanghai Composite will surely close in green – for fourth straight session – up 2.45% to 4,640.5. Hong Kong’s Hang Seng if following the lead and adds 1.56%. The Nikkei 225 is up 0.30% as the Bank of Japan maintained unchanged its monetary stimulus at ¥80tn a year. USD/JPY is grinding lower toward the 120.61 support (Fib 61.8% on March debasement). A little further south, Australian equities are treading water, up 0.04%. AUD/USD is currently testing the 0.7930 resistance implied by the 38.2% Fibonacci retracement level on April 13 – May 14 rally. Yesterday, the Aussie rebounded on the lower support at 0.7858 after failing at breaking it on the downside. On the upside, the next resistance stands at 0.8028 (multi lows).
In UK, April retail sales came in much stronger than expected, jumping 1.2%m/m while economists forecast an increase of 0.2%. The cable welcomed the news and jumped 1 figure and stabilised around 1.5660 in Tokyo. GBP/USD is therefore slightly below the middle of its hourly uptrend channel and should find support at 1.56. On the long-term, the sterling successfully broke its 200dma and the 1.5569 resistance (Fib 38.2% on July 2014 – April 2015 debasement), indicating that the cable is gaining momentum. EUR/GBP broke the strong support lying at 0.7120 (multi lows) and is currently trying to invalidate that break. In case of failure, the road is wide open toward the next support standing at 0.7014.
Elsewhere in Europe, German Q1 GDP preliminary estimate was released an hour ago and matched consensus at 0.3%q/q. European equity futures are mixed in pre-session with FTSE 250 down -0.08%, DAX down -0.03%, Euro Stoxx 50 up 0.08% and SMI down -0.14%. USD/CHF failed at breaking the resistance implied by the highs of early May and is grinding lower. EUR/CHF rebounded from the bottom of its range around 1.04.
Today traders will be watching German IFOs, Italy industrial orders and retail sales, US CPI and Fed Chair Yellen’s speech, CPI from Canada.
Today's CalendarEstimatesPreviousCountry / GMT DE Apr Retail Sales MoM 0.40% 0.50% DKK / 07:00 DE Apr Retail Sales YoY - 2.70% DKK / 07:00 GE May IFO Business Climate 108.3 108.6 EUR / 08:00 GE May IFO Current Assessment 113.5 113.9 EUR / 08:00 GE May IFO Expectations 103 103.5 EUR / 08:00 IT Mar Industrial Orders MoM 0.70% 0.80% EUR / 08:00 IT Mar Industrial Orders NSA YoY - 2.00% EUR / 08:00 IT Mar Industrial Sales MoM - 0.40% EUR / 08:00 IT Mar Industrial Sales WDA YoY - -0.90% EUR / 08:00 UK Apr Public Finances (PSNCR) - 19.4B GBP / 08:30 UK Apr Central Government NCR - 22.2B GBP / 08:30 UK Apr Public Sector Net Borrowing 7.9B 6.7B GBP / 08:30 UK Apr PSNB ex Banking Groups 8.3B 7.4B GBP / 08:30 IT Mar Retail Sales MoM 0.20% -0.20% EUR / 09:00 IT Mar Retail Sales YoY 0.40% 0.10% EUR / 09:00 TU May Real Sector Confidence SA - 102.7 TRY / 11:30 TU May Real Sector Confidence NSA - 107.9 TRY / 11:30 TU May Capacity Utilization - 74.10% TRY / 11:30 BZ May IBGE Inflation IPCA-15 MoM 0.59% 1.07% BRL / 12:00 BZ May IBGE Inflation IPCA-15 YoY 8.23% 8.22% BRL / 12:00 US Apr CPI MoM 0.10% 0.20% USD / 12:30 CA Apr CPI NSA MoM 0.10% 0.70% CAD / 12:30 US Apr CPI Ex Food and Energy MoM 0.20% 0.20% USD / 12:30 CA Apr CPI YoY 1.00% 1.20% CAD / 12:30 US Apr CPI YoY -0.20% -0.10% USD / 12:30 CA Apr Consumer Price Index 126.5 126.3 CAD / 12:30 US Apr CPI Ex Food and Energy YoY 1.70% 1.80% USD / 12:30 CA Apr CPI Core MoM 0.20% 0.60% CAD / 12:30 US Apr CPI Index NSA 236.58 236.119 USD / 12:30 CA Apr CPI Core YoY 2.40% 2.40% CAD / 12:30 US Apr CPI Core Index SA 241.13 240.793 USD / 12:30 CA Apr CPI SA MoM 0.00% 0.40% CAD / 12:30 CA Apr CPI Core SA MoM 0.10% 0.40% CAD / 12:30 US Apr Real Avg Weekly Earnings YoY - 2.20% USD / 12:30 CA Mar Retail Sales MoM 0.30% 1.70% CAD / 12:30 CA Mar Retail Sales Ex Auto MoM 0.40% 2.00% CAD / 12:30 BZ Apr Formal Job Creation Total 48000 19282 BRL / 18:30 AU Australia’s Private Capital Expenditure Bloomberg Survey - - AUD / 22:00
Currency Tech
EUR/USD
R 2: 1.1529
R 1: 1.1450
CURRENT: 1.1152
S 1: 1.1000
S 2: 1.0521
GBP/USD
R 2: 1.6189
R 1: 1.5879
CURRENT: 1.5672
S 1: 1.5338
S 2: 1.5191
USD/JPY
R 2: 122.03
R 1: 121.20
CURRENT: 120.71
S 1: 118.91
S 2: 117.94
USD/CHF
R 2: 1.0240
R 1: 0.9571
CURRENT: 0.9348
S 1: 0.8936
S 2: 0.8823