The higher-than-expected inflation data gave the USD a bit of a boost as USD pairs were trading near interesting inflection points – everything from 1.10 in EUR/USD to 0.9550 in USD/CHF, 0.7900 in AUD/USD, 1.2500 in USD/CAD and 119.25/50 in USD/JPY, suggesting that today’s action will be important for either confirming that yesterday’s USD comeback was the beginning of a return to strength, or just a hitch in a larger consolidation of the USD to the weak side.
We should know after the release of today’s German Ifo survey data whether the market cares much about European data (somewhat questionable as the European Central Bank has laid out a yellow brick road of quantitative easing as far as the eye can see whether the survey beats or misses by a few points). On the other hand, even minor and relatively volatile US data series like today’s Durable Goods Orders release can have an exaggerated effect due to the nervous outlook on the Fed and the fact that the USD is trying to pivot at the moment.
Overnight, New Zealand’s trade data was far weaker than expected – a look at the seasonality shows that this is the weakest trade surplus for the month of February in the last five years, and adds a bit of pressure on the kiwi as its strength has faded here a bit.
AUD/USD
AUD/USD is rather typical of the action in the various USD pairs yesterday, with the added interest that the small bearish reversal unfolded astride the line of resistance just above 0.7900 that was crossed from below intraday. Today will be about whether we find some confirmation in this modest reversal attempt.
The G-10 rundown
USD: Comeback attempt yesterday needs confirmation today and the market could be very reactive to US data today, even if it isn’t particularly important data, merely because we are in a key pivot zone in so many USD pairs at the moment. Prefer to look for the pivot to the strong side to continue, but let’s see where we settle the day.
EUR: EUR/USD beaten back at the psychologically important 1.1000 level as we watch for further confirmation that the range will hold today and whether the market cares about European data (German Ifo). Watching 1.0950 for resistance and sell-off confirmation comes down through.
JPY: Tough to get interested in the action as most pairs are yielding few technical clues. End of Japan’s financial year approaching next Tuesday – does volatility pick up into that date and in the days beyond?
GBP: Looking rather weak as yesterday’s EUR/USD sell-off failed to see similar downside sticking in EUR/GBP – perhaps German Ifo gives us a sense of whether the rally is finished there or if we can see 0.7400+. GBP/USD stuck in a range.
CHF: Watching for whether EUR/CHF can regain 1.0525+ after yesterday’s meltdown. Not much support if 1.0400 taken out until 1.0170 and even parity. USDCHF needs support after yesterday’s lows, or we start to discuss 200-day MA test in low 0.9400s.
AUD: Interesting rejection of the range break attempt yesterday in AUD/USD, though volatility was somewhat muted. Prefer to look lower unless we pull back above yesterday’s highs.
CAD: The pair has regained 1.2500 after yesterday’s US inflation data – need a sharp and large follow-up rally to confirm the reversal implications.
NZD: Getting some tentative confirmation that AUD/NZD is bottoming here, but still need a stronger pull higher toward 1.0500 there to turn a more intensely negative spotlight on the little kiwi. This 0.7600/50 pivot area in NZD/USD is also important.
SEK: Small data points out of Sweden today and strong Ifo would be EUR/SEK negative as we watch the 9.35-9.25 range there.
NOK: EUR/NOK still looking heavy as we watch the downside toward 8.50, though weaker oil prices could corral further downside quickly as momentum has so far failed to impress.
Economic Data Highlights
- New Zealand February Trade Balance out at +50M vs. +350M expected and +33M in Jan.
Upcoming Economic Calendar Highlights (all times GMT)
- Sweden March Consumer/Manufacturing Confidence (0800)
- Germany March Ifo Business Climate Survey (090)
- UK February BBA Loans for House Purchase (0930)
- US Fed’s Evans to Speak (1030)
- US February Durable Goods Orders (1230)
- Germany Bundesbank’s Weidmann to Speak (1700)
- Canada Bank of Canada Governor Lane to Speak (1930)