Market Brief
As widely expected, the RBA left its cash target rate unchanged at 2.50% and reiterated the importance of a period of price stability. The Australian officials repeated that the Aussie remains at historical highs, which is unfavorable for economic boost. The inflation is in line with RBA’s target, while the labor market needs some time to display significant improvement. AUD/USD shortly spiked to 0.9317 in Sydney as no mention on lower AUD was made, yet the dovish RBA stance and lower trade surplus (AUD 731mn in March vs. AUD 1200mn previously) pulled the pair back to early levels. The pair remains in Fibonacci 50.0/61.8% range (0.9209/0.9339), techs remain comfortably bearish. AUD/NZD still tests the main downtrend channel top (today at 1.0660) on the downside.
USD/JPY and JPY crosses remain little changed, the volumes were low due to Tokyo holiday. The low US yields (despite good US data) and difficult pick up in USD keep USD/JPY under pressure. Offers are lined up below the daily Ichimoku cloud cover (102.60/102.80), option bids are negatively skewed walking into 103.00. On the downside, the 101.80-support is at risk.
Released yesterday, US composite PMI advanced from 54.9 to 55.6 in April (acc. Markit). Markets showed little enthusiasm while 10-year US yields are back above 2.60%. More PMI figures are due across EZ and UK today.
The Cable extends gains to 1.6897 (at the time of writing), the intra-day momentum is positive. Technicals remain comfortably bullish; the volatilities (1-month implied and realized) remain at 16-month lows pre-BoE (Thu). The key resistance stands at 1.6920 (year high), then 1.7043 (five year high). EUR/USD remains offered at 1.3880/85 zone. More resistance is seen at 1.3906 (April high) & 1.3967 (2014 high). On the downside, 1.3800/40 zone should limit offers pre-ECB this week (Thu).
USD/CAD remains offered below the 21-dma (1.0980), the trend momentum is marginally on the downside. Canada will publish the international merchandise trade figures for March today, a second month of surplus should keep the Canadian dollar well sustained versus USD. The consensus is a surplus of CAD 0.40bn vs. CAD 0.29bn a month ago. Option related offers wait to be activated below 1.0900 in today’s expiry.
Today, the OECD publishes the Global Economic Outlook. Traders watch the April Final Services and Composite PMI across Euro-zone and UK, Swedish March Household Consumption m/m & y/y, Norwegian April Unemployment Rate, UK April Official Reserves Change, Euro-Zone March Retail Sales m/m & y/y, Canadian March International Merchandise Trade, Canadian April Purchasing Managers Index SA, US March Trade Balance and US May IBD/TIPP Economic Optimism.
Currency Tech
EUR/USD
R 2: 1.3967
R 1: 1.3906
CURRENT: 1.3885
S 1: 1.3800
S 2: 1.3781
GBP/USD
R 2: 1.7043
R 1: 1.6920
CURRENT: 1.6897
S 1: 1.6825
S 2: 1.6763
USD/JPY
R 2: 103.43
R 1: 102.80
CURRENT: 102.00
S 1: 101.80
S 2: 101.33
USD/CHF
R 2: 0.8953
R 1: 0.8862
CURRENT: 0.8774
S 1: 0.8765
S 2: 0.8744