Market Brief
The US dollar’s three-day losing streak came to an end on Thursday as investors finished pricing in Yellen’s dovish comments. The dollar index stabilised at around 94.92, unable to break the strong support lying at 94.57 (low from March 18th). EUR/USD printed a fresh 1-month high, reaching 1.1365, after ADP figures showed that US companies created 200k jobs during the month of March, beating median forecast of 195k. However, the previous figure was revised lower to 205k from 214k. Tomorrow’s NFP is expected to come in at 205k. Overall, it seems that the market is paying less and less attention to data from the job market, following the footsteps of the Federal Reserve and thus focusing on inflation data and global financial markets’ development. GBP/USD also lost momentum as it started to quickly reverse gains. The cable slid 0.80% from yesterday’s high to 1.4340. On the upside, a resistance can be found at 1.4459 (high from March 30th), while on the downside a support lies at 1.4057 (low from March 24th).
Crude oil went under renewed selling pressure in New York yesterday amid concerns over supply glut - since the beginning of the year US inventories have kept increasing at a solid pace. US stockpile increased 2299k last week missing the median forecast of 3100k and below the previous reading of 9357k. Since yesterday afternoon, the West Texas Intermediate tumbled 5.20% to $37.74 a barrel, while its counterpart from the North Sea, the Brent crude, slid $1.80 to $38.80 a barrel.
Commodity currencies were therefore for sale in Asia. The Australian dollar fell 0.30% against the US dollar to $0.7670 and was unable to break the 0.7680 resistance to the upside. A bearish reversal seems the most likely scenario, especially considering that the commodity rally is running out of steam. The New Zealand dollar is still testing the key resistance that lies at 0.6897 (high from October 15th). A clear break will be needed to revive the rally; however, we rather remain cautious on the pair, especially considering the dovish stance of the RBNZ and the faltering commodity rally.
In the equity market, Asian regional markets went through a tough session with most regional indices blinking red across the screen with the exception of mainland Chinese equities, which managed to stay in positive territory. The Shanghai and Shenzhen Composites rose 0.11% and 0.29% respectively. In Japan, the Nikkei slid 0.71%, while the broader Topix fell 0.67%. In Hong Kong the Hang Seng fell 0.43%. In Europe, the picture is not much brighter as all equity futures are trading in negative territory.
Today traders will be watching GDP from Canada; mortgage approval and GDP from the UK; CPI estimates from Italy, Spain, France and the euro zone; trade balance from South Africa; initial jobless claims, ISM Milwaukee and Chicago purchasing manager index from the US.
Currency Tech
EUR/USD
R 2: 1.1495
R 1: 1.1376
CURRENT: 1.1338
S 1: 1.1144
S 2: 1.1058
GBP/USD
R 2: 1.4668
R 1: 1.4591
CURRENT: 1.4349
S 1: 1.4195
S 2: 1.4033
USD/JPY
R 2: 117.53
R 1: 114.91
CURRENT: 112.37
S 1: 110.67
S 2: 107.61
USD/CHF
R 2: 0.9913
R 1: 0.9788
CURRENT: 0.9645
S 1: 0.9593
S 2: 0.9476