Market Brief
The US dollar rose sharply in Wall Street yesterday amid strong housing numbers in March. Existing home sales increased by 5.33 million in March or 5.1%m/m, beating a median forecast increase of 5.28m or 3.9%m/m. February’s figure was downwardly revised to 5.07m from 5.08m initially. The low interest rate environment added incentive for buyers to return to the housing market after the weak figures of January and February. As a result, EUR/USD fell from 1.1385 to 1.1290 and stabilised around the latter ahead of today’s ECB meeting. Neither us nor the market is expecting a change in the ECB's monetary policy. However, investors will pay particular attention to the central bank’s reaction with respect to the recent strength of the single currency. Mario Draghi will also most likely express his concerns regarding Brexit. As usual on ECB day, traders will remain sidelined ahead of the meeting and will resume trading during the press conference that follows the rate decision.
Crude oil jumped to a 5-month high in late US session yesterday after US inventories came in below market’s expectations. Data showed that US stockpiles increased by only 2080k barrels over the previous, missing estimates of 3000k. The international gauge, the Brent crude, rose to $46.13 a barrel, the highest level since late November last year. Similarly, the West Texas Intermediate hit $44.48 a barrel in Asia up $5.5 from its lowest level of the day.
Commodities got another strong trading session in Asia. Gold resumed the rally and rose 1.15% in Tokyo, reaching $1,258 an ounce. The yellow metal is moving towards the $1,262.79 resistance (high from April 12th). On the downside, a support can be found at $1,223.95 (low from April 14th). Gold is currently trading at key levels as it still needs to validate an escape from its multi-year downtrend channel but it still holding ground above its 50dma and 200dma. Silver was also buoyed in Tokyo as it surged 2.88%, rising from $12.96 to $17.46.
In the FX market, the US dollar was trading broadly lower overnight after surging massively in London and New York on Wednesday. The Australian dollar almost completely erased yesterday’s losses and returned to above the $0.78 threshold.
The Swiss franc got hammered in the late European session yesterday as investors dampened safe haven assets for riskier ones as Brexit fears eased. EUR/CHF rose 0.65% to 1.0989, the highest level since March 17th, while USD/CHF broke the 0.9688 resistance (high from April 14th) before consolidating above the 0.97 level. The next resistance can be found at 0.9788 (high from March 25th), while on the downside, the low from April 19th will act as support.
Today traders will be watching Riksbank's interest rate decision; retail sales from the UK; ECB's interest rate decision from the euro zone; Chicago Fed National activity index, initial jobless claims, leading index and Philadelphia Fed business index from the US; Russian gold and forex reserves.
Currency Tech
EUR/USD
R 2: 1.1714
R 1: 1.1465
CURRENT: 1.1304
S 1: 1.1144
S 2: 1.1058
GBP/USD
R 2: 1.4668
R 1: 1.4514
CURRENT: 1.4353
S 1: 1.4006
S 2: 1.3836
USD/JPY
R 2: 112.68
R 1: 109.90
CURRENT: 109.61
S 1: 107.63
S 2: 105.23
USD/CHF
R 2: 0.9913
R 1: 0.9788
CURRENT: 0.9702
S 1: 0.9476
S 2: 0.9259