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GBP In Focus On UK Data

Published 05/14/2014, 03:42 AM
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Market Brief

The S&P 500 hit the fresh historical high of $1,902.17 in New York yesterday as US retail sales missed the market estimates. Higher conviction on longer period of cheap money boosted the risk sentiment in US after data showed flat-to-negative evolution in April: overall retail sales advanced by 0.1% (vs. 0.4% exp. & 1.1% last), stabilized at 0.00% ex-autos ((vs. 0.6% exp.), and contracted by -0.1% ex-autos and gas (vs. 0.5% exp.).

G10 Advancers - Global Indexes

Little news followed in Asia. Japanese corporate good prices accelerated 2.8% m-o-m in April due to 3 ppt sales tax hike during the same month. JPY crosses traded in mixed fashion. USD/JPY failed to break above the 100-dma, eased on weak US data and remained ranged between 102.12/28 in Tokyo. Trend and momentum indicators remain flat. Importer bids trail above 101.50, option bids are supportive above 102.50. Light stops are eyed within 102.44/75 (daily Ichimoku cover). EUR/JPY tests the daily I-cloud base (140.01) on the downside. EUR-negative bias and flat JPY is likely to keep the pressures downwards before Thursday EZ data (GDP and CPI).

Crowded wires on ECB shake the EUR-crosses across the globe. EUR is subject to high event/verbal intervention risk as data and ECB officials’ views shape ECB expectations for the critical June 6th meeting. Italian 10-year government bonds fell below 3% for the first time. EUR/USD shortly traded down to 1.3689 and recovered above 1.3700. Resistance is eyed pre-100-dma (1.3741) on CPI fears in Thursday release. On the downside, light option bids are seen at 1.3700/25, more support is placed at 1.3673 (April low), then 1.3625 (200-dma).

In UK, we are heading into an event-full day: March unemployment figures and the Quarterly Inflation Report will broadly occupy headlines in London. GBP/USD retreated to May low levels (1.6819 in NY yesterday) and recovered above the 21-dma (1.6847) as Europe walked in this morning. We do not expect significant change in BoE economic forecasts, Carney is likely to show limited enthusiasm vis-à-vis the good UK recovery to stand behind his forward guidance. Nevertheless, any supportive news should boost GBP-bulls. Key resistance remains at 1.7000 (psychological level), before 1.7043 (five year high). EUR/GBP extends weakness to 0.81346 – lowest since January 2013, bearish momentum strengthens. Next key support stands at 0.80817/55 (January 2013 low).

Today’s key event is BoE’s Quarterly Inflation Report release (at 09:30 GMT). Traders watch German, French and Spanish April (Final) CPI m/m & y/y, Italian March General Government debt, UK April Jobless Claims Change and Claimant Count Rate, UK March ILO Unemployment rate (3-months) and Weekly Earnings (3-months average), Euro-Zone March Industrial Production m/m & y/y, Credit Suisse ZEW Survey on May Expectations in Switzerland, US April PPI m/m & y/y, Canadian April Teranet/National Bank m/m & y/y.

Todays Calender Estimates Previous Country / GMT

Currency Tech

EUR/USD
R 2: 1.3825
R 1: 1.3775
CURRENT: 1.3725
S 1: 1.3700
S 2: 1.3673

GBP/USD
R 2: 1.6996
R 1: 1.6906
CURRENT: 1.6863
S 1: 1.6819
S 2: 1.6763

USD/JPY
R 2: 103.02
R 1: 102.75
CURRENT: 102.16
S 1: 102.00
S 2: 101.50

USD/CHF
R 2: 0.8953
R 1: 0.8909
CURRENT: 0.8886
S 1: 0.8840
S 2: 0.8780

GE Apr F CPI MoM -0.20% -0.20% EUR / 6:00 AM
GE Apr F CPI YoY 1.30% 1.30% EUR / 6:00 AM
GE Apr F CPI EU Harmonized MoM -0.30% -0.30% EUR / 6:00 AM
GE Apr F CPI EU Harmonized YoY 1.10% 1.10% EUR / 6:00 AM
SW TNS Sifo Prospera publishes Swedish inflation expectations - - SEK / 6:00 AM
FR Apr CPI EU Harmonized MoM 0.10% 0.50% EUR / 6:45 AM
FR Apr CPI EU Harmonized YoY 0.90% 0.70% EUR / 6:45 AM
FR Apr CPI MoM 0.10% 0.40% EUR / 6:45 AM
FR Apr CPI YoY 0.90% 0.60% EUR / 6:45 AM
FR Apr CPI Ex-Tobacco Index 126.38 126.29 EUR / 6:45 AM
SP Apr CPI EU Harmonised MoM 0.60% 1.60% EUR / 7:00 AM
SP Apr F CPI EU Harmonised YoY 0.30% 0.30% EUR / 7:00 AM
SP Apr CPI Core MoM - 0.50% EUR / 7:00 AM
SP Apr CPI Core YoY 0.30% 0.00% EUR / 7:00 AM
SP Apr CPI MoM 0.90% 0.20% EUR / 7:00 AM
SP Apr F CPI YoY 0.40% 0.40% EUR / 7:00 AM
UK Apr Claimant Count Rate 3.30% 3.40% GBP / 8:30 AM
UK Apr Jobless Claims Change -30.0K -30.4K GBP / 8:30 AM
UK Mar Average Weekly Earnings 3M/YoY 2.10% 1.70% GBP / 8:30 AM
UK Mar Weekly Earnings ex Bonus 3M/YoY 1.50% 1.40% GBP / 8:30 AM
UK Mar ILO Unemployment Rate 3Mths 6.80% 6.90% GBP / 8:30 AM
UK Mar Employment Change 3M/3M 248K 239K GBP / 8:30 AM
IT Mar General Government Debt - 2107.2B EUR / 8:30 AM
NO Norway Presents Supplemental 2014 Budget - - NOK / 8:45 AM
EC Mar Industrial Production SA MoM -0.30% 0.20% EUR / 9:00 AM
EC Mar Industrial Production WDA YoY 0.90% 1.70% EUR / 9:00 AM
SZ May Credit Suisse ZEW Survey Expectations - 7 CHF / 9:00 AM
NO Norway's Jensen Presents Budget in Oslo - - NOK / 9:00 AM
UK Bank of England's Mark Carney Releases Inflation Report - - GBP / 9:30 AM
US May 9th MBA Mortgage Applications - 5.30% USD / 11:00 AM
US Apr PPI Final Demand MoM 0.20% 0.50% USD / 12:30 PM
US Apr PPI Ex Food and Energy MoM 0.20% 0.60% USD / 12:30 PM
US Apr PPI Final Demand YoY 1.70% 1.40% USD / 12:30 PM
US Apr PPI Ex Food and Energy YoY 1.40% 1.40% USD / 12:30 PM
CA Apr Teranet/National Bank HPI MoM - 0.00% CAD / 1:00 PM
CA Apr Teranet/National Bank HPI YoY - 4.60% CAD / 1:00 PM
CA Apr Teranet/National Bank HP Index - 160.42 CAD / 1:00 PM

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