Market Brief
The US dollar slowly recovers after yesterday’s heavy sell-off. Better bid today, the reason of the slide is broadly unknown given that the US economic data has been encouraging over the past trading sessions (good NFPs, supportive PMIs, narrower trade deficit,..). The US 10-year government yields break below 2.60/2.80 range. Seemingly markets are selling the Fed’s inaccuracy.
In Japan, the optimism out of BoJ’s April 7-8th meeting minutes weigh on JPY-crosses. Consumer spending remains resilient after sales tax hike said the BoJ. USD/JPY sold-off to 101.43, techs suggests further weakness. Key supports stand at 101.06 (200-dma) and 100.76 (2014 low). EUR/JPY stepped in the daily Ichimoku cloud cover (140.01/141.51). A daily close below the I-cloud top should trigger deeper correction.
The broad based USD weakness sent GBP/USD to the fresh high of 1.6996 in New York yesterday. Psychological resistance at 1.7000 cap the upside, offers are seen below 1.7043 (2009 peak), stops above. The sentiment remains comfortably bullish with option bids seen at 1.6900/50 levels. EUR/GBP retreated to 0.81945, lowest since Feb 17th. Support is seen at the 30-day lower Bollinger band (0.81873), the sentiment is to remain mild for a daily close below 0.82045.
On a similar pattern, EUR/USD pulled out the 1.3906 (April peak) and hit 1.3951 in NY. The strength in EUR clearly raise pressures on the ECB, yet the majority of market participants do not price in a concrete action on Thursday meeting. Technicals are bullish with support placed at 1.3800/23/46 (optionality / 50 & 21 dma). The next key resistance stands at 1.3967 (2014 high), light barriers are seen pre-1.4000 with stops touted above.
NZD/USD also recorded a fresh high (0.8780) on USD weakness. Diary prices further weakened at latest Fonterra auction, yet volumes improved. Released overnight, the NZ unemployment remained stable at 6.0% in Q1 (vs. 5.8% expected), yet the participation rate unexpectedly improved from 68.9% to 69.3%. NZD/USD aggressively pared yesterday gains and couldn’t make it higher than 0.8744 (former high) at today’s NZ session. RBNZ Governor Wheeler stated that the reliance on foreign savings put pressure on NZ rates, that the NZD is overvalued thus RBNZ could sell currency. In Australia, AUD/USD tests Fibonacci 61.8% resistance (0.9339) on the upside, sentiment improves.
Canada released a second month a trade surplus of CAD 0.08bn in March due to lower energy exports. Last month surplus was revised up to CAD 0.85bn (from 0.29bn) due to higher-than-expected natural gas prices according to Statistics Canada. USD/CAD broke below 1.0900 for the first time since April 10th. Trend and momentum indicators gain momentum on the downside. The next key support is placed at 1.0807 (Fibonacci 61.8% on 2009-2011 drop).
Today, traders watch Swiss April Unemployment Rate and Foreign Currency Reserves, German March Factory Orders m/m & y/y, French March Industrial and Manufacturing Production m/m & y/y, April Retail PMI across the Euro-zone, German April Construction PMI, US May 2nd MBA Mortgage Applications, US 1Q (prelim) Nonfarm Productivity and Unit Labor Costs, Us March Consumer Credit and Canadian March Building Permits.
Currency Tech
EUR/USD
R 2: 1.3967
R 1: 1.3951
CURRENT: 1.3920
S 1: 1.3885
S 2: 1.3846
GBP/USD
R 2: 1.7043
R 1: 1.6996
CURRENT: 1.6977
S 1: 1.6900
S 2: 1.6825
USD/JPY
R 2: 102.70
R 1: 101.87
CURRENT: 101.48
S 1: 101.06
S 2: 100.76
USD/CHF
R 2: 0.8862
R 1: 0.8780
CURRENT: 0.8740
S 1: 0.8720
S 2: 0.8699