FTSE +9 points at 7374
DAX +28 points at 12167
CAC +9 points at 5110
Euro Stoxx +5 points at 3475
Chinese consumer price inflation printed 0.9% on year to March, slightly faster than 0.8% a month earlier, yet softer than 1.0% expected by analysts. Producer prices eased to 7.6% from 7.8% over the same period, yet the deceleration has been softer than the 7.4% expected. The data eased inflationary concerns in China, suggesting that People’s Bank of China (PBoC) wouldn’t be constraint to tighten the monetary conditions while the future of the US-China trade relationship remains uncertain. yuan softened 0.15% against the US dollar in Shanghai.
The USD/JPY broke the 100.00-support and rallied on stops to the 200-day moving average (109.50). The pair hit the oversold market. Consolidation could be expected at the current levels yet the negative trend is supported by the meagre risk appetite due to geopolitical tensions across the globe. Large option barriers could cap the upside pre-110.00/110.20.
Nikkei (-1.25%) and Topix (-1.25%) were offered on stronger yen.
The Aussie remained offered as well, as the Westpac consumer confidence index turned negative in April. The AUD/JPY traded at the lowest levels since November, as the safe-haven inflows due to global geopolitical concerns pushed the carry traders to trim their positions. The AUD/JPY broke the 200-day moving average (82.62) for the first time in five months and is technically oversold. The daily Relative Strength Index (23.6%) hints at deeply oversold conditions and suggest a short-term correction. Yet the upside is seen limited pre-200DMA. The 80.00 level is the next natural target for the AUD/JPY shorts.
The AUD/USD is sold at 0.7500 level and above. The kiwi (-0.30% against the US dollar), which is a popular carry destination, suffers from the increasing risk aversion as well.
On the flip side, the gold soared to $1279 after clearing the $1260 resistance. The Relative Strength Index (RSI) stepped above 70%, the overbought territory. Pause is expected before considering a further rise toward $1300. Price pullbacks are expected to meet support at $1260 (minor 23.6% retrace on March-April rise).
The UK’s inflation came roughly in line with market expectations. The headline inflation remained unchanged at 2.3% year-on-year in March, while the core inflation eased to 1.8% from 2.0% reported a month earlier. The labour data, due at 9.30am London time, should reveal the progress in wages growth. A solid read could revive the worries on rising inflation and reinforce the GBP appreciation.
Prior to the labour data, the Bank of England (BoE) Governor Mark Carney is due to speak at 9am in London. He is expected to maintain his supportive stance, yet will unlikely reveal anything new regarding the UK’s monetary policy.
The GBP/USD is fighting back the 1.25-offers for a further rise toward its 200-day moving average (1.2555). Intraday support is eyed at 1.2405/1.2397 (50 and 100-day moving averages respectively).
The EUR/USD remains offered below the 100-day moving average (1.0622) on rising political concerns ahead of the French presidential election. Stronger negative momentum suggests a further slide toward 1.0500/1.0495 (mid-term support).
UK and European stocks are expected marginally firmer at the open, yet gains could be fragile given the lack of appetite from global investors.
The Bank of Canada (BoC) is expected to maintain the bank rate unchanged at 0.50% at today’s monetary policy meeting. The loonie is recovering from the sell-off caused by the plunge in oil prices in February. As the WTI is set to regain the $55/barrel, the USD/CAD could extend the weekly slide to 1.3273 (50% retracement on February-March decline), before 1.3210 (major 61.8% retracement).
Turkey is going to hold a critical constitutional referendum on April 16th. Rising political tensions could rapidly dent the appetite in the lira and reverse gains into the Friday’s close. Traders are expected to turn flat into the week-end’s referendum.
Quick glance at technical on LCG Trader:
EUR/JPY: short positions below 116.90 with targets at 115.95 and 115.50 inn extension. Above 116.90, upside potential to 117.40 and 117.85.
USD/CAD: short positions below 1.3350 with targets at 1.3310 and 1.3290 in extension. Above 1.3350, potential for a rise to 1.3380 and 1.3400. Approaching mid-term support at 1.3272 and 1.3210.
Crude oil intraday: long positions above 53.10 with targets at 53.95 and 54.20 in extension. Below 53.10, potential for a decline to 52.70 and 52.30