Small Reprieve For GBP As Polls Show Tory Lead

KEY DATA RELEASES TODAY (BST) :

09:30 GBP PPI Input m/m -0.5% v 0.2%
09:30 GBP RPI y/y 1.0% v 1.0%
09:30 GBP CPI y/y 0.0% v 0.0%
13:30 USD Core PPI m/m 0.2% v -0.5%
13:30 USD PPI m/m 0.3% v -0.5%
13:30 USD Retail Sales m/m 1.1% v -0.6%
13:30 USD Core Retail Sales m/m 0.7% v -0.1%
15:00 USD Business Inventories m/m 0.2%v 0.0%

OVERNIGHT:

USDJPY ended New York session at 120.08 and traded lower as the left-hand side fix was stronger. Japanese Finance Minister Aso refused to comment on the remark by PM Abe’s advisor Hamada’s remark on JPY weakness which implied that 105 was preferable to 120. Although these comments once again spooked short term players it is believed that Hamada is not influential. The actors we should pay attention to are Aso, Suga,Krugman, and especially to Honda. Decent offers are reported close to 121.00, there is also a large strike there expiring today New York cut. Bids are reported into the 119.70-80 (low 119.79) and Asian names are buying under 119.40. Bloomberg repeated the remarks from Hamada in an interview which saw USDJPY trade back to 119.755.

EURUSD fell from above 1.06 and hit 1.0519 low as investors still bet the US Federal Reserve will raise rates in the coming months. European Commission Vice President Valdis Dombrovskis said the negotiations between Greece and its lenders were ongoing and would continue until end of April. Early Asian action saw a small boost to 1.0594 on broad USD weakness after the plunge in USDJPY. Sellers re-emerged at the highs and pushed it back down to 1.0550 later. Sentiment remains decidedly bearish with lower lows and highs seen over the past five days.

GBPUSD rebounded from the five-year lows and hit 1.4681 high before closed at 1.4670, the UK March CPI due today will be the main event for GBP. GBP found support from an opinion poll showed that the ruling Conservative Party pulling ahead of the opposition Labour Party before UK 7 May general election,

Commodity FX took the brunt of declines prompted by much worse than anticipated data out of China suggesting the economy is slowing. AUDUSD traded heavily but rebounded from the intraday low of 0.7550 at the start of the European session, and hovered at around 0.7600 level. USDCAD market is cautious and in the process of paring positions ahead of the rate decision of the Bank of Canada, a slight rebound in oil price provided some support to the loonie.

PRICE ACTION OVERVIEW:

EUR: While 1.0630/60 contains upside expect 1.05 test en rout to 1.0460, above 1.0810 refocuses on fourth 1.10 test
GBP: While 1.4730/60 contains upside reactions target 1.45 en route to 1.43/42
JPY: While 118.90 contains downside target 121.00 en route to retest of year to date highs, only below 118.30 concerns bullish view
CAD: While 124.50 contains downside target retest of year to date highs en route to 130.00
AUD: While .7760/80 contains upside anticipate third test of key .7550 failure here opens the bearish target of .72, above .7880 alleviates immediate downside pressure

KEY TRADES: