US$ mixed ahead of Draghi speech, US Durable Goods. RBNZ hike rates by 25bp

Aud down on weaker CPI, China data. Kiwi higher after RBNZ rate hike.

Solid German/EU Manufacturing data helped the Euro today but it was unable to build on its gains, despite US housing figures, ahead of a speech later in the coming session from Mario Draghi who may well use the opportunity to talk the Euro lower once again. Aside from Draghi, the focus will be on the German IFO and the US Durable Goods orders. In the meantime, the RBNZ have just hiked rates – as expected.

EUR/USD: 1.3815


Despite the mixed outlook of the manufacturing PMI’s (France 50.9 v expected 51.9), the solid figures from Germany and the Eurozone (respectively 54.2 vs 54.0 exp. and 53.3 vs 53.0 exp) took the Euro up to a high of 1.3854, where speculative sellers capped it ahead of Mario Draghi’s speech later on today. The dollar though has been unable to regain any substantial ground though, due to the soft US data, with New Home Sales down sharply, by 14.5% mm for March.

Overall there is little change from a technical point of view and 1.3800 remains the pivot. On the topside, 1.3850 looks set to remain reasonably firm resistance and we have yet to close the Monday opening gap of 14 April to 1.3885. I cannot see it up there today but if wrong, above there, the recent high at 1.3905 will be strong resistance. A break would lead us back towards the 13 March 1.3966 high but that seems some way off and the indicators do not suggest any chance of such a move in the near term.

On the downside, back below 1.3800, there will be strong bids at 1.3780, with stops placed below here which could drive the Euro towards support at 1.3760 (61.8% of 1.3672/1.3905) and 1.3730 (76.4%). Rising trend support also lies near here and should provide reasonable support, below which the 100 DMA/daily cloud base both lie at 1.3720. A break of 1.3700 could bring a deeper decline, and apart from some minor Fibo levels, there is not too much to hold the Euro up ahead of the 200 DMA at 1.3568.

Mario Draghi could provide much of the action today if he repeats his recent remarks about the exchange rate, although the market is reacting less and less to these and wants to see some action from the ECB to back up the rhetoric. The German IFO will also be in focus as will the US Durable Goods orders later in the day, for what hopefully will be a busy session. I still prefer selling the Euro into strength for an eventual break to the downside, but if the US data is weak again, the dollar is going to find it hard to make too much headway.

Economic data highlights will include:

German IFO Business Climate, Mario Draghi Speech, US Durable Goods Orders, Jobless Claims, Kansas Fed Mfg Activity

Meta Trader – AxiTraderEUR/USD: 4 hour



USD/JPY: 102.45

The dollar gave up a bit of ground today, mostly on the back of the weaker equities markets and US housing data, but mostly appears to be biding its time until tomorrows Japanese CPI data, which it is hoped will provide a clue as to the next move by the BOJ.

For its part, the dollar has fallen to a low of 102.16, where it has so far been supported by the 200 HMA, while at the same time it currently sits below the 100 HMA now at 102.50.

As we said on Monday, 102/103 should cover much of the week and I don’t really see anything to change that today. On the topside, back above 102.50 would see further decent sellers at 102.70 (50% pivot of 104.12/101.31/Daily Tenkan), ahead of more solid offers at 102.92 (100 DMA), 103.00 (61.8%) and 103.05 (daily cloud top). Above this would see an acceleration to 103.45 (76.4% of 104.12/101.31).

Below today’s low would see a run towards the daily Tenkan at 102.00 ahead of minor support at 101.85 and 101.65.

For today use 102.20/70 as a guide, but generally expect it to be reasonably quiet.

Economic data highlights will include:

Foreign Bond/Stock Investment

Meta Trader – AxiTraderUSD/JPY: 1 hour

GBP/USD: 1.6780

The BOE minutes showed that the MPC voted 9-0 to keep rates and the APP on hold, while the PSNBR improved, initially keeping a bid tone under Cable, although it was unable to take out the session high at 1.6836, coming just ahead of the strong resistance at 1.6840 and has slipped steadily lower ever since in reaching a low of 1.6761.

Stops lie below 1.6750, and with the 4 hour charts pointing lower it would not surprise to see these eventually get taken out, suggesting a run towards 1.6730, below which would probably see 1.6700. I cannot really see it happening yet, although if Cable ever gets below 1.6660, where rising trend support lies, we could see a deeper correction, possibly towards 1.6540, where the 100 DMA will provide the first major support.

On the topside, 1.6800 will now see sellers ahead of the session high. The dailies still look positive, although they are flattening out for what could be abroad topping formation , but if 1.6840/50 does get taken out, then we can expect a run towards 1.6876 (Nov 2009 high) beyond which there is not too much to stop it progressing to 1.7000.

For today, look for 1.6800 (100 HMA) to cap it, with a chance to take out the 1.6750 stops for a run to 1.6730.

Meta Trader – AxiTraderGBP/USD: 4 hour

USD/CHF: 0.8832

The dollar has recovered from a low of 0.8806, seen after the release of the firm German/EU PMI’s and sits not too far below yesterday’s closing levels.

There is little change from a technical perspective and bids will again appear in the 0.8800/15 area, a break of which would head back towards 0.8780.

The topside has strong offers at around 0.8850 above which would see gains towards resistance at 0.8870 and possibly to the 100 DMA at 0.8915.

The charts are a bit mixed and another day of choppy trade looks possible, although I still suspect that trading form the long side may the best plan, but not necessarily looking for much of a directional move in the coming session unless Mario Draghi puts the boot into the Euro.

Economic data highlights will include:

Trade Balance

Meta Trader – AxiTraderUSD/CHF: 4 hour

AUD/USD: 0.9285

The combination of the weaker than expected CPI and HSBC China manufacturing data sent the Aud sharply lower, down to a low of 0.9266, eventually seen in the US session, after having spent the previous hours, following the data, chopping around in a 0.9270/90 range.

More of the same looks likely, although the hourlies are unwinding from becoming oversold and if 0.9290 gets taken out, then we could see a bit of a squeeze back towards 0.9310/15. If we get there, I would expect further upside to be rather limited today, with the 100 HMA at 0.9325 and the 200 HMA at 0.9350 both likely to see offers.

0.9265/70 is strong support but the 4 hour charts remain negative and if this level gets taken out, then we can expect a run towards 0.9250 (minor) and possibly toward 0.9200. This seems a step too far today, and in the absence of any data I would imagine that 0.9260/0.9310 might cover it.

Economic data highlights will include:

China Leading Economic index

Meta Trader – AxiTraderAUD/USD: 4 hour

NZD/USD: 0.8590

NB. The RBNZ have hiked rates as expected and the Kiwi has jumped back to sit at 0.8615. Now waiting on the press statement for direction.

The Kiwi was unable to overcome its 0.8620 high and was dragged a bit lower by the weaker Aud today, to 0.8564, although the damage has been limited ahead of the upcoming RBNZ meeting which has seen it close the US session back at 0.8590. A rate hike is just about written in to market expectations and the focus will be on Governor Wheeler’s statement. Speculation is that the tone will be less hawkish than the last post-decision comments, in which case the Kiwi could see a dip towards 0.8550, blow which would suggest a test of 0.8515 and possibly 0.8500. I don’t really see the downside potential as being too great, but if wrong, look for a run towards 0.8480.

If he remains as hawkish as in his previous statements, then the Kiwi might see a jump back to 0.8620 above which, sellers will arrive at 0.8650 and then at 0.8670. I would be surprised to see the Kiwi above 0.8700 today, but if wrong we could then get a run to the recent top at 0.8744.

Wheeler will I think be fairly circumspect for fear of driving the Kiwi too much higher and I suspect we might be in for a range of something similar to yesterday with 0.8570/0.8620 to cover it.

Economic data highlights will include:

RBNZ Meeting/IR Decision

Meta Trader – AxiTraderNZD/USD: 4 Hour