Soft US Retail Sales data and an IMF downgrade in the US 2015/16 growth outlook, while at the same time upgrading the outlook for the EU, Japan and UK did not help the dollar today, and it is weaker on all fronts. Today will be busy, kicking off with some major China data – headed by the GDP – and then followed up in Europe by the ECB Meeting, Mario Draghi’s Press Conference and plenty of secondary data from both the EU and the US. The Bank of Canada will also be meeting, where rates are expected to stay on hold. Aside from the China data, Fed member Kotcherlokata will be speaking in the Asian time zone, which will also feature the Australian Consumer Confidence.
EUR/USD: 1.0653
The dollar is lower today after the IMF lowered its growth forecast for the US economy in its world economic outlook update. For 2015, US growth forecast was revised down to 3.1%, comparing to prior 3.6%, while for 2016, the US growth projection is predicted to be 3.1% (prev 3.3%). At the same time, growth projection for the EU, Japan and UK were raised. Elsewhere, the US Retail sales rose 0.9% in missing the expectation of 1.0%, while the PPI dropped to -0.8% yy in March versus expectation of 0.9%. Earlier the EU industrial output was better than expected at +1.1% (vs +0.4% exp) and helped to underpin the Euro.
Today is going to be a another busy one with plenty of data coming on stream, the highlight being the ECB Meeting, although no change to Monetary Policy is expected. With QE already under-way and pre-committed until September 2016, and also with the recent EU growth outlook showing a glimmer of positive light, including a mild uptick in the inflation forecasts, Draghi could even be mildly hawkish on at today’s Press Conference, which could potentially push the Euro a bit higher. However, with the next FOMC Meeting due on April 28/29, any major gains seem unlikely in the event of a potential June rate hike, although I suspect September is the more realistic use-by date.
Technically, after having risen to a high of 1.0706, Euro is now sitting in the middle of the day’s range, although the short term charts show the potential for further gains back towards 1.0700. The 100 HMA is currently supporting the price action and if we do head higher then back above the 1.0708 high would see further progress towards 1.0715 (38.2 of 1.1035/1.0520) and then to the daily Kijun at 1.0755 and then to the stronger level (200 HMA/50% pivot of 1.1035/1.0520 /daily Tenkan) at 1.0775. It would take quite a hawkish Draghi to get the Euro above here, but the next port of call would be at 1.0800 and then at 1.0835 (76.4%)
On the downside, back below 1.0600 would see a run towards lows of the last couple of sessions in the 1.0520/30 area. The dailies remain negative, and a break of 1.0520 would signal a run to 1.0500 and then towards the previous, 13 Mar, 1.0461 low. Beyond there, support is again rather thin until we meet the March 2003 low at 1.0334. Under this would likely see another acceleration lower, as there is then very little left to hold it up ahead of the major descending channel base at around 1.0200 (monthly chart below) and then at the Fibo support at 1.0069 (76.4% of 0.8225/1.6037), below which parity will become a magnate.
The Feds Kotcherlakota is speaking in the Asian time zone but the major focus will be on the China GDP, ahead of the main action of the day at the ECB Press Conference.
Economic data highlights will include:
German CPI, EU Trade Balance, ECB Interest Rate Decision/Press Conference, New York Sate Manufacturing Index, US Industrial Production , Capacity Utilisation, NAHB Housing Market Index, Beige Book, Fed Bullard/Kotcherlokata Speech.
Meta Trader – AxiTrader EUR/USD: 4 Hour
USD/JPY: 119.38
USD/JPY dived to a low of 119.06 today following the release of the US Retail Sales data, where the rising trend support and the 100 DMA (119.15) lent a hand in halting further declines towards the base of the daily cloud (118.75), and lower.
With the dailies being flat, a reasonably neutral stance is currently required, but a daily close below the rising trend support and the daily cloud base would signal further losses towards the Fibo support at 118.20 (61.8% of 115.85/122.02) and possibly lower, to 117.30 (76.4%).
If the support in the 118.85/119.00 area holds, then we are in for further consolidation near 120.00, where the 200 HMA (119.85) and the 100 HMA (120.15) will provide short term resistance ahead of 120.50, 120.85 (both minor) and 121.00. As before, although unlikely to be seen yet, a topside break of 121.00 would open up the 20 March high at 121.20, the consolidation area at around 121.50 and the 10 March high at 122.02. If/when this level can be overcome, the way would open up for a run towards the 15 July 2007 high at 122.42, and in the longer term, the target of 124.13 (17 June 2007 high) would appear on the horizon but will take time.
Economic data highlights will include:
Japan Industrial Production, Capacity Utilisation..
Meta Trader – AxiTrader USD/JPY: 4 Hour
GBP/USD: 1.4779
Cable soared from a low of 1.4602 (seen after soft UK CPI data @ 0.0%yy, Core @ 1.0% v exp 1.2%) to a high of 1.4801 today after the US Retail Sales missed expectations. It is finishing the session not too far from the highs and the shorter term charts suggest that if 1.4800 can be successfully overcome hen we could see a run towards 1.4865 and then possibly to 1.4930 which should be very strong resistance(61.8% of 1.5165/1.4565 and also 38.2% of 1.5551/1.4565).
On the downside, today will see support at 1.4760 (minor) and then at the 100 HMA at 1.4710. Below 1.4700, which currently looks less likely, would see a run back towards 1.4640 and then to 1.4600. The recent 1.4565 low looks too far away at present, although if wrong, a break of this would suggest a run towards the June 2010 low at 1.4549 and then to the May 10 low at 1.4403. Below here would see a capitulation towards the 76.4% Fibo support of the rally from 1.3502/1.7091 at 1.4375 (monthly chart below) and then to the base of the 2009/2010 fall from the 1.7041 high to the low, seen at 1.4229 in May 2010..
For the coming session buying dips seems to be the plan although further out there is no change and selling into strength towards 1.5000 remains the strategy to follow.
Meta Trader – AxiTrader GBP/USD: 4 Hour
USD/CHF: 0.9721
As we thought it might, in yesterday’s outlook, US$Chf did lead the way in sending the dollar lower, falling sharply to 0.9674 after the US data, before recovering ate in the session to currently sit at 0.9725.
The shorter term charts suggest that we could head lower again, and if so, support, below the session low, now lies at 0.9625 (61.8% of 0.9454/0.9862) and then at 0.9600(100 DMA). A break of this would head towards the 200 DMA, currently at 0.9460, but rising slowly, which if seen would seem to be a decent medium term buying opportunity.
The topside will find sellers today at 0.9755 (100 HMA) and then at 0.9800. Above here looks a little uncertain in the short term but further gains would take the dollar towards 0.9835 and then to the 0.9862 trend high. Beyond here and the Fibo resistance at 0.9868 (61.8% of 1.0127/0.9454) will run into further sellers at 0.9880(descending trend resistance) but beyond which would accelerate towards 0.9900 and higher, towards 0.9964 (76.4% of 1.0127/0.9454).
Meta Trader – AxiTrader USD/CHF: 4 Hour
AUD/USD: 0.7625
Support at 0.7550 held once more today and provided the platform a strong bounce to 0.7648, seen after the US Retail Sales failed to meet expectations, and currently sits at 0.7625 where it is likely to remain until the Consumer Confidence data and more likely until the China GDP (exp 7% yy).
Technically the Aud is sitting pretty much in the middle of the recent 0.7737/0.7552 range and it could be that this continues to provide the parameters for the next few days. A GDP reading of below 7% today would return to the downside, where, below 0.7600, decent support lies at 0.7575 and 0.7550. Below there, which looks a little unlikely today, would see a retest of 0.7532 (2 April low). Below this , the RBA’s line in the sand at 0.7500 will provide stronger support but a break of which would open up the way to 0.7414 (Oct 2010 low). Beneath this there is a bit of a black hole until the very strong support at around 0.7200, where two important Fibo levels are lining up (0.7210: 61.8% of 0.4773//1.1082 and 0.7180: 76.4% of 0.6006/1.1082). I suspect that eventually 0.7000 will appear on the horizon (and even 0.6000!), but this is going to be some way off yet.
On the topside, the 100/200 HMA’s are crossing at the day’s high at 0.7648 and should see decent sellers. Beyond 0.7650 would see a squeeze towards the Fibo resistance at 0.7665 (61.8% of 0.7737/0.7552) and possibly towards 0.7700. I don’t think we head above here today but if wrong, the recent high at 0.7737 would be the next port of call.
While the China data will be today’s focus, traders will also be looking forward to tomorrows important local Jobs data (ecp 6.3%, +15k, PR 64.6%) and the implications for a possible May RBA rate cut – or not.
Economic data highlights will include:
WBC Consumer Confidence, China Retail Sales, Industrial Production, GDP NBC China Press Conference..
Meta Trader – AxiTrader AUD/USD: 4 Hour
NZD/USD: 0.7521
The Kiwi has bounced well off the day’s low of 0.7437 to reach a high of 0.7552 after the US data missed expectations and for the time being looks underpinned at 0.7500, although this will depend to a large degree on the China GDP.
Nearby support levels to watch, below 0.7500, are at 0.7480 (minor) and 0.7440 (rising trend support). Back below yesterdays low at 0.7421, the 1 April low at 0.7390 will come into view although I doubt that we head there today. If wrong, below 0.7390 there is minor support at 0.7372 (19 March low) and at 0.7326 (18 March low) and at the Fibo support at 0.7307 (76.4% of 0.7175/0.7696), a break of which would head back to the important base at 0.7270. Below here the Kiwi is headed back to 0.7175 (11 Mar low) and then to 0.7000. The big question is whether it will it get there before the Aud does?!
On the topside, above 0.7550/55 would allow a run towards the descending trend resistance at 0.7595, and possibly back above 0.7600 to the recent high at 0.7630, which if seen would present a decent medium term sell opportunity.
Food Price Index coming up.
Economic data highlights will include:
Food Price Index..
Meta Trader – AxiTrader NZD/USD: 4 Hour
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