EUR Stronger on German and French GDP, AUD Better Bid

Market Brief

The Nikkei stocks closed this Friday 1.53% down, while other Asian equity markets kept trading on post-Fed improved risk sentiment. USDJPY and JPY crosses were offered in Tokyo. USDJPY cleared bids at 101.80/102.00, fell towards the daily Ichimoku cloud base (101.53) and slightly recovered as Europe walked in. Technical indicators remains slightly bearish, a daily close below 101.80 will keep the MACD (12, 26 day) indicator in the red zone suggesting the extension of weakness. The key support stands at 100.76 (Feb support), stops are eyed below. Option bets are mixed on the upside, resistance remains solid at the 21-dma (currently at 102.63). Weakness in US yields keeps the enthusiasm limited.

In US, the unexpected contraction in January retail sales (-0.4% vs. 0.0% exp. & 0.2% last) triggered USD-unwind across the board. GBPUSD hit the fresh year high of 1.6671 post-data (in NY). The Cable consolidated gains in the tight range of 1.6645/62 in Asia. Trend and momentum indicators are solidly in the bullish zone. Option bids are seen at 1.6650 & 1.6700.

The Euro-zone releases 4Q preliminary GDP growth across the zone. The French and German numbers came in better-than-expected this morning. Preliminary data showed that French GDP y/y grew 0.8% in Q4 (vs. 0.2% exp. & 0.6% last), German GDP y/y (non-seasonally adjusted) growth accelerated from 1.1% to 1.3%. EURUSD advanced to 1.3714 (at the time of writing). The former 1.3655/65 supply zone is now seen as daily support. Option bets trail above 1.3655 as EUR-bulls gain momentum. EURGBP enters the bear market according to MACD. Offers are seen at 0.82540/0.82800 (21-dma / optionality). The mid-run target stands at 0.808500 (January 2013 low).

The Aussie-complex recovers from the post-jobs-data sell-off. AUDUSD shortly spiked to 0.9026 on pre-weekend short covering. The faster than expected Chinese CPI (2.5% in Jan, vs. 2.4% exp. & 2.5% last) helped while comments from RBA’s Kent (stating softer AUD is better for recovery) gathered no attention. The bias remains on the upside yet offers pre-0.9000 are to be cleared.

In New Zealand, the house sales y/y fell by 4.3% in January, pulling the house price index 2.4% lower according to REINZ release. NZDUSD advanced to 0.8368 creating a weekly double top at this level. More offers are eyed pre-0.8400/20.

The economic calendar consists of French, German, Italian and Euro-Zone 4Q (Prelim) GDP q/q & y/y, French 4Q (Prelim) Non-farm Payrolls & Wages q/q, Spanish CPI m/m 6 y/y, Italian December General Government Debt, UK December Construction Output m/m & y/y, Euro-Zone December Trade _Balance, Canadian December Manufacturing Sales m/m, Canadian January Existing Home Sales, US January Import Price Index m/m & y/y, Industrial Production & Capacity Utilization, US January Manufacturing (SIC) Production and University of Michigan’s February (Prelim) Confidence Index.