USD lower amid dovish Fed

Market Brief

As broadly expected the Federal Open Market Committee left short-term interest rates unchanged at between 0.25% and 0.50%. Since there was no press conference, the market had nothing to get its teeth into apart from the statement. The latter was little changed compared to the one from January, indicating that the Fed sticks to its dovish position. The line saying that “the global economic and financial developments continue to pose risks” was removed but on the other hand the Fed agreed that the domestic economic activity appeared to have slowed. All in all, it was roughly in line with the market was expecting and USD crosses remained flat as investors had already priced in that the Fed would most likely hold fire in June. It is now almost a sure thing. EUR/USD fell initially to 1.1272 before bouncing to 1.1362, and finally consolidate at 1.1322.

In Japan, the BoJ announced that the bank needs more time to assess the impact of negative interest rates, thus maintaining its monetary stimulus. Nevertheless, the move came as a surprise as the market was expecting the BoJ to take action in response to the recent JPY’s strength that could delay the BoJ’s inflation target. This decision raised some important questions. Is the BoJ worried about the real effects of ultra-accommodative monetary policy on growth and inflation? Or the central bank really need more time to fine tune its negative interest rate tool? However, one thing is clear: the BoJ made clear that the market will not dictate what the central bank should do. USD/JPY collapsed more than three figures or 3.25% and reached 108.20, the lowest level since April 18th. The closest support lies at 107.63 (low from April 11th), further south another support lies at 105.23 (low from October 2014). In our opinion, the first support should not last long given the rapid building in long JPY positioning.

On the commodity market, the West Texas Intermediate was unable to break the strong $45 resistance level and stabilised nearby. Similarly, the international gauge, the Brent crude, tumbled on the $47 level, down 0.53%.

On the equity market, the BoJ decision dampened the mood as Japanese equity fell sharply with the Nikkei 225 down 3.61% and the Topix down 3.16%. In mainland China, the Shanghai and Shenzhen Composites slid 0.26% and 0.13% respectively. In Hong Kong, the Hang Seng edged up 0.45%. in Europe, equity futures are blinking red across the board, pointing to a lower open as the negative mood is spreading from Asia.

Today traders will be watching CPI from Spain and Germany; retail sales from Sweden; unemployment from Germany; consumer confidence from the Eurozone; initial jobless claims, GDP, personal consumption and core PCE from the US.

Global Indexes	Current Level	% Change
Nikkei 225 Index	16666.05	-3.61
Hang Seng Index	21456.68	0.45
Shanghai Index	2945.668	-0.27
FTSE futures	6241	-0.43
DAX futures	10280	-0.47
SMI Futures	8002	-0.35
S&P future	2079.1	-0.55

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Indexes	Current Level	% Change
Gold	1255.47	0.77
Silver	17.36	0.71
VIX	13.77	-1.36
Crude wti	45.13	-0.44
USD Index	93.74	-0.69

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Today's Calendar	Estimates	Previous	Country/GMT
SP 1Q Unemployment Rate	20,90%	20,90%	EUR/07:00
SP Apr P CPI EU Harmonised MoM	0,80%	2,00%	EUR/07:00
SP Apr P CPI EU Harmonised YoY	-0,90%	-1,00%	EUR/07:00
SP Apr P CPI MoM	1,10%	0,60%	EUR/07:00
SP Apr P CPI YoY	-0,70%	-0,80%	EUR/07:00
IT Bank of Italy Annual Meeting of Shareholders	-	-	EUR/07:30
SW Mar Retail Sales MoM	0,40%	-0,20%	SEK/07:30
SW Mar Retail Sales NSA YoY	3,50%	3,90%	SEK/07:30
RU Bloomberg April Russia Economic Survey	-	-	RUB/07:30
TU Bloomberg April Turkey Economic Survey	-	-	TRY/07:50
GE Apr Unemployment Change (000's)	0k	0k	EUR/07:55
GE Apr Unemployment Claims Rate SA	6,20%	6,20%	EUR/07:55
NO Feb Unemployment Rate AKU	4,80%	4,80%	NOK/08:00
NO Mar Retail Sales W/Auto Fuel MoM	0,40%	-0,50%	NOK/08:00
TU Mar Foreign Tourist Arrivals YoY	-	-10,30%	TRY/08:00
NO 1Q Industrial Confidence	-6	-8	NOK/08:00
IT Mar Hourly Wages MoM	-	0,10%	EUR/08:00
IT Mar Hourly Wages YoY	-	0,80%	EUR/08:00
FI Bank of Finland Governor Liikanen Speaks in Helsinki Seminar	-	-	EUR/08:40
EC Apr Economic Confidence	103,4	103	EUR/09:00
EC Apr Business Climate Indicator	0,14	0,11	EUR/09:00
EC Apr Industrial Confidence	-4	-4,2	EUR/09:00
EC Apr Services Confidence	10	9,6	EUR/09:00
EC Apr F Consumer Confidence	-9,3	-9,3	EUR/09:00
AS Austrian Central Banker Nowotny Presents Annual Report	-	-	EUR/09:15
SA Mar PPI MoM	1,10%	0,80%	ZAR/09:30
SA Mar PPI YoY	7,40%	8,10%	ZAR/09:30
NO Norway Wealth Fund Issues 1Q, Real Estate Reports	-	-	NOK/10:00
BZ Apr FGV Inflation IGPM MoM	0,35%	0,51%	BRL/11:00
BZ Apr FGV Inflation IGPM YoY	10,65%	11,56%	BRL/11:00
PO Bank of Portugal's Costa Speaks at Conference in Lisbon	-	-	EUR/11:30
GE Apr P CPI MoM	-0,20%	0,80%	EUR/12:00
GE Apr P CPI YoY	0,10%	0,30%	EUR/12:00
GE Apr P CPI EU Harmonized MoM	-0,20%	0,80%	EUR/12:00
GE Apr P CPI EU Harmonized YoY	0,00%	0,10%	EUR/12:00
US Apr 23 Initial Jobless Claims	259k	247k	USD/12:30
US Apr 16 Continuing Claims	2136k	2137k	USD/12:30
US 1Q A GDP Annualized QoQ	0,60%	1,40%	USD/12:30
US 1Q A Personal Consumption	1,70%	2,40%	USD/12:30
US 1Q A GDP Price Index	0,50%	0,90%	USD/12:30
US 1Q A Core PCE QoQ	1,90%	1,30%	USD/12:30
RU Apr 22 Gold and Forex Reserve	-	386.2b	RUB/13:00
BZ Mar Outstanding Loans MoM	-	-0,50%	BRL/13:30
BZ Mar Total Outstanding Loans	-	3184b	BRL/13:30
BZ Mar Personal Loan Default Rate	-	6,20%	BRL/13:30
US Apr 24 Bloomberg Consumer Comfort	-	42,9	USD/13:45
US Apr Kansas City Fed Manf. Activity	-	-6	USD/15:00
BZ Mar Central Govt Budget Balance	-9.9b	-25.1b	BRL/17:00
SK May Business Survey Non-Manufacturing	-	71	KRW/21:00
SK May Business Survey Manufacturing	-	70	KRW/21:00
IN Mar Eight Infrastructure Industries	-	5,70%	INR/22:00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Currency Tech

EURUSD
R 2: 1.1714
R 1: 1.1465
CURRENT: 1.1353
S 1: 1.1144
S 2: 1.1058

GBPUSD
R 2: 1.4959
R 1: 1.4668
CURRENT: 1.4588
S 1: 1.4284
S 2: 1.4132

USDJPY
R 2: 112.68
R 1: 111.91
CURRENT: 108.29
S 1: 107.63
S 2: 105.23

USDCHF
R 2: 1.0093
R 1: 0.9913
CURRENT: 0.9672
S 1: 0.9476
S 2: 0.9259

• S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot