Varengold Bank Research Team
Varengold Wertpapierhandelsbank AG
Good morning from beautiful Hamburg and welcome to our first Daily FX Report in this week. Asian stock markets were subdued on Monday in a week book-ended with Easter holidays across the globe and a U.S. jobs report that could affect the timing of the first hike in interest rates there. MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.4 percent, with Australia's main index down 1.4 percent amid weakness in commodity prices. Japan's Nikkei dithered on either side of zero though there was some talk of demand for the new month and quarter. Seoul edged 0.2 percent into the black. Federal Reserve Chair Janet Yellen on Friday reaffirmed that rates would likely start rising later this year but emphasized the pace of tightening would be gradual and data-dependent.
However, we wish you a successful trading day and a great week!
Market Review – Fundamental Perspective
The dollar started trade on Monday pretty much where it closed in New York after the head of the U.S. central bank assured investors that the path back to 'normal' interest rates will only occur at a gradual pace. The dollar fetched 119.24 yen versus 119.11 late in New York on Friday. It has fallen more than 2 percent from a near eight-year peak of 122.04 set early this month. In a highly anticipated speech late Friday, Fed Chair Janet Yellen outlined the case for a 'gradualist approach' to rate hikes, in comments mirroring those at the post-FOMC meeting on March 18. The euro eased a touch to $1.0877, having in the last two weeks pulled up from a 12-year trough of $1.0457.
Commodity currencies were notable underperformers in early trade, partly unsettled by further falls in oil and iron ore prices last Friday. Iron ore hit a fresh record low amid supply glut worries, while oil slid 5 percent. The Aussie eased to $0.7733, continuing to retreat from a two-month peak of $0.7939 set a week ago. It was nearing a six-year trough of $0.7561 plumbed early this month. Traders said there is little prospect for volatility in Asia on Monday, given a dearth of market-moving data out of the region. U.S. jobs data due on Friday is shaping up to be a key event for this week. Flash inflation data for the euro zone are due Tuesday and manufacturing surveys on China are out the day after. That should be just an appetiser for Friday's U.S. payrolls report. The market reaction will be complicated by holidays across much of the western world on Friday. Only some U.S. markets will be open and then only for shortened hours.
Daily Technical Analysis
EUR/USD (Daily)
Since June the bears took control over this currency pair and the euro experienced a sharp decline versus the USD and even reached its lowest level for more than 10 years. After experiencing a slightly recovery, the EUR depreciated pretty sharply on Firday last week and it remains to be seen whether we will see a further decline. The oveall trend remains bearish.
Support & Resistance (Daily)
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