Forex News and Events

Heads up…Expect Fed comments to drive volatility (by Peter Rosenstreich)

In an uncertain environment one thing has been certain, Fed comments have driven USD volatility. In what has become confusing gamesmanship between the doves and hawks, Chicago Fed President Evans will speak today. Evans has been one of the most consistent doves on the committee and is likely to support a rate path that includes two hikes in 2016. He will be discussing key economy and monetary policy topics. There is plenty of room here for market-disrupting comment, especially considering that investors are becoming more comfortable with a rate hike in June. Fed fund futures suggest approximately a 50% probability of a 25bp raise in June, so any comments that might tip the balance could have a short term direction impact. Elsewhere, ISM non-manufacturing is expected to increase to 54.0 from 53.4 in Feb. Rebound in business activity and strong service sector payroll gains should help the survey. However, this will have a limited impact on expectations for Fed policy and therefore a limited effect on USD. We remain bearish on the USD based on a cautious Yellen and soft international conditions, decreasing the probability of rate hikes in 2016. To derail USD weakness (especially versus EM and high beta currencies) we would need a clear catalyst such as a breakdown of Greek-Troika debt negotiations or Brexit.

RBA holds but risk of rate cut increase (by Peter Rosenstreich)

As was widely anticipated the RBA kept the cash rate target unchanged at 2.00%. In addition as we had suggested yesterday the accompanying statement maintained a dovish bias while providing stronger comments around the strength of the AUD. The RBA raised the stakes on the currency indicated “appreciating exchange rate could complicate the adjustment under way in the economy” much clearer then Marches off handed comment that the currency was “adjusting”. Yet, while the central bank indicated their discomfort with the strong AUD they did seem to understand that the root cause, of recovering commodity prices and easing in global monetary policy. We maintain our expectations for one additional 25bp cut in 2016 based on falling inflation and weak economic conditions. Australia 1Q inflation report will be released 27th April which should indicated that inflation has accelerated moderately to 1.8%y/y from 1.7% in 4Q. As the RBA has included the verbiage” assess the outlook for inflation” the slower pace will be of concern. Marginal growth rate of 2.5% looks decent except for downside risks increasing as low commodity prices linger and further deterioration in labour markets anticipated the RBA will be forced to act. But perhaps the strongest force working against the RBA is yield | risk seeking investors how are likely to bid up the AUD in this decreasing volatility environment. Sustained AUD strength will continue to weigh on growth (deterioration in economic outlook), further tighten monetary and fiscal conditions and demand a RBA monetary response (not just verbal intervention). In this environment we are bullish on AUDUSD watching for a quick move to 0.7620 reaction highs.

Eurozone: weak retail sales expected (by Yann Quelenn)

March final Eurozone retail sales printed in lower than the previous release at 0.2% m/m vs 0.4% m/m in February. Recent surveys have also shown that Eurozone consumer sentiment dropped in March and it is important to note that this survey was actually carried out before the recent events in Brussels. For the time being, European fundamentals are clearly not picking up (economy keeps on contracting) and the ECB's quantitative easing has so far not delivered the expected results. It is also worth noting that the impact of lower oil prices (despite recent rebound) is threatening the inflation outlook.

However, we believe that financial markets have already priced in current European difficulties. The euro should not weaken further as results should be appraised on a mid-term horizon. We believe that only internal difficulties such as Greek debt coming back in the picture and sovereignty issues can drive the single currency lower. We are maintaining our bullish position on the Euro against the greenback and we target 1.1500 over the next few weeks. The next ECB meeting on the 21st April should not trigger major moves of the EUR as the central bank is already all-in.

 

EUR/JPY - Bearish Breakout.

EURJPY


 
Today's Key Issues Country/GMT
Mar Standard Bank South Africa PMI, exp 49,5, last 49,1 ZAR/07:15
Mar Markit Spain Services PMI, exp 54,5, last 54,1 EUR/07:15
Mar Markit Spain Composite PMI, exp 54,2, last 54,5 EUR/07:15
Feb Industrial Production MoM, exp 0,30%, last 0,60% SEK/07:30
Feb Industrial Production NSA YoY, exp 4,00%, last 4,60% SEK/07:30
Feb Industrial Orders MoM, last 1,60% SEK/07:30
Feb Industrial Orders NSA YoY, last 3,80% SEK/07:30
Feb Service Production MoM SA, exp 0,50%, last -2,00% SEK/07:30
Feb Service Production YoY WDA, last 2,00% SEK/07:30
Mar Markit/ADACI Italy Services PMI, exp 53,9, last 53,8 EUR/07:45
Mar Markit/ADACI Italy Composite PMI, last 53,7 EUR/07:45
Mar F Markit France Services PMI, exp 51,2, last 51,2 EUR/07:50
Mar F Markit France Composite PMI, exp 51,1, last 51,1 EUR/07:50
Mar F Markit Germany Services PMI, exp 55,5, last 55,5 EUR/07:55
Mar F Markit/BME Germany Composite PMI, exp 54,1, last 54,1 EUR/07:55
Mar FIPE CPI - Monthly, exp 0,86%, last 0,89% BRL/08:00
Istat Releases the Monthly Economic Note EUR/08:00
Mar F Markit Eurozone Services PMI, exp 54, last 54 EUR/08:00
Mar F Markit Eurozone Composite PMI, exp 53,7, last 53,7 EUR/08:00
Mar Official Reserves Changes, last $1362m GBP/08:30
Mar Markit/CIPS UK Services PMI, exp 53,5, last 52,7 GBP/08:30
Mar Markit/CIPS UK Composite PMI, exp 53,4, last 52,8 GBP/08:30
BOE's Financial Policy Committee Record of March 23 Meeting GBP/08:30
Feb Retail Sales MoM, exp 0,00%, last 0,40% EUR/09:00
Feb Retail Sales YoY, exp 1,90%, last 2,00% EUR/09:00
Norway March House Price Statistics NOK/09:00
Feb Trade Balance, exp -$46.2b, last -$45.7b USD/12:30
Feb Int'l Merchandise Trade, exp -0.90b, last -0.66b CAD/12:30
Mar Markit Brazil PMI Composite, last 39 BRL/13:00
Mar Markit Brazil PMI Services, last 36,9 BRL/13:00
Mar F Markit US Services PMI, exp 51,2, last 51 USD/13:45
Mar F Markit US Composite PMI, last 51,1 USD/13:45
Mar ISM Non-Manf. Composite, exp 54,2, last 53,4 USD/14:00
Apr IBD/TIPP Economic Optimism, exp 47, last 46,8 USD/14:00
Feb JOLTS Job Openings, exp 5490, last 5541 USD/14:00
Bank of Canada's Deputy Governor Wilkins Speaks in Vancouver CAD/18:45
Mar CPI MoM, exp 0,60%, last 0,60% RUB/22:00
Mar CPI YoY, exp 7,50%, last 8,10% RUB/22:00
Mar CPI YTD, exp 2,20%, last 1,60% RUB/22:00
Mar CPI Core MoM, exp 0,70%, last 0,70% RUB/22:00
Mar CPI Core YoY, exp 8,10%, last 8,90% RUB/22:00
Feb Leading Index, last 98,12 CNY/22:00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Risk Today

Yann Quelenn

EUR/USD is now consolidating below 1.1400. Hourly resistance can be found at 1.1438 (01/04/2016 high) while hourly support is given at 1.1144 (24/03/2016 low). Stronger support is located a 1.1058 (16/03/2016 low). Expected to show further consolidation. In the longer term, the technical structure favours a bearish bias as long as resistance at 1.1746 ( holds. Key resistance is located region at 1.1453 (range high) and 1.1640 (11/11/2005 low) is likely to cap any price appreciation. The current technical deterioration implies a gradual decline towards the support at 1.0504 (21/03/2003 low).

GBP/USD is still trading without clear direction despite the medium-term technical structure is clearly bearish. Hourly resistance is given at 1.4591 (05/02/2016 high) while hourly support can be found at 1.4171 (01/04/2016 low). A break of stronger resistance at 1.4668 (04/02/2016) is nonetheless needed to show a reverse in the medium-term momentum. The long-term technical pattern is negative and favours a further decline towards key support at 1.3503 (23/01/2009 low), as long as prices remain below the resistance at 1.5340/64 (04/11/2015 low see also the 200 day moving average). However, the general oversold conditions and the recent pick-up in buying interest pave the way for a rebound.

USD/JPY's medium term momentum is negative. The pair has exited ranged in which it was installed over the last two months. On the short-term, selling pressures keep increasing. Hourly support at 110.67 (17/03/2016 low) has been broken. Hourly resistance is given at 113.80 (29/03/2016 high) while stronger resistance is given at 114.91 (16/02/2016 high). Expected to further weaken. We favour a long-term bearish bias. Support at 105.23 (15/10/2014 low) is on target. A gradual rise towards the major resistance at 135.15 (01/02/2002 high) seems now less likely. Another key support can be found at 105.23 (15/10/2014 low).

USD/CHF has weakened over the last month which confirms increasing selling pressures. Yet, the pair is pausing. Hourly support can be found at 0.9556 (01/04/2016 low) while hourly resistance is located at 0.9788 (25/03/2016 high). Stronger resistance can be found at 0.9913 (16/03/2016 high). Expected to show further weakness. In the long-term, the pair is setting highs since mid-2015. Key support can be found 0.8986 (30/01/2015 low). The technical structure favours a long term bullish bias.

 

Resistance and Support:


 
EURUSD GBPUSD USDCHF USDJPY
1.257 1.4668 1.0093 114.91
1.1714 1.4591 0.9913 113.8
1.1495 1.4459 0.9788 112.68
1.1373 1.4229 0.9586 110.67
1.1144 1.4172 0.9476 110.49
1.1058 1.4033 0.9259 107.61
1.0822 1.3836 0.9072 105.23

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

This report has been prepared by Swissquote Bank Ltd and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Swissquote Bank Ltd personnel at any given time. Swissquote Bank Ltd is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.

Recommended Content


Recommended Content

Editors’ Picks

AUD/USD holds above 0.6500 in thin trading

AUD/USD holds above 0.6500 in thin trading

The Australian Dollar managed to recover ground against its American rival after AUD/USD fell to 0.6484. The upbeat tone of Wall Street underpinned the Aussie despite broad US Dollar strength and tepid Australian data.

AUD/USD News

EUR/USD comfortable below 1.0800 lower lows at sight

EUR/USD comfortable below 1.0800 lower lows at sight

The EUR/USD pair lost ground on Thursday and settled near a fresh March low of 1.0774. Strong US data and hawkish Fed speakers comments lead the way ahead of the release of the US PCE Price Index on Friday.

EUR/USD News

Gold pulls away from daily highs, holds above $2,200

Gold pulls away from daily highs, holds above $2,200

Gold retreats from daily highs but holds comfortably above $2,200 in the American session on Thursday. The benchmark 10-year US Treasury bond yield stays near 4.2% after upbeat US data and makes it difficult for XAU/USD to gather further bullish momentum.

Gold News

Google starts indexing Bitcoin addresses

Google starts indexing Bitcoin addresses

Bitcoin address data is live on Google search results after users realized on Thursday that the tech giant started indexing Bitcoin blockchain data. However, mixed reactions have followed the tech giant's reversed stance on the cryptocurrency.

Read more

A Hollywood ending for fourth quarter GDP

A Hollywood ending for fourth quarter GDP

The latest revisions put Q4 GDP at 3.4%, the second fastest quarterly growth rate in two years. Much of the upside was attributable to stronger consumer spending, yet fresh profits data affirmed it was a good quarter for the bottom line as well with profits up by the most since the Q2-2022.

Read more

Majors

Cryptocurrencies

Signatures