Forex News and Events

Impeachment process goes on (by Arnaud Masset)

Dilma Rousseff, Brazil’s president, is definitely on the hot seat after a congressional impeachment committee voted (38-27) on Monday to recommend a trial in the Senate (upper house) on charges of breaking budget laws. Even though this vote is non-binding, it clearly set the tone for the lower-house (the Chamber of Deputies) for another vote, which is expected on next Sunday (April 17th). A two-third majority is required (342 out of 513) in favour of impeachment before moving the case to Senate for another vote. If the move is approved by the lower house on Sunday, Dilma Rousseff will likely appeal the decision to the Supreme Court, which would delay the Senate’s vote meaning that she would stay in office during the court’s deliberation and then decision.

Looking at the FX market and more specifically USD/BRL, the latest developments towards impeachment impacted positively the Brazilian real as the pair hit 3.4871, the lowest level since mid-August last year. However, we remain sceptic that the real would hold recent gains since nothing has really changed at the root of the problem - i.e. the fiscal gap - for now as it is only the results of speculations that the new government - in case of successful impeachment - would address the situation quickly.

Focused on Fed speakers (by Peter Rosenstreich)

Looks like all the hype around rising volatility in the past weeks has settled down as we anticipated. US corporate earnings releases have been largely uneventful, keeping S&P 500 in its tight 40 point range, and allowing VIX index to pause around 16.26 levels. While the US yield curve has further flattened, US 2-year yields are struggling to stay above 0.71%. USD was marginally weaker against G10 (exception is JPY due to Japan FinMin Aso comments and speculation over FX intervention) EM currencies ahead of a heavy Fed speaker line-up today. As we mentioned yesterday the bearishness surrounding USD (highlighted by IMM data indicated the rapid liquidation of USD longs) based on skepticism on the FOMC interest rate path could reverse in the short term due to hawkish communication. FX markets are increasingly sensitive to fed comments and this afternoon brings known hawks Philadelphia Fed President Harker, San Francisco Fed President Williams and Richmond Fed President Lacker. Fed Harker is a new member for the FOMC this year that has steadily shifted towards the hawkish end of the spectrum. Harker's comments could shed some light on the migration of balanced members towards a hawkish stance and influence on the fed’s March communications. Fed Lacker is probably the most hawkish FOMC member and is likely to take direct aim at Chair Yellen’s leadership in a speech entitled “Economic Leadership in an Uncertain World”. Lacker has been critical of Yellen’s control of the FOMC and is expected to develop this view today. Further confusion and divergent views within the Fed will only increase the market’s uncertainty. A steady stream of hawkish headlines should drive temporary USD bullishness. However, without interest rate support it is unlikely that any strength will last. EURUSD upside should be contained by 1.1450 resistance with a bearish target located at 1.1327 support.

USD/JPY - Range trading

USDJPY


 
Today's Key Issues Country/GMT
Mar CPI MoM, exp 0,30%, last 0,30% SEK/07:30
Mar CPI YoY, exp 0,70%, last 0,40% SEK/07:30
Mar CPI CPIF MoM, exp 0,40%, last 0,30% SEK/07:30
Mar CPI CPIF YoY, exp 1,40%, last 1,10% SEK/07:30
Mar CPI Level, exp 315,49, last 314,14 SEK/07:30
Apr 7 FIPE CPI - Weekly, exp 0,90%, last 0,92% BRL/08:00
Mar CPI MoM, exp 0,30%, last 0,20% GBP/08:30
Mar CPI YoY, exp 0,40%, last 0,30% GBP/08:30
Mar CPI Core YoY, exp 1,30%, last 1,20% GBP/08:30
Mar Retail Price Index, exp 260,8, last 260 GBP/08:30
Mar RPI MoM, exp 0,30%, last 0,50% GBP/08:30
Mar RPI YoY, exp 1,40%, last 1,30% GBP/08:30
Mar RPI Ex Mort Int.Payments (YoY), exp 1,50%, last 1,40% GBP/08:30
Mar PPI Input NSA MoM, exp 2,30%, last 0,10% GBP/08:30
Mar PPI Input NSA YoY, exp -6,20%, last -8,10% GBP/08:30
Mar PPI Output NSA MoM, exp 0,20%, last 0,10% GBP/08:30
Mar PPI Output NSA YoY, exp -1,00%, last -1,10% GBP/08:30
Mar PPI Output Core NSA MoM, exp 0,10%, last 0,20% GBP/08:30
Mar PPI Output Core NSA YoY, exp 0,30%, last 0,20% GBP/08:30
Feb ONS House Price YoY, last 7,90% GBP/08:30
Mar NFIB Small Business Optimism, exp 93,5, last 92,9 USD/10:00
1Q BER Consumer Confidence, exp -12, last -14 ZAR/10:00
U.K. PRA's Moulder Speaks at Market Forum in London GBP/10:20
Mar CPI YoY, exp 5,03%, last 5,18% INR/12:00
Feb Industrial Production YoY, exp 0,60%, last -1,50% INR/12:00
Feb Retail Sales MoM, exp 0,00%, last -1,50% BRL/12:00
Feb Retail Sales YoY, exp -5,60%, last -10,30% BRL/12:00
Feb Retail Sales Broad MoM, exp 0,50%, last -1,60% BRL/12:00
Feb Retail Sales Broad YoY, exp -6,50%, last -13,30% BRL/12:00
Mar Import Price Index MoM, exp 1,00%, last -0,30% USD/12:30
Mar Import Price Index YoY, exp -4,80%, last -6,10% USD/12:30
Fed's Harker Speaks on Economic Outlook in Philadelphia USD/13:00
Mar Monthly Budget Statement, exp -$104.0b, last -$52.9b USD/18:00
Fed's Williams Speaks in San Francisco at LendIt Conference USD/19:00
Fed's Lacker Speaks in Wilmington, North Carolina USD/20:00
Mar Budget Balance YTD, exp -300.0b, last -112.7b RUB/22:00
Mar Foreign Direct Investment YoY CNY, exp 2,40%, last 1,80% CNY/22:00
Mar New Yuan Loans CNY, exp 1100.0b, last 726.6b CNY/22:00
Mar Aggregate Financing CNY, exp 1400.0b, last 780.2b CNY/22:00
Mar Money Supply M0 YoY, exp 4,30%, last -4,80% CNY/22:00
Mar Money Supply M1 YoY, exp 18,40%, last 17,40% CNY/22:00
Mar Money Supply M2 YoY, exp 13,50%, last 13,30% CNY/22:00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Risk Today

Peter Rosenstreich

EUR/USD is moving within a horizontal range defined by the key support area between 1.1339 (06/04/2016 low) and resistance at 1.1454 (07/04/2016 high). Stronger support is located a 1.1058 (16/03/2016 low). Expected to show further range-bound pattern. In the longer term, the technical structure favours a bearish bias as long as resistance at 1.1746 ( holds. Key resistance is located at 1.1640 (11/11/2005 low). The current technical appreciation implies a gradual increase.

GBP/USD is grinding higher. Hourly supports at 1.4171 (01/04/2016 low) and at 1.4033 (03/03/2016 low) have been broken. The short-term technical structure is positive as long as the hourly support at 1.4108 (08/04/2016 range low) holds. Hourly resistance is given at 1.4320 (04/04/2016 high). Expected to show further bullish 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 has reverse and is challenging range resistance area 107.61 (11/04/2016 high). A break of the resistance at 109.10 (08/04/2016 low) is needed to signal weakening short-term selling pressures. Hourly support can be located at 107.68 (07/04/2016 low). 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 managed to close above its key trendline support at 0.9522 (16/04/2013 low). Hourly support can be found at 0.9510/22 (declining trendline & intraday low). Resistance is located at 0.9582 (11/04/2016 high) then 0.9622 (06/04/2016 high). Expected to show further bearish consolidation. 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 113.8
1.1714 1.4591 0.9913 112.68
1.1454 1.4459 0.9788 109.9
1.1427 1.4311 0.9524 108.27
1.1144 1.4016 0.9476 107.61
1.1058 1.3836 0.9259 105.23
1.0822 1.3503 0.9072 100.82

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

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.

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