Peter A Rosenstreich
Swissquote Bank Ltd
Forex News and Events
Hawkish Fed speaker boosted USD
FX markets continued their roller coaster trading pattern in the Asian session. As we had anticipated, the hawkish line-up of Fed speakers gave the oversold USD a bullish push. Richmond Fed Lacker commented that faster pace of inflation suggested that roughly four 25bp rate hikes would be warranted in 2016. While San Francisco Fed Williams sounded slightly less hawkish suggesting that 2-3 hikes were reasonable. Surprisingly (because this is exactly what we expected know hawks to say) front-end of the US yield curves shifted higher with 2-year yields trading up 4 bps to .75%. USD benefiting from higher interest rates gaining broadly against G10 and EM currencies. However, USDCNY fix was basically unchanged around 6.4671, unaffected by the strong Chinese data.
Solid Chinese trade data
Asia regional equity indices continued to rally aided by the solid Chinese trade data. China March foreign trade data improved meaningfully above expectations. After contracting for eight straight months Exports rose 11.5% y/y (in USD terms) while imports slowed to 7.6%. Overall China trade surplus was $29.9bn downs slightly from February. With hawkish Fed comments still resonating and stronger China in international trade terms it will be very interest to see how US equities react. Generally, increase in Fed rate expectations and evidence of stability in China are accompanied with a pull-back in stock prices. Despite this temporary USD strength we still suspect that a June rate hike is unlikely based on weak intentional backdrop and slowing inflation, indicating that current USD correction will be short lived.
Oil pushing higher
The dominate risk-on sentiment has also been gaining for the risk in oil prices. Growing speculation for an oil production freeze in OPEC Doha meeting this weekend has pushed oil prices higher (although incoming news indicates a cut is unlikely due to rumors around Saudi – Iran talks), without effecting inflation expectations (Goldilocks conditions for risky assets). Higher commodity prices should further positively affect commodity producing EM continues (in higher term of trade) and amplify investors yield seeking behavior. We remain bullish on RUB, MXN, ZAR and BRL while safe haven, low yielding currencies JPY and CHF have become overbought making them good funding currencies.
USD/CAD - Bearish pause
| Today's Key Issues | Country/GMT |
| Mar CPI Core MoM, last 0,10% | EUR/07:00 |
| Mar CPI Core YoY, exp 1,00%, last 1,00% | EUR/07:00 |
| Mar F CPI EU Harmonised MoM, exp 2,00%, last 2,00% | EUR/07:00 |
| Mar F CPI EU Harmonised YoY, exp -1,00%, last -1,00% | EUR/07:00 |
| Mar F CPI MoM, exp 0,60%, last 0,60% | EUR/07:00 |
| Mar F CPI YoY, exp -0,80%, last -0,80% | EUR/07:00 |
| 1Q House Price Index QoQ, last 0,60% | NOK/08:00 |
| ECB's Knot in Dutch Parliament to Discuss ECB Monetary Policy | EUR/08:00 |
| Bank of England Credit Conditions & Bank Liabilities Surveys | GBP/08:30 |
| Feb Industrial Production SA MoM, exp -0,70%, last 2,10% | EUR/09:00 |
| Feb Industrial Production WDA YoY, exp 1,30%, last 2,80% | EUR/09:00 |
| Apr 8 MBA Mortgage Applications, last 2,70% | USD/11:00 |
| Feb Retail Sales Constant YoY, exp 2,60%, last 3,10% | ZAR/11:00 |
| Feb Retail Sales MoM, exp 0,30%, last -0,30% | ZAR/11:00 |
| Feb IBGE Services Sector Volume YoY, last -5,00% | BRL/12:00 |
| Mar Retail Sales Advance MoM, exp 0,10%, last -0,10% | USD/12:30 |
| Mar Retail Sales Ex Auto MoM, exp 0,40%, last -0,10% | USD/12:30 |
| Mar Retail Sales Ex Auto and Gas, exp 0,30%, last 0,30% | USD/12:30 |
| Mar Retail Sales Control Group, exp 0,40%, last 0,00% | USD/12:30 |
| Mar PPI Final Demand MoM, exp 0,20%, last -0,20% | USD/12:30 |
| Mar PPI Ex Food and Energy MoM, exp 0,10%, last 0,00% | USD/12:30 |
| Mar PPI Ex Food, Energy, Trade MoM, exp 0,10%, last 0,10% | USD/12:30 |
| Mar PPI Final Demand YoY, exp 0,30%, last 0,00% | USD/12:30 |
| Mar PPI Ex Food and Energy YoY, exp 1,30%, last 1,20% | USD/12:30 |
| Mar PPI Ex Food, Energy, Trade YoY, last 0,90% | USD/12:30 |
| Apr 11 CPI Weekly YTD, last 2,10% | RUB/13:00 |
| Apr 11 CPI WoW, last 0,10% | RUB/13:00 |
| Apr 13 Bank of Canada Rate Decision, exp 0,50%, last 0,50% | CAD/14:00 |
| BOC Releases Monetary Policy Report; Poloz, Wilkins Speak | CAD/14:00 |
| Revisions: Business Inventories (Wholesale revised) | USD/14:00 |
| Feb Business Inventories, exp -0,10%, last 0,10% | USD/14:00 |
| Apr 8 DOE U.S. Crude Oil Inventories, exp 1000k, last -4937k | USD/14:30 |
| Apr 8 DOE Cushing OK Crude Inventory, exp -500k, last 357k | USD/14:30 |
| Bank of Portugal Governor Costa Attends Awards Ceremony | EUR/15:00 |
| Currency Flows Weekly | BRL/15:30 |
| ECB's Nowotny Gives Keynote at Event in New York | USD/16:35 |
| U.S. Federal Reserve Releases Beige Book | USD/18:00 |
| ECB's Constancio Speaks in New York | USD/21:15 |
The Risk Today
Peter Rosenstreich
EUR/USD continues to weaken and is now close to the key support at 1.1339. However, pair is still 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 moving sideways near the hourly support at 1.4154. Stronger supports stands at 1.4033 (03/03/2016 low) have been broken. The short-term technical structure is positive as long as the support at 1.4033 (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 clear 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 continues to strengthen as can be seen by the break of the hourly resistance at at 0.9582 (11/04/2016 high). Hourly support can be found at 0.9510/22 (declining trendline & intraday low). Further resistance is located 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 |
| 1.1321 | 1.4236 | 0.9616 | 109.23 |
| 1.131 | 1.4016 | 0.9476 | 107.61 |
| 1.1144 | 1.3836 | 0.9259 | 105.23 |
| 1.1058 | 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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