Yen Climbs on Labour Data and BoJ Kuroda Comments; RBA Cash Rate on Hold

As most Monday’s, yesterday’s trading session was also quiet with most major currencies to end the day marginally changed. In Eurozone and U.S. there were numerous indicators out and despite that they were not market affecting, should be worth looking at them. The Reserve Bank of Australia kept its cash rate at 2% lifting sharply the Aussie but lost all of its gains right after.The recent slump in the oil prices dragged slightly down the Canadian and the New Zealand dollars. It’s worth noting that kiwi was the underprivileged currency of the G10 basket after the release of some macroeconomic domestic figures ahead of the Fonterra dairy auction later today. In addition, Japanese yen gained ground versus its counterparts due to the impressive wage data that smashed expectations and BoJ Kuroda’s comments.

USDEUR

Eurozone Unemployment Rate Steady; U.S. Factory Orders Slide
The single currency was traded firmly versus the majority of the G10 currencies on Monday and early Tuesday except the kiwi that dropped on soft domestic data. Eurozone’s unemployment met market’s forecasts of 10.3% in February from an upwardly revised 10.4% in January. The Sentix Investors’ Confidence rose slightly at 5.7 but missed market’s expectations for a stronger figure of 6.4 in April. Finally, the Producer Price Index for February came out lower than initially forecasted, On a yearly basis, the index showed a setback of 4.2% versus a decline of 3.0% the previous month and 4.0% expected. Going to U.S.,Factory Orders slide 1.7% in February from a downwardly revised 1.2% increase in January while the market was expected it to slip by 1.6%. The Labour Market Conditions Index, which is a combination of labour indicators, improves slightly to -2.1 in March from -2.5 before.

Eurozone Unemployment Rate

EUR/USD – Technical Outlook
The EUR/USD pair has been choppy and fairly directionless on Monday as it eased from a fresh year high set at 1.1437 after the U.S. NFP. Last Friday the U.S. Non-farm Payrolls surged by 215k jobs in the last month. The unemployment rate increased slightly to 5.0% from 4.9%. The pair was little change this morning, trading around 1.1400. If we see another move higher, the next target, above Friday’s high, will be at 1.1500, however, I think it’s going to take at least 2-3 attempts before we see a break above here. On the other hand, support will be seen at 1.1300, which coincides with the 23.6% Fibonacci retracement level, from May 2014 high to March 2015 low. This is a significant level as it also coincides with the 50-SMA on the 4-hour chart.

UK Construction activity remained stable
No significant data in UK to draw traders’ interest, therefore the currency performed mainly by technical reasons and the impact of the other currencies. The Construction Purchasing Managers’ Index (PMI) for the country revealed a stable expansion at 54.2 despite estimations that would fall at 54.0.

GBP

GBP/USD – Technical Indicators
The GBP/USD pair had another choppy day within a tight range, leaving the outlook pretty much unchanged. While we are seeing some consolidation today, the outlook for the pair once again looks quite bearish and March lows around 1.4100 may now be eyed. Along the way, it may run into support around 1.4200 and 1.4180. On the upside, the level to watch will be the key resistance level at 1.4330, which is a turning point for the short-term. A break above here would open the way towards the psychological level of 1.4500. On the daily chart, the pair has been fairly directionless as it remains in the symmetrical triangle, which started back in early March. Therefore, it leaves the outlook unchanged for now ahead of the FOMC minutes.

Yen Climbs on Labour Data and BoJ Kuroda comments
The Japanese yen has enjoyed some gains after Bank of Japan Governor Kuroda stated on Thursday that Japan is not headed toward a slump, even though the exports and output are showing some weaknesses due to the slowdown of the emerging economies. Although, he stated that the rising yen has a negative impact on big manufacturers’ sentiment. The Labour Cash Earnings outperformed with an increase by 0.9% in February from a flat month before. The market was expecting a moderate growth by 0.2%.

USD/JPY – Technical Outlook
The USD/JPY plunged below the significant level of 111.00 and locked the first profits for the week.
As we mentioned in yesterday’s strategic report ‘‘It should be noted, that the price continued to increase the rate of attempts to reach the 114.50 zone the previous month, however, the descending trend line prevented a break, near 113.80. Technically, having now taken out the 4-hour 50-SMA, the 113.10 and the 112.20 obstacles, a move back towards the 111.00 is more likely which would open the way to the next level at 110.50.’’ we have been waiting for the pair to retrace further. At the moment writing, the pair is increasing its attempts to test the second suggested level at 110.50. From here, I would expect the bulls to give their fight and if they manage to win the battle vs. bears then they could push the price back to the formation, which started back in mid-February.
But for now, we will remain bearish on this pair, targeting the key 110.50 level.

RBA keeps cash rate unchanged
The RBA left rates unchanged at 2% and signaled it awaits new labor data for a better assessment of the economy. As the global economy continues at a slower pace than earlier expected, conditions become more difficult for some emerging economies. The rate statement underlined that the commodity prices have generally increased but this follows very substantial declines over the past couple of years.

RBA

AUD/USD – Technical Outlook
Following the above announcements, the AUD/USD pair plunged below the key support level at 0.7600. The pair surged more than 8% last month, its biggest in over four years, to a high at 0.7725.
Technically there is again very little change, following the failed attempt above the latter level, although the short-term charts do look a little more negative, suggesting that we could see a run to the downside. Below the day’s low would open the way towards 0.7535, our first target for today, and then beyond here would then head towards 0.7480. At the same time, the medium-term charts still point lower, so it could end up being another range bound session below the 0.7700.

Gold – Technical Outlook
The precious metal nursed some losses the previous week after a strong U.S. jobs report triggered speculation that the Fed could raise interest rates sooner than expected. On the 4-hour chart, the yellow metal continues to be confined within a descending triangle, which started back in mid-February. The yellow metal is nearing the apex of the triangle and a breakout is expected anytime soon. To the upside, the levels to watch will be the $1,242 level, with a break above that to open the way towards $1,280. On the other hand, the $1,209 will be the first obstacle to the downside.
Beyond there, we could see a run to $1,200 and even to $1,180, although this remains some way off.

x

WTI and Brent Crude Oil – Technical Outlook
Oil prices fell more than 2.5% on Monday, with WTI touching one-month lows as investors doubted that producing countries will freeze output. U.S. crude oil has finished the session down, nearly 2.5%, at $36.18. WTI has tumbled more than 10% from a 2016 peak of $42.45 on March 18. A similar picture prevails in UK Brent as it settled down 2.5%, at $37.60 a barrel. Brent crude oil is down 10% from a 2016 high of $42.67 struck on March 22. The levels to watch are pretty much unchanged, as we remain bearish on these commodities. The next level to watch for the WTI will be the $35.40 barrier while the $35.85 level will be the next target for the UK Brent crude oil.

What to watch today
On Tuesday morning, the German Factory Orders for February will be released. The final Markit Services PMIs for March in U.S., UK, Germany and Eurozone as a whole will be released and are expected to meet the flash estimations.

Eurozone

After that, Eurozone Retail Sales for February are predicted to show a flat month compared to January and to have risen by 1.9% yoy from 2.0% before. After the U.S. Markit Services PMI for March, the ISM Non-Manufacturing PMI for March and the JOLTS Job Openings for February will be published as well. In New Zealand, the Global Dairy action will take place.

Global Dairy


 

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