Chinese growth data supports EUR/USD

KBC Market Research Desk KBC Bank

A strong Asian session initially supported euro buying yesterday. EUR/USD retreated from its intraday high around 1.1314 however. Reuters reported that "a significant minority" of ECB officials doubt the projected growth recovery in the second half of this year. The couple staged a comeback on a lack of enthusiasm within the ECB regarding deposit tiering. EUR/USD eventually did slip below 1.13 (1.1281) as US/German interest rate differentials widened in favour of the dollar, despite weak US industrial data. USD/JPY closed unchanged at 112.

China's growth data took centre stage during today's Asian session. 2019Q1 GDP growth slightly beat estimates and other high profile data equally showed resilience. EUR/USD jumped back above 1.13. The Aussie dollar advanced near 0.72. The Chinese yuan performs rather disappointingly, suggesting some investor fatigue. The kiwi dollar (0.67) slipped after soft (inflation) data before recovering on the Chinese data. The yen traded a similar pattern. USD/JPY changes hands close at 112.

Today's economic data flow basically ran dry after the Chinese batch this morning. The numbers at first sight have further eased investor growth concerns. But will the anedotical evidence in the Fed's beige book later today do so too? Speeches by Fed's Harker and Bullard are wildcards for trading. Meanwhile the earnings season gains traction. The next important point of reference are tomorrow's EMU PMI's.

Global economic sentiment has recently turned for the better. Chinese GDP data did not completely debunk that. Last week's price actions shows the euro is still net benefiter of such circumstances. The currency recaptured 1.13 but the situation remains fragile. We watch for Q1 earnings and EMU PMI's to further confirm the sentiment turnaround. We maintain the view that a EUR/USD break lower isn't evident given the Fed's wait-and-see bias unless EMU/US data come in surprisingly weak/strong. A break above 1.13 introduces resistance at 1.1448.

Yesterday's UK job report was strong. Nevertheless, sterling traded with a slight negative bias, testing the upper bound of the 0.85/0.865 range (EUR/GBP closed at 0.864). Brexit temporarily moved to the background as British MP's enjoy the Easter holidays. March CPI data might trigger some sterling volatility today. However, it won't change the BoE's assessment. In a broader perspective we stay cautious on sterling as long as Brexit and the political impasse drags on. We assume the EUR/GBP 0.85 support area to be solid.

Download The Full Sunrise Market Commentary Currencies

Author

KBC Market Research Desk

KBC Bank

EUR/USD holds firm near 1.1850 amid USD weakness

EUR/USD remains strongly bid around 1.1850 in European trading on Monday. The USD/JPY slide-led broad US Dollar weakness helps the pair build on Friday's recovery ahead of the Eurozone Sentix Investor Confidence data for February.

GBP/USD holds medium-term bullish bias above 1.3600

The GBP/USD pair trades on a softer note around 1.3605 during the early European session on Monday. Growing expectation of the Bank of England’s interest-rate cut weighs on the Pound Sterling against the Greenback.

Gold remains supported by China's buying and USD weakness as traders eye US data

Gold struggles to capitalize on its intraday move up and remains below the $5,100 mark heading into the European session amid mixed cues. Data released over the weekend showed that the People's Bank of China extended its buying spree for a 15th month in January. Moreover, dovish US Fed expectations and concerns about the central bank's independence drag the US Dollar lower for the second straight day, providing an additional boost to the non-yielding yellow metal.

Cardano steadies as whale selling caps recovery

Cardano (ADA) steadies at $0.27 at the time of writing on Monday after slipping more than 5% in the previous week. On-chain data indicate a bearish trend, with certain whales offloading ADA. However, the technical outlook suggests bearish momentum is weakening, raising the possibility of a short-term relief rebound if buying interest picks up.

Japan's Takaichi secures historic victory in snap election

In Japan, Prime Minister Sanae Takaichi's coalition secured a supermajority in the lower house, winning 328 out of 465 seats following a rare winter snap election. This provides her with a strong mandate to advance her legislative agenda.

Bitcoin, Ethereum and Ripple consolidate after massive sell-off

Bitcoin, Ethereum, and Ripple prices consolidated on Monday after correcting by nearly 9%, 8%, and 10% in the previous week, respectively. BTC is hovering around $70,000, while ETH and XRP are facing rejection at key levels. Traders should be cautious: despite recent stabilization, upside recovery for these top three cryptocurrencies is capped as the broader trend remains bearish.