Equities were the big winner today on the back of a strong increase in M&A activity, while the dollar took on a bid tone in putting all its major counterparts under pressure, particularly the Aud which is finally taking notice of the low iron ore price and the increasing likelihood of another RBA rate cut. More of the same appears likely in coming sessions. Today will be another busy one, kicking off in Asia with a speech from the Fed’s Fischer. Later on there will be plenty to keep an eye on, with the German Retail Sales, EU/German Unemployment, EU Provisional CPI, Case Schiller House Price Index and US Consumer Confidence all due. Australia gets the ANZ Business Confidence, HIA New Home Sales, Private Sector Credit, while the NZ Building Permits is due shortly.
EUR/USD: 1.0817
The dollar was bid from the outset of the week and remained so through the session, helped by some solid US housing data, as the Euro came under pressure on concerns as to whether Greece will secure the required funds from the aid package before it runs out of cash in three week’s time. While Athens sounded upbeat about the talks with its creditors, Germany called for a more detailed list of reforms and kept the pressure on the Euro, which hit a session low of 1.0810, remaining above Friday’s low of 1.0800 for now.
The Fed’s Fischer will be speaking in the Asian time zone, ahead of the German /EU Unemployment, Retail Sales, EU Provisional CPI and US Consumer Confidence later in the session so it could be another active one coming up.
While the daily charts do still look positive, the short term indicators point to a test of the downside and so a test of 1.0800 and lower should not be ruled out although as we said previously, the daily Tenkan sits at 1.0810 and will provide some decent support. A break to the downside, and a daily close below 1.0800 though would signal the potential to head lower, perhaps towards the 1.0461 trend low, although this seems unlikely ahead of Friday’s US jobs data. Interim support will arrive at the 61.8% Fibo support of the 1.0610/1.1057 rally at 1.0780, with further, support to arrive at 1.0755 (50% pivot of 1.0461/1.1057) and then at 1.0715 (76.4% of 1.0610/1.1057). I would be doubtful of heading to 1.0700 today, but if wrong, then 1.0688 (61.8% of 1.0461/1.1057) will provide backup support.
Back to the topside, short term resistances will arrive at the 200/100 HMA’s at 1.0855/1.0900. It is hard to see the Euro above here today, but if wrong, as before, the daily Kijun should provide a cap, now at 1.0930.
As before look to trade from the short side but it is going to be choppy I suspect and there will be good support at 1.0800. A downside break though could begin the next leg lower.
Economic data highlights will include:
German Retail Sales, Unemployment, EU Provisional CPI, Unemployment, Case Schiller House Price Index, US Consumer Confidence. Chicago PMI
Meta Trader – AxiTrader EUR/USD: 4 Hour
USD/JPY: 120.15
The week kicked off positively for the dollar, somewhat surprisingly as we were expecting more of a rangebound session to unfold after last week’s breakdown to 118.33, and having overcome the resistance levels lined up at around 119.50 has now recovered to meet the daily Kijun line at 120.19.
With the short term charts still looking positive another run to the topside should not be ruled out today, and the dollar could rise to meet the descending trend resistance at 120.50 and then to the 20 March high at 121.20. Although unlikely to be seen yet, a topside break of this would open up 121.50 and the 20 March high at 122.02. If/when this level can be overcome, the way would open up for a run towards the 15 July 2007 high at 122.42, and in the longer term, the target of 124.13 (17 June 2007 high) would appear on the horizon but will take time.
The downside will now find support at 119.80 (200 HMA) and then at 119.40/50 and while it looks unlikely to head back below here today, the daily and weekly charts are not yet indicating that this rally is likely to continue. If the dollar does turn lower once again, 119.00/118.90 will decent support ahead of the 100 DMA/daily cloud top at 118.75, Thursday’s 118.32 lows and the thin daily cloud base at 118.15.
Watch out for what the Fed’s Fischer has to say today in early Asia which might cause some waves. The Tankan is coming up tomorrow.
Economic data highlights will include:
Housing Starts.
Meta Trader – AxiTrader USD/JPY: 4 Hour
GBP/USD: 1.4796
Cable is back below 1.4800, after having reversed from testing 1.4900, to a low of 1.4752 once stops got triggered on the break of last Friday’s 1.4799 low.
While generally following the Euro today, Cable is also beginning to focus on the outcome of the UK election (May 6) which officially got under way today, and whatever the result the outcome does not really appear to be a positive for Sterling. While a hung parliament is generally expected, a Conservative victory is expected to bring forward a referendum on a UK exit from the EU, and should Labour win, the expectation would be for a less austere government which might derail the UK recovery. Who know? Not me, for sure. In the meantime today will see the UK GDP which may provide some waves (exp 0.5%qq, 2.5% yy) although the greater focus will probably be on the EU/US data.
Technically Cable is very choppy, but with an increasingly downside bias. A break of 1.4758 (76.4%of 1.4687/1.4994) and the session low of 1.4751 would suggest a run towards the recent lows at 1.4713, 1.4685 and at 1.4633, although the latter of these may be a stretch too far today.
The topside sees resistance now at 1.4840 and 1.4860 (both minor) ahead of the day’s high at 1.4900. Above this, 1.4920 and at 1.4950 will see sellers ahead of the very strong levels just ahead of 1.5000 which have held firm on the last 3 attempts, although we are unlikely to go close to it today.
Look to sell rallies seems to be the plan.
Economic data highlights will include:
UK GDP.
Meta Trader – AxiTrader GBP/USD: 4 Hour
USD/CHF: 0.9678
The dollar has retained a bid tone through the session and sits at the day’s highs, looking as though it wants to head to 0.9700 and above. The 200 HMA lies at 0.9706, above which could head on towards minor Fibo levels at 0.9730 and 0.9805, although this seems too far off today.
The downside will see bids at 0.9670 and 0.9635 (both minor) ahead of the 100 HMA at 0.9610.
The charts remain mixed, so another choppy session with a mild upside bias seems in store but with overall direction to come via the data.
Meta Trader – AxiTrader USD/CHF: 4 Hour
AUD/USD: 0.7642
The Aud was offered from the start of trade, with the market finally beginning to focus on the combination of a probable RBA rate cut and a new trend low for iron-ore, with a generally bid tone in the US$ not helping the cause.
With little bounce from the session low of 0.7632, further weakness seems to lie ahead although 0.7600/10 will provide some decent support, having held on the last couple of attempts, but a break of which would then suggest a return to the trend low at 0.7559. A break of this would then hint at a run to the RBA’s stated target of 0.7500. I think we are eventually heading there and lower over time, below which there is not too much to hold the Aud ahead of 0.7414 (Oct 2010 low). Under here there is very strong support at around 0.7200 where two important Fibo levels are lining up (0.7210: 61.8% of 0.4773/1.1082 and 0.7180:76.4% of 0.6006/1.1082). I suspect that eventually 0.7000 will appear on the horizon (and eventually 0.6000!), but this is going to be some way off yet.
The hourly charts are actually making an attempt to turn higher, so on the topside some short term profit taking could see a return to 0.7665 and then to 0.7700, where minor Fibo/trend resistances lie. A break of this, unlikely today I suspect, would open up the way for a return to 0.7750 and to the next descending trend resistance at 0.7800, but which is beginning to disappear over the horizon.
Selling rallies looks to be back in full swing.
Economic data highlights will include:
ANZ Business Confidence, HIA New Home Sales, Private Sector Credit.
Meta Trader – AxiTrader AUD/USD: 1 Hour
NZD/USD: 0.7491
The Kiwi is lower today, currently at 0.7493, but held up reasonably well for much of the session, underpinned by weakness in AudNzd, which hit a new trend low at 1.0156. Parity is not now so far away!
The session is closing below important support at 0.7500 (38.2%/200 HMA) and would seem to allow for a deeper move towards 0.7440, but seems unlikely today, although the 4 hour charts are building some downside momentum and so it seems that this will be the direction to follow. If wrong, below 0.7440 would open up 0.7400 and 0.7380 (61.8% of 0.7175/0.7694)
On the topside, 0.7500 will see sellers ahead of further minor levels at 0.7520, 0.7535 and the 200 HMA at 0.7555.
NZ Building permits lie ahead which might provide a squeeze higher, but overall the downside still appears to be the main game.
Economic data highlights will include:
NZ Building Permits.
Meta Trader – AxiTrader NZD/USD: 4 Hour
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