USD/JPY edges up despite intervention fears, DXY higher

CNH rebounds from four-month low, Euro dips on dovish ECB

Summary:

The Dollar edged higher against the Yen to near 4-month highs despite verbal warnings from Japanese officials. At the New York close, the USD/JPY pair settled at 151.52 (151.35 yesterday).

Japanese Finance Minister Shunichi Suzuki said that he would not rule out any measures to cope with a weakening currency. The Yen has weakened against the Dollar despite the Bank of Japan’s ending eight years of negative interest rates.

A popular gauge of the Greenback’s value against a basket of 6 major currencies, the Dollar Index (DXY) rallied to 104.00 from 103.85. Traders were cautious ahead of Friday’s release of the US PCE report, the Federal Reserve’s preferred inflation gauge.

The Euro (EUR/USD) renewed its fall further towards the 1.0800 support, settling at 1.0833 (1.0845). Remarks from Bundesbank President Nagel on Friday that the ECB might consider rate cuts before the summer break continued to weigh on the shared currency.

China’s Offshore Yuan (CNH) rebounded from 4-month lows against the US Dollar after the People’s Bank of China set the mid-point of the Yuan at 7.0996, the largest discrepancy in months. The USD/CNH pair settled at 7.2485, down from yesterday’s 7.2550.

The Australian Dollar (AUD/USD) dipped to 0.6533 from 0.6547 against the broadly based stronger Greenback. A weak Chinese Yuan also weighed on the Aussie Battler.

Against the Asian and Emerging Market Currencies, the Dollar was mixed. The USD/THB pair (USD/Thai Baht) eased to 36.33 (36.39). USD/SGD (Singapore Dollar) dipped to 1.3457 (1.3450).

Economic data released yesterday saw the US January House Price Index (m/m) ease to -0.1% from 0.1% previously and estimates at 0.1%. The March US Richmond Fed Manufacturing Index dropped to -11 from -5 previously and estimates at -4.

The US CB Consumer Confidence eased to 104.70 from 104.80 previously, much lower than expectations at 107.00. The US Dallas March Fed Services Index climbed to -5.5 from -6.

• USD/JPY – The Dollar rebounded against the Yen, edging up to 151.52 from 151.35 despite verbal warnings from Japanese officials. In choppy trade, the USD/JPY pair rallied to an overnight high at 151.60. The overnight low recorded was 151.20.
• EUR/USD – The Euro dipped to 1.0833 in late New York, down modestly from yesterday’s 1.0845. The shared currency soared to its overnight high at 1.0864 before easing. The overnight low recorded was 1.0824.
• AUD/USD – The Australian Dollar eased against the backdrop of broad-based US Dollar strength and a weaker Chinese Yuan. At the close of trade in New York, the AUD/USD pair eased to 0.6533 against 0.6547 previously.
• GBP/USD – The British Pound slipped to 1.2628 from 1.2640 against the backdrop of broad-based US Dollar strength. The overnight high traded was 1.2668 while the overnight low recorded for the GBP/USD pair was 1.2622.

On the lookout:

Today’s economic calendar kicks off with New Zealand’s ANZ Bank Business Confidence (f/c 34 from 34.7 previously – ACY Finlogix). Australia follows with its Westpac Bank’s February Leading Indicators (m/m f/c -0.2 from -0.1% previously – ACY Finlogix). Australia also releases its March CPI (f/c 3.5% from 3.4% - ACY Finlogix).

China releases its February Industrial Profits (y/y -1 from -2.3 previously – ACY Finlogix). France starts off Europe with its March Consumer Confidence (f/c 90 from 89 – ACY Finlogix). The Eurozone releases its March Euro Area Economic Sentiment Index (f/c 96.3 from 95.4 – ACY Finlogix). France releases its February Unemployment Benefit Claims (f/c 12.3K from 2.5K previously).

Next up is the Spanish Flash CPI (y/y f/c 3.1% from 2.8% - Forex Factory). Switzerland releases its Credit Suisse Bank Economic Expectations. There are no economic data schedules for release out of the US today.

Trading perspective:  

The Dollar saw modest gains versus its Rivals as markets extend their bets that other major central banks will ease interest rates ahead of the Federal Reserve. The Greenback also advanced against the Offshore Chinese Yuan (USD/CNH). Look for the Dollar to consolidate in Asia today.

While there are no major economic data releases out of the US today, markets will turn to Australasian and European reports. Australia’s March CPI is expected to grind higher to 3.5% from 3.4%. Which should underpin the Aussie Battler. A lower CPI read, say 3.3% or lower would weigh on the Australian Dollar, pushing it lower toward the 0.65 cent level.

Expect more rhetoric from Japanese officials against further Yen depreciation. Which would see further choppy trade in the USD/JPY pair.

• USD/JPY – the Dollar grinded higher to finish at 151.52 from 151.35 yesterday. Look for immediate resistance today at 151.60, which was the overnight high traded. The next resistance level lies at 151.90-152.00. The 152.00 level is formidable, and a break above that could see the Greenback soar to 155. Immediate support lies at 151.20 (overnight low). The next support level is found at 150.90 and 150.60. Look for consolidation, likely between 151.00-152.00. Trade the range. Watch for Japan Inc comments.

• AUD/USD – the Australian Dollar dipped to 0.6533 from 0.6547 yesterday, weighed by broad-based US Dollar strength and a weaker Chinese Yuan. On the day, look for immediate support at 0.6500 followed by 0.6470. Immediate resistance lies at 0.6560 (overnight high was 0.6559). The next resistance level lies at 0.6590. Look for more choppy trade, likely between 0.6500-0.6600. Trade the range today.
• EUR/USD – slip-sliding away, the Euro eased to 1.0833 against yesterday’s open at 1.0842. Look for immediate support today at 1.0800 followed by 1.0770. On the topside, immediate resistance can be found at 1.0860 (overnight high traded was 1.0863). The next resistance level lies at 1.0890 and 1.0920. Look for the Euro to trade in a likely range between 1.0800-1.0900. Prefer to sell Euro rallies.
• GBP/USD – the British Pound eased to 1.2628 against 1.2640 yesterday. Look for immediate support today at 1.2620 (overnight low traded was 1.2621). The next support level lies at 1.2590 and 1.2560. On the topside, immediate resistance lies at 1.2670 (overnight high traded was 1.2668). The next resistance level lies at 1.2700. Look for Sterling to consolidate in a likely range today of 1.26-1.27. Prefer to sell Sterling on strength.

Have a good trading day ahead. Wishing all a Happy Easter weekend.