Daily Commentary | 16/04/2019
USD edges up as stabilization signs are awaited
The USD edged higher against a number of its counterparts in expectance of more signs for a stabilization of the global economy. Markets seem to be focusing on European and Chinese data for more evidence that the worst is over. Chinese trade data last week showed some stabilization and the GDP growth rate is expected to weigh on investor’s sentiment tomorrow. Trade issues were also in focus as the US-Japanese talks began, with Japanese minister Toshimitsu Motegi and US trade representative Lighthizer. On other news, US officials once again have expressed their optimism for a possible trade deal between the US and China. We tend to focus on the financial releases today and during tomorrows Asian session for more clues about market sentiment. EUR/USD dropped during today’s Asian session continuously testing the 1.1300 (S1) support line. We could see the pair rise somewhat today, should today’s financial releases strengthen the EUR side of the pair. Should the pair’s long positions be favored by the market, we could see the pair aiming if not breaking the 1.1340 (R1) resistance line. Should on the other hand the pair come under the selling interest of the market, we could see the pair breaking the 1.1300 (S1) support line and aim for the 1.1260 (S2) support level.
RBA’s dovish outlook weighs on the Aussie.
RBA’s meeting minutes were released during today’s Asian session and showed a dovish outlook which weighed on the AUD. The bank seems to believe that a rate cut would be appropriate should inflation remain low and unemployment trend higher. Analysts seem convinced that the bank is setting out the conditions for a rate cut, practically paving the way for a possible rate cut in August. Also the Aussie may have been weakened by RBA’s explanation of how cutting interest rates could help economy, especially the reference for a weak Aussie. We see the case for the Aussie to be data dependent, especially given the release of Australia’s employment data on Thursday. AUD/USD dropped during today’s Asian session as the Aussie weakened from the release of RBA’s meeting minutes, aiming for the 0.7120 (S1) support line. Should the bears continue to have the upper hand over the pair’s direction we could see it breaking the 0.7120 (S1) support line and aim for the 0.7065 (S2) support level. Should on the flip side the bulls take over, we could see the pair reversing direction, breaking the 0.7150 (R1) resistance line and aim for the 0.7245 (R2) resistance hurdle.
Other economic highlights, today and early tomorrow
In today’s European session, we get UK’s employment data for February and Germany’s ZEW economic Sentiment indicator for April. In the American session, from Canada we get the manufacturing sales growth rate for February. From the US we get the Industrial output growth rate and the API weekly crude oil inventories figure. During tomorrow’s Asian session New Zealand’s CPI rate for Q1, Japan’s trade data for March and China’s GDP growth rate for Q1, as well as the industrial output growth rate for March.
• Support: 1.1300 (S1), 1.1260 (S2), 1.1220 (S3)
•Resistance: 1.1340 (R1), 1.1380 (R2), 1.1420 (R3)
• Support: 0.7120 (S1), 0.7065 (S2), 0.7005 (S3)
•Resistance: 0.7150 (R1), 0.7245 (R2), 0.7300 (R3)