FOREX: Japanese Yen Outperforms amid Move Lower for Core Yields
May-15 17:07
- The plethora of US data releases on Thursday came in on the weaker side of expectations, with retail sales disappointing and monthly PPI registering negative readings. US yields have moved significantly lower in sympathy and while the USD index does reside in negative territory, greenback moves have been very modest in comparison.
- This doesn’t tell the whole story in G10, where there has been mixed performance. The Japanese yen is outperforming, owing to US yields sliding 10bps lower in the belly of the curve. USDJPY is 0.75% lower around 145.65 as we approach the APAC crossover. Lows for the session were 145.42, however, we note the pair is yet to close the gap to last Friday’s close at 145.37. This level will remain in short-term focus, before 145.10, the 20-day EMA. Overall, the latest USDJPY pullback underpins the view that gains since Apr 22 appear corrective.
- Underperformance for the higher beta currencies in G10, such as the antipodeans sees the likes of AUDJPY and NZDJPY falling around 1.2% today. For AUDJPY, the prior trendline resistance break now provides solid support around the 93.00 handle, with both the 20- and 50-day exponential moving averages intersecting just below this mark.
- Stronger-than-expected UK growth data has only provided a modest boost to GBP, with cable hovering just below the 1.33 mark. A continuation higher would refocus attention on the key resistance and a bull trigger, at 1.3444, the Apr 28 / 29 high.
- In emerging markets, USDZAR (-1.3%) has fallen close to its worst level of the year at 18.0081, the Mar 18 low, and is now nearly 10% lower compared to April’s all-time high. Moderate greenback weakness and a solid recovery in spot gold through the European session have provided tailwinds for the rand, with sights turning to next support at 17.6191, the Dec 12 2024 low.
- Japan GDP and NZ inflation expectations cross tomorrow, before US import prices and building permits highlight the US calendar. SNB’s Schlegel is also due to speak Friday.
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FOREX: EURUSD Slips Back Below 1.13, Antipodeans Outperform
Apr-15 17:02
- Overall, the USD index is firmer on Tuesday as global markets trade in a relatively more stable manner compared to the significant swings last week. Amid this dynamic, EURUSD has slipped back below 1.1300 and trades 0.75% lower at 1.1270 as we approach the APAC crossover.
- The single currency move may have intensified following news that the EU and US have made scant progress bridging trade differences this week as officials from the Trump administration indicated that the bulk of the US tariffs imposed on the bloc will not be removed. With a bull cycle firmly still in play, markets will eye initial support at the 1.1144 breakout level. Key support remains unchanged at the 20-day EMA, now intersecting at 1.0972.
- EUR weakness has been even more evident in the crosses, with a notable 0.87% decline for EURGBP. This has been assisted by GBPUSD breaking above 1.3207 to fresh six-month highs, highlighting a resumption of the medium-term uptrend. Sights are on 1.3274 next, the Oct 3 ‘24 high.
- Even more notable across FX, has been the advances for AUD and NZD, which comfortably outperform in the G10 space. The more stable tone for risk this week continues to foster a more constructive backdrop for higher beta currencies. For NZDUSD specifically, the pair has rallied as high as 0.5944, briefly breaching the late November highs in the process. In just 5 sessions, NZDUSD has bounced over 8% from its cycle lows.
- Canada CPI came in lower than expected, which alongside the greenback bid has prompted a solid bounce for USDCAD. Importantly, this comes ahead of tomorrow’s Bank of Canada decision, where analysts remain divided over whether the BOC will opt for a 25bp cut or an unchanged decision.
- Elsewhere tomorrow, China GDP, UK CPI and US retail sales are highlights of a busy economic calendar. Fed Chair Powell is also due to speak on the economic outlook at the Economic Club of Chicago.
US: White House Press Conference Underway Shortly
Apr-15 17:01
White House Press Secretary Karoline Leavitt is shortly due to deliver her first press conference of the week (LIVESTREAM). State Department spokesperson Tammy Bruce is scheduled to hold a press conference in roughly one hour (LIVESTREAM).
- The White House presser is likely to be dominated by questions over the deportation of a Salvadorian national and the Trump administration's refusal to comply with a Supreme Court ruling on the case.
- The State Dept presser is likely to cover recent developments in Russia and Iran, with Trump's special envoy, Steve Witkoff, saying yesterday that Russian President Vladimir Putin is open to a "permanent peace" deal with Ukraine.
- Reuters noted this morning that the Kremlin said that "there is no clear outline of a U.S.-Russia deal on Ukraine for now, but that there is political will to move in the direction of an agreement."
- On Iran, Trump suggested yesterday that Tehran could be stringing US negotiators along after a first direct meeting between US and Iranian delegations in Oman on Saturday failed to deliver any concrete steps toward a new nuclear accord.
- Trump warned: “And they've got to go fast because they're fairly close to having [a nuclear weapon]. And they're not going to have one. And if we have to do something very harsh, we'll do it.”
- When asked if potential measures could include a strike on Iranian nuclear facilities if a deal isn’t struck, Trump said: “Of course it does.”
EURUSD TECHS: Bullish Trend Structure
Apr-15 17:00
- RES 4: 1.1608 High Nov 9 2021
- RES 3: 1.1555 1.382 proj of the Feb 28 - Mar 18 - 27 price swing
- RES 2: 1.1495 High Feb 10 2022
- RES 1: 1.1473 High Apr 11
- PRICE: 1.1323 @ 15:54 BST Apr 15
- SUP 1: 1.1144 High Apr 3 and a recent breakout level
- SUP 2: 1.0972 20-day EMA
- SUP 3: 1.0788 50-day EMA and a short-term pivot level
- SUP 4: 1.0733 Low Mar 27 and a key short-term support
A bull cycle in EURUSD remains intact and the pair is holding on to the bulk of its recent gains. The breach last week of 1.1144, the Apr 3 high and bull trigger, confirmed a resumption of the uptrend and maintains the price sequence of higher highs and higher lows. Sights are on 1.1555 next, a Fibonacci projection. Initial support lies at the 1.1144 breakout level. Key support is unchanged at the 20-day EMA, at 1.0972.
