AUDUSD TECHS: Key Support Remains Exposed
- RES 4: 0.7400 Round number resistance
- RES 3: 0.7343 61.8% retracement of the Apr 5 - May 12 bear leg
- RES 2: 0.7144/7283 50-day EMA / High Jun 3 and the bull trigger
- RES 1: 0.7063 High Jun 13
- PRICE: 0.6994 @ 06:58 BST Jun 16
- SUP 1: 0.6851 Low Jun 14
- SUP 2: 0.6829 Low May 12 and the bear trigger
- SUP 3: 0.6805 Low Jun 22 2020
- SUP 4: 0.6647 0.764 proj of the Apr 5 - May 12 - Jun 3 price swing
AUDUSD reversed higher Wednesday. Short-term gains are considered corrective though and a bearish threat remains present. A resumption of weakness would signal scope for a test of key support and the bear trigger at 0.6829, the May 12 low. Clearance of this support would confirm a resumption of the downtrend and open 0.6805, the Jun 22 2020 low. On the upside, 0.7063, Jun 13 high is seen as an initial firm resistance.
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EURJPY TECHS: Head And Shoulders Reversal
- RES 4: 141.06 High Jun 4 2015 and a key resistance
- RES 3: 140.87 0.50 proj of the Mar 7 - 28 - Apr 5 price swing
- RES 2: 138.32/140.00 High May 9 / High Apr 21 and the bull trigger
- RES 1: 136.75 High May 12
- PRICE: 135.20 @ 06:56 BST May 17
- SUP 1: 132.66 Low May 12 and the bear trigger
- SUP 2: 132.40 100-dma
- SUP 3: 132.20 50% retracement of the Mar 7 - Apr 21 bull phase
- SUP 4: 131.59 Low Mar 22
EURJPY fell sharply on May 12 and remains vulnerable. The move lower last week marks an extension of the reversal from Apr 21. The cross has breached a number of important support levels, clearing the 50-day EMA, and the Apr 5 low of 134.30. Furthermore, the move lower highlights a head and shoulders reversal pattern. A continuation lower would open 132.40 initially - the 100-dma. Initial resistance is 136.75, May 12 high.
UK DATA: Labour market data due at 7:00BST
- Note that there will be one further release of labour market data next month ahead of the June MPC decision (it will be released on the Tuesday of the decision week).
- Employment is forecast to rise by just 4,000 in the January-to-March period according to the Bloomberg consensus, after a 10,000 gain the in the three months to February. Payroll employment is forecast to rise by 51,000 in April, after a 35,000 increase in March, the smallest addition since February 2021.
- However, the jobless rate is seen remaining at 3.8%, matching the lowest level since the fourth quarter of 2019, with the employment rate remaining well below pre-pandemic levels. In the BOE’s post-MPC press conference, Governor Andrew Bailey stressed the strength of the UK labour market as grounds for underlying confidence despite the cost-of-living crisis.
- Earnings growth likely steadied in the first quarter, matching the 5.4% annual gain recorded in the three months to February. But with CPIH averaging 5.5% over the opening three months of the year, total earnings likely fell into the red.
- During the Treasury Select Committee testimony yesterday, we did see STIR markets price in a slightly more aggressive pace of tightening this year. And Governor Bailey highlighted that the tightness of the labour market had taken the BOE by surprise. We expect the market to remain focused on the HMRC real-time payroll employment figure as well as wage growth. However as with other recent UK releases, any market reaction might be reserved for when STIR markets open at 7:30BST.
INR: Rupee Underperforming Broader USD Weakness
Spot USD/INR has pushed to fresh record highs in the first few hours of onshore trading today. We ran up to 77.80 before sentiment stabilized, we are around 0.30% higher in spot USD/INR terms vs. last Friday (note spot markets were closed yesterday).
- The rupee is underperforming the broader rally seen in Asian FX today. All other regional currencies are higher against the USD (except for IDR), with KRW (+0.62%) and THB (+0.36%) the standouts. The USD is generally weaker against the G10 currencies as well.
- Higher energy and agricultural prices have not helped the INR's cause, particularly with oil back close to multi-week highs.
- Later today we get wholesale prices data. The market looks for a +14.92% YoY print, versus +14.55% YoY previously. Recall last week that CPI surprised on the upside. Looking ahead, tomorrow delivers the minutes from the RBI's most recent monetary policy gathering.
