Aud, Kiwi recover from their lows ahead of China Mfg PMI. Inflation Outlook for both Aust/NZ today.
The FOMC Minutes suggested that the Fed will keep tapering its stimulus programme but that no interest rate hikes are on the horizon while inflation remains benign. This generally helped to underpin the dollar ahead of today’s global PMI data, starting off in Asia with the HSBC China reading. Elsewhere, the main action was in Cable, which went higher on the back of the solid UK retail sales, and could see another busy session today, after the release of the provisional Q1 GDP data. Australia, NZ both get inflation outlook data.
CURRENCIES
EUR/USD: 1.3685
Outlook
Res
1.3700
1.3720
1.3735
The Euro saw a bit of action today, initially heading a little higher to reach 1.3722 before heading in the other direction in European trade, eventually reaching a low of 1.3633 as stops were triggered prior to the release of the FOMC Minutes …scroll down
Sup
1.3650
1.3630
1.3595
USD/JPY: 101.40
Outlook
Res
101.60
101.80
102.00
Having broken various levels of strong support in making a 6 month low at 100.82, following the BOJ Minutes…scroll down
Sup
101.20
101.00
101.80
GBP/USD: 1.6900
Outlook
Res
1.6920
1.6935
1.6950
Cable spiked higher to reach 1.6920 following the much stronger than expected UK retail Sales (+1.3% v +0.5 % exp; April) before later reversing towards 1.6855…scroll down
Sup
1.6875
1.6850
1.6825
USD/CHF: 0.8931
Outlook
Res
0.8960
0.8980
0.9000
US$/Chf did make a new high today at 0.8965 but did not really carry on given that the Euro fell to as low as 1.3630, and is now back in neutral territory …scroll down
Sup
0.8900
0.8890
0.8875
AUD/USD: 0.9250
Outlook
Res
0.9255
0.9275
0.9300
The Aud remained heavy for most of the session following the ongoing arguments following the tough budget and added to by the weak Consumer Confidence data …scroll down
Sup
0.9210
0.9190
0.9160
NZD/USD: 0.8565
Outlook
Res
0.8575
0.8590
0.8610
The Kiwi has had a choppy session but has ended up pretty much unchanged ahead of the RBNZ Inflation expectations which are due shortly…scroll down
Sup
0.8550
0.8535
0.8520
Commodities / Indices
ASX SPI: 5455
Outlook
Res
5465
5475
5485
The SPI has bounced strongly off the session 5380 low and has reached resistance at the 200 HMA and the 4 hour momentum indicators now point to the chance of closing the chart gap to 5480. The dailies though, still point lower and as such, if we do wee 5480, it may be a sell opportunity, with a SL placed above 5500
Sup
5440
5425
5400
S+P Futs: 1885
Outlook
Res
1890
1895
1900
The S+P continues to chop around within the recent 1855/1890 range and given the mixed nature of the indicators, more consolidative trade may be in order. The short term indicators suggest that it will be the topside that comes under pressure, and eventually I suspect the market will need to take a look at what lies beyond 1900. The dailies do not look so sure though.
Sup
1875
1865
1855
DJI Futs: 16500
Outlook
Res
16550
16600
16650
Ditto S+P. The 4 hour charts point to a retest of the topside but the dailies look less certain and I suspect more choppy trade below 16600 may follow…
Sup
16450
16400
16350
GOLD: 1291
Outlook
Res
1300
1305
1310
Gold looks a bit heavy, but ultimately is sticking close to the recent 1275/1305 range. More of the same looks likely.
Sup
1285
1280
1275
SILVER: 19.40
Outlook
Res
19.50
19.65
19.75
As with Gold, rangebound, so look for another day of 19.25/65. I suspect Silver may be putting in a bit of a base, for another look at the topside, but not overly convinced that we see much of a move today..
Sup
19.25
19.00
18.85
OIL(WTI): 103.85
Outlook
Res
104.25
105.00
105.25
Reduced inventories helped WTI to surge higher again, from 102.40 yesterday, towards the 105.00 target, in reaching 104.24 today before easing back into the US close. The 1 & 4 hour charts are becoming O/B and momentum should slow a little, giving us the chance for a dip towards 102.50/103.00. The dailies are positive though, so dips appear to be a buy opportunity for an eventual test of 105, beyond which would hint at a run towards the 3 March high at 105.19. Above this would head to higher levels with 107.20 being the next realistic resistance. ….
Sup
103.25
103.00
102.60
EUR/USD: 1.3685
The Euro saw a bit of action today, initially heading a little higher to reach 1.3722 before heading in the other direction in European trade, eventually reaching a low of 1.3633, as stops were triggered prior to the release of the FOMC Minutes, and then bouncing sharply back towards 1.3680. The Minutes themselves did not really come up with anything new, except to reinforce the view that tapering will probably be wound up before the end of the year, although rate hikes are not on the agenda yet as no inflationary risks have so far become evident.
Technically the base of the daily cloud at 1.3720 did a good job of capping the Euro today, while the 200 DMA at 1.3630 contained it at the lows, and given the mixed nature of the short term indicators it could well be that this range again holds it today.
While the dailies point lower, it does not appear that the Euro has the short term momentum to head much below 1.3630 in the coming session, but if wrong, look for 1.3595 (76.4% of 1.3475/1.3995) to provide some support, below which would head towards 1.3560 (minor) and 1.3520 (38.2%) of 1.2754/1.3995.
On the topside, minor sellers will appear at 1.3700, with stronger interest at 1.3720 (daily cloud base). Beyond this the 200 DMA and daily Tenkan both sit at 1.3735 and I would be surprised to see the Euro head above this. If wrong, further sellers should appear at 1.3750 and at 1.3780.
Use 1.3710/1.3630 as a guide, with a preference to sell rallies again for an eventual return/break of 1.3630. The flash PMI’s are due later today and these will provide some volatility, but unless the EU figures are particularly weak, I suspect we are in for a choppy day around current levels. A very weak reading though would reinforce the case for a June ECB rate cut and would see the Euro head lower once more.
Economic data highlights will include:
EU Flash Mfg/Services/Composite PMI’s, Chicago/Kansas Fed Mfg Activity, Flash Mfg PMI, Existing Home Sales
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EUR/USD: 4 Hour
USD/JPY: 101.40
Having broken various levels of strong support in making a 6 month low at 100.82 following the BOJ Minutes (no change as expected) and Press Conference, at which Governor Kuroda gave little indication of any further easing, the dollar has bounced well since the FOMC Minutes to currently sit near its session highs of 101.63.
US equities have had a solid session, closing near their own highs, dragging the Nikkei Futures up with it and away from the 14000 level which just held yesterday. Having closed in Asia at 14042, the Nikkei is currently at 14175 and should avoid triggering downside stops sub 14000 today, which in turn, should see more confident buyers come into US$/Jpy.
Having taken out the stops below the 200 DMA (101.23) before closing the US session back above it, the dollar is now looking a bit more positive and could be in for a run up towards minor resistance at 101.70 (200 HMA), beyond which would possibly head back towards 102.00 (101.90; 50% pivot of 103.01/100.82) and beyond to 102.15 (61.8%) and then 102.45 (76.4%).
The downside will see bids once again at 101.20 and at 101.00 although the short term indicators do not really suggest that we are heading much below here again today. If wrong the session low at 101.82 which comes ahead of the Feb low at 100.75 and the 50% pivot of the move from 95.80/105.43 is at 100.60.
Use 101.20/101.85 as a guide.
Economic data highlights will include:
Foreign Stock/Bond Investment, BOJ Monthly Economic Survey
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USD/JPY: 4 Hour
GBP/USD: 1.6900
Cable spiked higher to reach 1.6920 following the much stronger than expected UK retail Sales(+1.3% v +0.5 % exp; April), before later reversing towards 1.6855 and then picking up some strength once again following the FOMC minutes. The BOE MPC voted 9-0 to keep rates and QE on hold, as expected. Some members noted slack in the economy in the form of low wage growth, indicating that it is too early to confirm the economy is moving to sustained, above-trend growth.
The short term indicators are a bit mixed and I suspect we are in for a choppy ride today although the price action looks reasonably positive as Cable finished the NY session just below 1.6900. A run back to the session high is possible, above which would test the Fibo resistance at 1.6932 (76.4% of 1.6995/1.6730). Beyond there would see a retest of 1.6995/1.7000, although I am not sure that we are ready for such a move.
In the downside, 1.6855 is the first minor support, below which would head to the 100/200 HMA at around 1.6830. Below here, further Fibo supports arrive at around 1.6800/1.6775 but look unlikely to be bothered today.
The UK GDP lies ahead, and another strong reading here could see Cable run higher once again but I am not sure that the time is right to take out 1.7000. Use 1.6850/1.6940 as a guide.
Economic data highlights will include:
UK GDP, PSNBR
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GBP/USD: 4 Hour
USD/CHF: 0.8932
US$/Chf did make a new high today at 0.8965, but did not really carry on given that the Euro fell to as low as 1.3630, and is now back in neutral territory at 0.8930, close to the levels of this time yesterday.
While the dailies still point higher and I think we might eventually see a run up above 0.8965 (0.8960:23.6% of 0.9838/0.8698), and then to 0.9000 (200 DMA: 0.8995), the short term indicators actually now point a bit lower.
There is some minor bearish divergence appearing and thus we could get a near term move back towards 0.8900 (200 HMA/200DMA; 0.8892) and possibly to 0.8880. If so I suspect it would be a buy opportunity, with a SL placed sub 0.8850
Use 0.8890/0.8950 as a guide, while keeping an eye on the PMI data. A soft reading could weaken the Chf and send the dollar back towards the session highs.
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USD/CHF: 4 Hour
AUD/USD: 0.9250
The Aud remained heavy for most of the session, with the ongoing arguments following the tough budget keeping the pressure on the Government, and added to by the weak Australian Consumer Confidence data yesterday. It has however found a mild bid tone to finish the US session near its highs, as the US$ comes under a little pressure following the FOMC Minutes. Today will most likely be an active session once again, with the focus on the flash HSBC manufacturing PMI at which a reading of 48.1 is expected. Australian data will focus on the Consumer Inflation Expectations.
Technically, the dailies still look as though the Aud could come under further pressure in the sessions ahead. However, the hourlies look positive and the 4 hour charts also appear to be picking up some positive momentum and suggest that we could be in for a run towards 0.9260, above which would possibly see a bit more of a short squeeze towards 0.9285 (38.2% of 0.9408/0.9208). I would be surprised to see the Aud much above here today, but if wrong, look for further progress back towards 0.9300 (100 HMA).
On the downside the low has so far been 0.9208, which really need s to hold if we are to make a return to higher ground. Below the SHS neckline at 0.9200 would potentially see a sharp run lower, but as I have said before, until that happens I prefer to buy the dips with a tight SL and reverse at around 0.9185, or even better, below 0.9165, where the 200 DMA lies. A break of this would potentially see a quick run towards 0.9095 (100 DMA).
Economic data highlights will include:
Consumer Inflation Expectation, HSBC China Flash Mfg PMI
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AUD/USD: Daily
NZDUSD: 0.8565
The Kiwi has had a choppy session but has ended up pretty much unchanged ahead of the RBNZ Inflation expectations which are due shortly.
Having been down to a low of 0.8537, the hourlies have once again turned higher and we could be in for a run up, beyond near term resistance at 0.8575 and on to 0.8600 (100 HMA). Beyond there the 200 HMA is at 0.8625 but currently looks out of reach.
On the downside, below the session low, the next support will be at the 23.6% Fibo (0.7718/0.8778)level at 0.8525. A break of this would see it in further trouble, most likely heading towards the 100 DMA at 0.8425.
Use 0.8540/0.8600 as a guide and keep an eye out for the China data later in the session.
Economic data highlights will include:
RBNZ Inflation Expectation
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NZD/USD: 4 Hour