Market Roundup
- Dollar index extends early gains, hits three-week high of 99.318.
- Sterling falls to five-year low of $1.4623.
- BOJ’s Nakaso: Don’t think BOJ will face problem buying JGBs as it proceeds with QQE; Japan’s economy recovering gradually, underlying trend of inflation improving steadily; no intention of changing BOJ’s commitment to hit 2 pct inflation in roughly 2 years, which is core aim of QQE.
- German Cbank’s Dombret says further assistance to Greece can only be granted if it applies sound public finances.
- United Kingdom Feb Manufacturing Output MM increases to +0.4 % (consensus 0.4 %) vs previous -0.5 %.
- United Kingdom Feb Industrial Output YY decreases to +0.1 % (consensus 0.4 %) vs previous 1.3 %.
- United Kingdom Feb Industrial Output MM increases to +0.1 % (consensus 0.3 %) vs previous -0.1 %.
- United Kingdom Feb Construction Output Volume MM increases to -0.9 % (consensus 2.0 %) vs previous -2.6 %.
- United Kingdom Feb Construction Output Volume YY increases to -1.3 % (consensus 1.7 %) vs previous -3.1 %.
- France Feb Industrial Output MM decreases to 0.0 % (consensus -0.1 %) vs previous 0.4 %.
- France Feb Budget Balance decreases to -23.45 bln vs previous -9.40 bln.
Economic Data Ahead
- (0830 EDT/1230 GMT) USImport Price Index (Mar) consensus -0.3% m/m, previous +0.4% m/m
- (0830 EDT/1230 GMT) US Export Price Index (Mar) consensus -0.2% m/m, previous -0.1% m/m
- (1000 EDT/1400 GMT) UK NIESR GDP Estimate, previous 0.6%
Key Events Ahead
- (0945 EDT/1345GMT) FRB Richmond’s Lacker on the economic outlook; Sarasota, FL
- (1245 EDT/1645 GMT)FedTrade 30-year Fannie Mae / Freddie Mac (max $2.025 bln)
- (1330 EDT/1720GMT) FRB Minneapolis’s Kocherlakota remarks at credit union convention; Bloomington, MN
FX Recap
EUR/USD further weakened on Friday and dropped below 1.06 levels in Europe before consolidating at 1.0620 levels. The euro was unable to benefit from Greece making payment to the IMF yesterday. On the topside, immediate resistance is located at 1.0636 levels and a break above could see the pair testing 1.0682 levels. On the downside, support is located at 1.0550 levels, below which it could extend its losses to 1.0461 levels. Option expiries at 1.0600 (656M), 1.0700 (830M), 1.0750 (339M), 1.0800 (591M).GBP/USD plunged to a five year low of $1.4623 in the European session after UK’s production output data failed to meet expectations while US dollar strengthened across board. It is expected to find support at 1.4600 levels and a break below would drag the pair to 1.4550 levels. On the other hand, resistance is located at 1.4725 (Today’s High), and then at 1.4755 levels. Option expiries at 1.4650 (341M).AUD/USD traded in the red in the European session and currently trades at 0.7670 levels, having posted day’s high at 0.7720 levels and low at 0.7668 levels. It remained under pressure due to upbeat China CPI data, which signals waning of PBOC easing prospects. Immediate resistance is eyed at 0.7729 (April 8 High) levels, above which it could extend its gains to 0.7762 (March 29 High) levels. On the downside, a break below 0.7660 levels could take the pair to 0.7626 levels. Option expiries at 0.7700 (1.3BLN).USD/CAD has taken support near 1.25075 (20 day 4HMA) and slightly recovered till 1.2610 from that level. Overall trend is bullish as long as support 1.2500 holds. Canadian job market is expected to shed 500 jobs compared to 1000 in previous week. The unemployment rate is expected to be at 6.9% compared to 6.8%. On the downside any break below 1.2500 will take the pair further down till 1.2480/1.2420. The pair’s minor resistance is around 1.2620 and any break above would extend gains till 1.2650/ 1.27080 in short term.USD/JPY broke the short term resistance at 120.50 temporarily and currently trades at 120.28 levels. Short term trend is bullish as long as support 119.80 holds. On the upside minor resistance is around 120.50 and any break above would extend gains till 121.18/122.01. Option expiries at 119.50 (1BLN), 120.00 (588M), 120.50 (466M), 121.00 (1.1BLN).USD/CHF soared higher in Europe on the back of a strong US dollar and broke above the 0.9800 mark. It currently trades at 0.9809 levels (today’s high so far), having posted today’s low at 0.9750 levels. On the upside, the pair has resistance at 0.9818 levels and a break above could extend its gains to 1.0130 levels. To the downside, immediate support might be located at 0.9700 levels and below that at 0.9657 levels.NZD/USD has formed a triple top around 0.7610 and is retreating from that level. Overall trend is weak as long as resistance 0.7630 holds. On the downside minor support is around 0.7520 and any break below will drag the pair further down till 0.7480. Intraday bearish invalidation seen only above -0.7610. Option expiries at 0.7400 (337M), 0.7750 (882M).
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