Peter Kazimir, member of the European Central Bank governing council, said that the ECB is closely monitoring the situation in the banking sector and that it is ready to step in to ensure price and financial stability in the euro area. However, his remarks relating to the monetary policy show that ECB is somewhat concerned by the uncertainty caused by recent banking failures in the US and Europe - Kazimir revealed that ECB members agreed not to provide guidance for the May meeting. On the other hand, Kazimir said in the very same speech that he thinks that inflation is too high for too long and that further rate hikes are needed, although possibly at a slower pace, which is a kind of guidance on its own. Speaking about future decisions he said that core inflation developments and trends will be key in determining the next move.
EUR ticked lower during Kazimir's speech but the move was very small and has been completely erased by now. The pair is trying to recover from an overnight drop that was launched after repeated failures to break above the 1.0850 swing area.
EURUSD will be on watch throughout the day today. This is thanks to releases of inflation data from Europe. Flash CPI reading for March from Spain was already released at 8:00 am BST and it came in even below low expectations - 3.3% YoY vs 3.8% YoY expected (6.0% YoY previously). Such a drop can be attributed to base effects, especially in energy, as oil prices skyrocketed a year ago in the aftermath of Russian invasion of Ukraine and now they are over 30% year-over-year lower. German reading at 1:00 pm BST is also expected to show a noticeable drop - from 8.7% YoY to 7.3% YoY.
Market expectations for ECB rate hikes have dropped and now the market prices in an around-75% chance of a 25 basis point rate hike at a meeting on May 4, 2023. However, a softer CPI readings from Europe may push those expectations even lower and it could serve as a drag for EUR. Nevertheless, it should be noted that CPI data for April will be available when ECB next meets therefore today's reading may have less of an importance for rate setters in Europe at their next meeting.
Taking a look at EURUSD chart at H1 interval, we can see that the pair dropped following Spanish CPI release (orange circle) but has managed to recover all of the losses later on. Pair broke above the 1.0850 resistance zone and is now attempting to take out yesterday's daily highs in the 1.0865 area.
US indices finished another trading day higher. S&P 500 gained 0.57%, Dow Jones moved 0.43% higher and Nasdaq jumped 0.73%. Russell 2000 was a laggard and dropped 0.18%
Indices from Asia-Pacific followed into footsteps of US peers and traded higher. Nikkei and S&P/ASX 200 gained around 0.8% each, Kospi added 0.9% and Nifty 50 traded 1.0%. Indices from China traded up to 0.8% higher
DAX futures point to a slightly higher opening of the European cash session today
Reuters reports that Japan will set up a panel to discuss possibility of implementing digital yen backed by Bank of Japan
Turkey has approved Finland's NATO membership bid, clearing the final hurdle for the Nordic country to join the alliance. Sweden is still waiting for approval from Turkey and Hungary
According to Reuters report, OPEC+ JMMC is most likely to recommend leaving output cuts unchanged at a meeting on Monday
The Japanese trade and industry ministry announced that it will impose export controls on semiconductor manufacturing equipment. While it was stated that restrictions do not target any specific country, most take it as a step against China
Official Chinese manufacturing PMI dropped from 52.6 to 51.9 pts in March (exp. 51.6). Services gauge jumped from 56.3 to 58.2 pts (exp. 55.0)
Japanese industrial production increased 4.5% MoM in February (exp. 2.7% MoM)
Japanese retail sales increased 1.4% MoM in February (exp. -0.3% MoM)
Australian private sector credit increased 0.3% MoM in February (exp. 0.4% MoM)
Major cryptocurrencies are trading higher - Bitcoin gains 0.3%, Ethereum and Dogecoin add 0.6% each and Ripple trades 1.4% higher
Energy commodities are trading little changed - oil drops around 0.1% while US natural gas prices climb 0.2%
Precious metals trade mixed - gold and silver drop while platinum gains slightly
NZD and AUD are the best performing major currencies while JPY and CHF lag the most
AUDJPY is trading higher following better than expected readings of official Chinese PMIs for March. A key near-term resistance to watch can be found in the 90.25 area, where the downward trendline and 50-session moving average (green line) can be found.
EURUSD climbs back above 1.09 mark after French CPI beat
French flash CPI data for March was released today at 7:45 am BST. Report, just like reports from other European countries, was expected to show a significant deceleration in year-over-year reading. However, actual data showed a smaller than expected slowdown, just as it was the case with German data yesterday. French CPI slowed from 6.3 to 5.6% YoY in March, while the market expected a slowdown to 5.5% YoY. On a monthly basis, CPI reached 0.8% MoM, above 0.6% MoM expected by the market but below 1.0% MoM print from January.
Market reaction was small - DE30 ticked lower in a knee-jerk move before recovering losses while EURUSD moved higher and climbed back above 1.09 mark.
Futures markets point to a slightly lower opening of today's European cash session. Investors' attention is on the oil market as Brent and WTI trade 5% higher on the day after OPEC countries surprised with voluntary cuts of more than 1 million barrels. OPEC+ Joint Minister Monitoring Committee is set to meet again and will be watched closely. Timing of the post-meeting announcement is unknown, however. Apart from that, investors will be offered US ISM manufacturing print as well as final PMIs from Europe and the United States. Traders should keep in mind that this is a pre-Easter week and liquidity on the markets may be thinner. The week will also be shorter with many stock exchanges being offline on Friday.
8:00 am BST - Poland, manufacturing PMI for March. Expected: 48.2. Previous: 48.5
8:15 am BST - Spain, manufacturing PMI for March. Expected: 50.1. Previous: 50.7
8:45 am BST - Italy, manufacturing PMI for March. Expected: 51.0. Previous: 52.0
8:50 am BST - France, manufacturing PMI for March (final). First release: 47.7
8:55 am BST - Germany, manufacturing PMI for March (final). First release: 44.4
9:00 am BST - Euro area, manufacturing PMI for March (final). First release: 47.1
9:30 am BST - UK, manufacturing PMI for March (final). First release: 48.0
2:45 pm BST - US, manufacturing PMI for March (final). First release: 49.3
3:00 pm BST - US, ISM manufacturing index for March. Expected: 47.5. Previous: 47.7
3:00 pm BST - US, construction spending for February. Expected: 0.0% MoM. Previous: -0.1% MoM
Today we are going to analyze the EUR/USD for a longer period of time, in order to get a broader view of the major currency pair. Over the last few months the euro has been recovering against the US dollar, but recently the bullish momentum has slowed down. But could the current rally be compromised?
On the weekly chart, we can see that the price continues to be supported relatively well by the 50-period EMA, although it continues to struggle to break above the recent highs reached this year.
Dollar Index - Weekly Time Frame
On the other hand, when we look at the dollar index chart, we can see that there is room for further declines in the USD. Above all, when we identify the chart pattern - head and shoulders which could support further declines if the price breaks below the neckline of the pattern.
Furthermore, the improvement in market sentiment also supports this bearish USD scenario.
Revisions of European manufacturing PMI indices for March were released this morning. Spanish reading showed quite noticeable beat but releases from other countries, like France and Germany, were revisions and came in close to flash estimates. As a result, there was no major reaction to those on the market. EURUSD trades mostly flat on the day while European equity markets trade slightly higher on the day.
Manufacturing PMIs for March
Spain: 51.3 vs 50.1 expected
Italy: 51.1 vs 51.0 expected
France (final): 47.3 vs 47.7 first release
Germany (final): 44.7 vs 44.4 first release
Eurozone (final): 47.3 vs 47.1 first release
While EURUSD has seen nearly no reaction to PMI releases, the pair saw some interesting moves earlier in the day and a pin bar pattern near an important price zone can be spotted on the daily chart.
US indices finished yesterday's trading mixed - S&P 500 gained 0.37%, Dow Jones moved 0.98% higher, Nasdaq dropped 0.27% and Russell 2000 traded flat
Indices from Asia-Pacific traded mostly higher today - Nikkei gained 0.3%, S&P/ASX 200 traded 0.1% higher, Kospi added 0.3% and NIfty 50 moved 0.2% higher. Indices from China traded mixed
DAX futures point to a higher opening of the European cash session today
The Reserve Bank of Australia decided to keep the main rate unchanged at 3.60% at today's meeting. Such a decision was expected. AUD dropped as wording of the statement hinted that future rate hikes are not so certain
RBA noted that Australian banking system is strong, well capitalized and has ample liquidity, and therefore should not be viewed to be at similar risk as recently-failed banks in Europe or the United States
China has once again voiced discontent over possible meetings of Taiwanese president with US officials, saying that it will undermine regional peace, security and stability
ECB Simkus said that the European Central Bank is done with the larger part of the rate cycle. ECB Holzmann said that there is likely room for another 50 basis point rate hike
SNB Schlegel said that Swiss central bank is ready to conduct more FX interventions if necessary
South Korean CPI inflation decelerated from 4.8 to 4.2% YoY in March (exp. 4.3% YoY) while core gauge stayed unchanged at 4.0% YoY. This was the lowest reading of headline CPI since March 2022
Morgan Stanley lowered its Q4 2023 Brent price forecast from $95.00 to $87.50 per barrel and 2024 forecast from $95 to $85 per barrel. Bank says that OPEC output cut hints that demand must be weak
Major cryptocurrencies are trading higher today - Bitcoin gains 0.7%, Ethereum trades 0.8% higher and Dogecoin rallies around 5%. Dogecoin surged yesterday after Elon Musk changed Twitter logo to Shiba Inu dog
Energy commodities are trading higher - oil gains around 0.4% while US natural gas prices jump 1.2%
Precious metals are pulling back - gold and platinum trade 0.3% lower while silver drops 0.6%
NZD and USD are the best performing major currencies while JPY and AUD lag the most
AUDUSD is pulling back after the RBA decided to keep rates unchanged. The pair is retesting a recently-broken 0.6765 resistance zone but this time as a support.
US indices finished yesterday's trading mixed - S&P 500 gained 0.37%, Dow Jones moved 0.98% higher, Nasdaq dropped 0.27% and Russell 2000 traded flat
Indices from Asia-Pacific traded mostly higher today - Nikkei gained 0.3%, S&P/ASX 200 traded 0.1% higher, Kospi added 0.3% and NIfty 50 moved 0.2% higher. Indices from China traded mixed
DAX futures point to a higher opening of the European cash session today
The Reserve Bank of Australia decided to keep the main rate unchanged at 3.60% at today's meeting. Such a decision was expected. AUD dropped as wording of the statement hinted that future rate hikes are not so certain
RBA noted that Australian banking system is strong, well capitalized and has ample liquidity, and therefore should not be viewed to be at similar risk as recently-failed banks in Europe or the United States
China has once again voiced discontent over possible meetings of Taiwanese president with US officials, saying that it will undermine regional peace, security and stability
ECB Simkus said that the European Central Bank is done with the larger part of the rate cycle. ECB Holzmann said that there is likely room for another 50 basis point rate hike
SNB Schlegel said that Swiss central bank is ready to conduct more FX interventions if necessary
South Korean CPI inflation decelerated from 4.8 to 4.2% YoY in March (exp. 4.3% YoY) while core gauge stayed unchanged at 4.0% YoY. This was the lowest reading of headline CPI since March 2022
Morgan Stanley lowered its Q4 2023 Brent price forecast from $95.00 to $87.50 per barrel and 2024 forecast from $95 to $85 per barrel. Bank says that OPEC output cut hints that demand must be weak
Major cryptocurrencies are trading higher today - Bitcoin gains 0.7%, Ethereum trades 0.8% higher and Dogecoin rallies around 5%. Dogecoin surged yesterday after Elon Musk changed Twitter logo to Shiba Inu dog
Energy commodities are trading higher - oil gains around 0.4% while US natural gas prices jump 1.2%
Precious metals are pulling back - gold and platinum trade 0.3% lower while silver drops 0.6%
NZD and USD are the best performing major currencies while JPY and AUD lag the most
AUDUSD is pulling back after the RBA decided to keep rates unchanged. The pair is retesting a recently-broken 0.6765 resistance zone but this time as a support.
Australian dollar is one of the worst performing G10 currencies after Reserve Bank of Australia announced its latest monetary policy decision earlier today. The RBA decided to pause the rate hike cycle and keep the main interest rate unchanged at 3.60%. While such a decision was expected, wording of the RBA statement was changed so that it no longer suggests that future rate hikes are certain. Having said that, today's weakening of AUD should not come as a surprise.
Traders will be offered rate decisions from another Antipodean central bank tomorrow at 3:00 am BST - Reserve Bank of New Zealand. In this case, the market expects rates to be increased by 25 basis points with the Official Cash Rate (OCR) jumping to 5.00%. A 25 basis point rate move is fully priced in by money markets. Economists also seem to be convinced that a 25 bp rate hike is the next move - out of 21 economists surveyed by Bloomberg, 19 expect a 25 bp rate hike, 1 expects a 50 bp rate hike and 1 expects no change. This would mark another slowdown in the pace of tightening after the Bank slowed from 75 bp rate hike to 50 bp rate hikes in February. Moreover, it may also hint that the 5.5% peak OCR rate in latest RBNZ forecasts may no longer be a base case scenario with expectations swinging towards a lower terminal rate. This will be the focus of RBNZ announcement tomorrow - how much higher will the rates go. Money markets currently see a rate peak near 5.25% in December 2023.
Taking a look a AUDNZD chart at H1 interval, we can see that the pair has been recently trading sideways. Dovish RBA decision today led to quite a steep drop on the pair. AUDNZD broke below the 1.0755 support zone and continued to move lower until it reached 1.0720 support zone (orange circle). This is an important support zone, marked with previous price reactions as well as 200-hour moving average (purple line). A break below it could pave the way for a test of recent lows in the 1.0680 area. However, a hawkish RBNZ may be needed for this scenario to materialize.
USDCHF rebounds to the 38.2% retracement of the week's trading range
The USDCHF fell sharply in the early NY session and in the process moved below the swing low going back to early August 2021 at 0.90178 (see red numbered circles on the daily chart above). The low price today reached to the nice round number of 0.9000 where some traders put a toe in the bearish water. Those buyers are breathing a sigh of relief as the price has indeed rebounded. The price has rebounded to a high of 0.90756.
That has taken the price above the February 2 low at 0.9058, and tested the swing low from March at 0.90706. The high correct price has extended to 0.90756 just above the March low.
Looking at the hourly chart, the move up off the low tested the 38.2% retracement of the week's trading range at 0.9075. Getting above the 38.2% retracement is the minimum retracement target of a trend like move i.e. the move down from Monday's high.
A move above the 38.2% retracement would next target the 50% retracement at 0.9098. Move above that and focus will turn toward the falling 100 hour moving average and swing area near 0.9120. Getting above all those levels would ultimately be needed if the buyers are to be taken more seriously.
Nevertheless, they could still get short-term satisfaction on a move above the 38.2% retracement.
Lane, the ECB's chief economist gives a question mark on the May decision, pointing out that it will depend on inflation perpsectives, including the underlying ones. In view of this, Lane stresses that this is why the ECB does not give guidance for the next meeting and everything depends on the data and its outlook. On the other hand, he says that if the data performs as in the projections, May should bring a hike. However, it is unclear what kind. The market, on the other hand, is currently pricing that it should be a smaller hike, or 25 bps.
The EUR is not reacting to these reports, although we have seen slight increases on the pair in recent minutes. Further strong declines in US and European yields are progressing. U.S. yields are down 2.8 basis points today, and European yields are down 2.7 basis points.
The Canadian jobs report for March was released today at 1:30 pm BST. Report release was brought a day forward as Canada will be observing Good Friday tomorrow. Data turned out to be a huge positive surprise. Employment change turned out ot be much higher-than-expected with both full-time and part-time jobs showing decent increases. As a result, the unemployment rate avoided an expected uptick to 5.1% and stayed unchanged at 5.0% instead.
Canada, jobs report for March
Employment change: +34.7k vs +12.9k expected (+21.8k previously)
Unemployment rate: 5.0% vs 5.1% expected (5.0% previously)
Full-time employment: +18.8k vs +31.1k previously
Part-time employment: +15.9k vs -9.3k previously
USDCAD climbed to the short-term resistance zone near 1.3490 prior to the release. However, the pair pulled back following better-than-expected data. A support zone near 1.3460 handle, marked with previous price reactions as well as the lower limit of the upward channel. However, bulls managed to defend the area and erased the majority of the drop in the first minutes following the release.
USD is trading slightly higher today but EURUSD remains above 1.09 mark and maintains the uptrend. The latest drop in US yields shows that USD still has room to drop. If NFP data shows sub-200k jobs gain, it would be a strong sign of the labour market cooling down. However, it will not be a sign of a crisis yet. Nevertheless, readings that are significantly below 200k would likely encourage the Fed to pause the rate hike cycle and not raise rates at the May meeting. On the other hand, should we once again see strong job gains and strong earnings growth, rate hike at the May meeting may be still in play.
The first market session after the release of US jobs data is mixed as investors are wondering about the future policy path from the Fed. It looks like we are observing a re-trading of the data from Friday as most markets were closed then.
NFP came out at 236k and the unemployment rate fell to 3.5%. Wages dynamic decreased to 4.2% YoY but they are still not consistent with an inflation rate of 2%
Most Asian stocks reversed earlier gains but on the other hand, US yields decreased also. Nikkei 225 and Kospi are the only indices that are up in the morning trading. Nikkei gains 0.4% and Kospi is higher by 0.9%
US indices futures continue their sell-of after Friday’s NFP release that suggests another hike from the Fed in May. US100 is trading 0.5% lower and US500 is down by about 0.3%
The US dollar is rising against all of the G10 currencies and the yen is one of the weakest, falling nearly 0.4%
It is important to know for all investors that at 10:15 GMT (11:15 BST and 12:15 CET) the new governor of the Bank of Japan will hold the inaugural press conference which means that Kuroda era is finally ended. The market is wondering whether Ueda would decide to end or change its yield curve control program. On the other hand, Ueda said in February that an accommodative policy in Japan is still needed.
The gold price digests the US job market data and decreases below 2000 USD per ounce in early morning trading
Trading may be choppy today as most markets are still closed in observance of Easter Monday
The USDJPY currency pair is up nearly 0.4% as investors are reassessing the US jobs market report from Friday and are waiting for the first public news conference of the new BoJ's governor Ueda.
EURUSD decreased significantly below 1.0900 with increasing probability of Fed hike
The dollar gained over 0.3% today and EURUSD fell below 1.0900 and tested a vicinity of 1.0850. The dollar is finally higher after Friday's good data from the US labor market. Due to the fact that Friday was a day off in the US, investors can fully assess the data from the US labor market only today. The data increases the likelihood of a rate hike in May to 70%.
EURUSD not only breaks out of the uptrend but falls below the 200-hour moving average. The pair is trading at its lowest level since April 3. Another important support lies around the 1.0800 level.
US indices finished yesterday's trading mostly higher. S&P 500 gained 0.10%, Dow Jones moved 0.3% higher and Russell 2000 rallied 1%. Nasdaq was a laggard and finished flat
Indices in Asia-Pacific traded mostly higher today - Nikkei and S&P/ASX 200 gained around 1.2% each, Kospi rallied 1.4% and Nifty 50 traded 0.6% higher
Indices from China traded 0.1-0.5% lower
DAX futures point to a higher opening of the European cash session today
New Bank of Japan Governor Ueda said that a small rate hike would not be a problem for the Japanese financial system. Ueda also said that he agreed with PM Kishida that there is no need to revise government-BoJ joint statement
AUD gains after Australia and China reached agreement on barley exports and Australia suspended WTO dispute against China
Fed Williams said he expects inflation to get back under 2% by 2025
Citigroup expects oil to drop below $70 per barrel amid slower-than-expected demand recovery in China and significant production potential in Iraq and Venezuela
Chinese CPI inflation decelerated from 1.0 to 0.7% YoY in March (exp. 1.0% YoY). PPI inflation came in at -2.5% YoY as expected (-1.4% YoY previously)
Bitcoin jumps 3% and trades above $30,000 mark for the first time since June 2022
Energy commodities trade mixed - oil gains 0.5% while US natural gas prices drop 0.3%
Precious metals benefit from USD weakness - gold gains 0.5%, silver trades 0.6% higher and platinum adds 0.4%
AUD and EUR are the best performing major currencies while USD and NZD lag the most
AUDUSD bounced off the 0.6630 support zone and climbed back above the 0.6660 area. Improvement in Australia-China trade relations is driving today's upward move on the pair.
Indices on Wall Street ended yesterday's session in mixed sentiment. Investor sentiment was weighed down primarily by uncertainty over the US CPI inflation reading scheduled for today, which will be one of the final key clues creating the FOMC's decision at its next meeting in May.
The S&P 500 ended trading unchanged on a daily basis. The Dow Jones gained 0.29%, and the Russell 2000 small-cap index gained 0.8%. The Nasdaq index of technology companies was the weakest performer, losing 0.43%.
Asia-Pacific indices traded mostly higher - the Nikkei gained 0.6%, the S&P/ASX 200 gained 0.4%, the Kospi gained 0.2% and the Nifty 50 traded 0.15% higher.
In the FX market, we are seeing capital outflows to the currencies of the antipodes, namely the New Zealand dollar and the Australian dollar. The EURUSD pair is trading slightly up and testing the resistance zone at 1.093. At the moment, the Japanese yen and the US dollar are experiencing the biggest declines.
Federal Reserve and ECB bankers have warned that we may see elevated inflationary pressures all the time, current inflation targets should remain in place, and higher interest rates may be present for an extended period.
Wells Fargo warned that the S&P500 index could experience a near 10% correction due to deteriorating economic conditions in the US.
Elon Musk stated that Twitter will be a profitable business as early as next quarter.
Yields on Chinese 10-year Treasury bonds fell to their lowest levels since November 2022, due to increased expectations of continued interest rate cuts in the country. Yesterday, China reported a sharp decline in inflation growth to 0.7%, compared to an earlier reading of 1%.
An index measuring construction activity in China in March reached its highest level in more than a decade.
Deutsche Bank analysts expect Bank of Japan Governor Ueda to end the YCC in 2 weeks.
Australian weekly consumer confidence surprised on the upside with a reading of 79.3 (previously 78.2).
The lower house of the Swiss parliament rejects a CHF 109 billion bailout package for Credit Suisse.
Energy commodities are trading at mixed levels this morning. WTI crude oil is gaining 0.21%, while natural gas is off 1.0%.
Gold continues its recent upward momentum and is currently breaking out above the 2019 USD level.
There is weak sentiment in the cryptocurrency market. Bitcoin is currently losing nearly 1%, and Ethereum is losing 1.5%.
The US CPI report for March was released today at 1:30 pm BST. Report was expected to show a steep deceleration in headline price growth as well as slight acceleration in core measure. However, as headline CPI was expected to drop below core CPI for the first time since late-2020, it was the core gauge that was especially on watch today.
Actual report showed headline inflation more than expected, from 6.0% to 5.0% YoY, while core gauge matched expectations by accelerating to 5.6% YoY. It looks like investors acted on softer headline reading with market reaction being clearly dovish - USD slumped while US index futures jumped.
Markets odds for a 25 basis point Fed rate hike at May meeting dropped from around 73% prior to data release to around 60% now.
Headline US CPI inflation slowed below the pace of core US CPI inflation in March.
EURUSD jumped above April 4 highs following softer than expected US CPI data for March.
US500 caught a bid following US CPI data and is attempting to make a break above the resistance zone ranging between 50% retracement and 4,165 pts mark.
The Bank of Canada did not change interest rates as widely expected. Current interest rate remains at 4.50%. This is the second meeting during which interest rates have not been raised. According to analysts, a series of aggressive hikes has yet to be fully reflected within the economy therefore, there is no need to continue raising interest rates at the moment.
The Latest inflation data fell sharply to 5.2% in February compared to the 5.9% in January. And according to forecasts, the next inflation data in April is expected to be even lower, between 4.1 and 4.4%. On the other hand labour market remains tight fueling the economic growth, which in the first quarter seems to be stronger that it was projected in January.
BoC stated that it continues to assess whether monetary policy is sufficiently restrictive to reliece price pressures and remains prepare to raise interest rates further if needed. Governing Council stressed that bringing back inflation target to the 2% has the highest priority.
CAD firms after Bank of Canda Policy decision. USDCAD is down 0.2% at 1.34379 versus 1.34670 ahead of the decision.
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