· A surprise improvement in Chinese factory activity supported the yuan and Australian dollar on Monday, and provided a broader boost to investors’ risk appetite, giving the dollar a lift against the safe-haven yen.
The Chinese yuan also gained a quarter of a percent in offshore trade to 6.707 to the dollar.
The greenback rose 0.3 percent to 111.12 yen, extending its advance from the 1-1/2-month low of 109.70 it touched a week ago to 1.3 percent.
The euro struggled near a three-week low of $1.1210 brushed on Friday. The single currency was last trading up 0.1 percent at $1.1232.
Sterling was a shade lower at $1.3032, within sight of Friday’s near-three-week lows of $1.2977 and not far from last month’s low of $1.2945.
· Turkish President Recep Tayyip Erdogan’s Justice and Development Party (AK Party) has lost the capital Ankara and looks set to lose the commercial hub of Istanbul after 25 years in power in both cities, as Sunday’s municipal election results — largely seen as a referendum on the president himself — roll in.
On Monday morning, the lira quickly sunk at roughly 8:30 a.m London time after the country’s election board said the opposition party was ahead in Istanbul’s mayoral election, briefly trading at $5.6913. The currency had traded at 5.61 to the dollar after the initial results came in on Sunday evening, compared with 5.55 at Friday’s close.
· EUR/USD recovers after upbeat Chinese data, ahead of EZ inflation
EUR/USD kicked off the week with a small weekend gap to the upside after Chinese PMIs returned to growth territory and the mood improved. Euro-zone inflation, US retail sales, and the US ISM Manufacturing PMI are next.
From a technical perspective, the pair's resilience near the 1.1200 handle could be seen as initial signs of bearish exhaustion, warranting some near-term corrective bounce. A sustained move beyond the 1.1245-50 region will reinforce the expectations and trigger a short-covering bounce and assist the pair to aim towards reclaiming the 1.1300 round figure mark, albeit any subsequent up-move seems more likely to remain capped near the 1.1325-30 supply zone.
Alternatively, a decisive break through the 1.1200 mark will shift the pendulum back in favour of bearish traders and accelerate the slide back towards YTD lows, around the 1.1175 region. A follow-through selling has the potential to continue dragging the pair further towards challenging the 1.1100 round figure mark, coinciding with descending trend-line support extending from lows touched in Aug. 2018 through Nov. 2018 swing low.
· The GBP/USD pair seesaws around 1.3030 ahead of London open on Monday. The pair recently dropped to the lowest levels in a fortnight as the UK parliament again turned down the PM Theresa May’s Brexit proposal.
The GBP/USD pair broke the base of a long-term ascendant channel last Thursday, completing a pullback to it on Friday and before collapsing, adding technical signs of further declines coming ahead. In the daily chart, the pair settled below its 200 EMA, while the 20 DMA turned lower, now over 100 pips above the current level. Technical indicators in the mentioned chart have entered negative territory, the Momentum heading strongly south, but the RSI flat at around 43 as the pair bounced from a weekly low of 1.2977.
Support levels: 1.3000 1.2965 1.2920
Resistance levels: 1.3080 1.3125 1.3160
· Britain’s exit from the European Union was in disarray after the implosion of Prime Minister Theresa May’s Brexit strategy left her under pressure from rival factions to leave without a deal, go for an election or forge a much softer divorce.
British lawmakers will wrest control of the Brexit process for a second day on Monday in order to try to find a majority for an alternative way forward that could break the parliamentary deadlock over Prime Minister Theresa May’s proposed deal.
· Japan declared the name of its new imperial era when Crown Prince Naruhito becomes emperor on May 1, with Prime Minister Shinzo Abe saying it emphasized traditional values at a turning point in the nation’s history.
Crowds watching giant television screens across Tokyo roared and raised their phones to take photos as a somber Chief Cabinet Secretary Yoshihide Suga held up a white placard with the new name - Reiwa - written in two characters in black ink.
· China’s manufacturing sector unexpectedly returned to growth for the first time in four months in March, in a sign that government stimulus measures may be slowly gaining traction, a private business survey showed on Monday.
But growth in new domestic and exports orders was marginal, suggesting the economy will remain under pressure in coming months and will likely require more policy support before it can convincingly stabilize.
The Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) expanded at the strongest pace in eight months in March, rising to 50.8 from 49.9 in February, above the neutral 50-mark dividing expansion from contraction on a monthly basis and the highest level seen since July 20
· Oil prices rose on Monday, adding to gains in the first quarter when the major benchmarks posted their biggest increases in nearly a decade, as concerns about supplies outweigh fears of a slowing global economy.
Positive Chinese factory gauges and signs of progress in Sino-U.S. trade talks also boosted sentiment, helping buoy regional stockmarkets.
Brent crude for June delivery was up by 64 cents, or 1 percent, at $68.22 a barrel by 0606 GMT, having risen 27 percent in the first quarter.
U.S. West Texas Intermediate (WTI) futures rose 43 cents, or 0.7 percent, to $60.57 barrel, after posting a rise of 32 percent in the January-March period.
· CRUDE OIL TECHNICAL ANALYSIS
Crude oil prices failed to make good on last week’s bearish signaling thus far but the absence of break past range resistance coupled with the appearance of negative RSI divergence warns that a top may yet appear. A reversal below support in 57.24-88 area initially opens the door for a test of the 55.37-75 zone. Alternatively, a daily close above 38.2% Fibonacci expansion at 60.45 eyes the 50% level at 62.28 next.
Reference: Reuters, CNBC, Daily FX, FX Street
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