· The dollar is a little weaker in early trading in Europe Thursday as the euro shrugs off a disappointing set of factory orders in Germany that bode ill for a quick turnaround in the euro zone’s largest economy.
News that President Donald Trump is to meet China’s top trade negotiator Liu He later on Thursday had little immediate effect on the currency market, which seems resigned to waiting for a final deal to be reached before drawing conclusions. The meeting was touted as a sign that talks are reaching their closing stage, but The Wall Street Journal reported that the U.S.’s insistence on keeping some tariffs in place on Chinese goods remains a major sticking point.
At 04:00 AM ET (0800 GMT), the dollar index, which tracks the greenback against a basket of six major currencies, was little changed from late Wednesday levels at 96.688. The euro was up a touch at $1.1235, while the pound was also higher at $1.3178.
The pound strengthened overnight after lawmakers moved by a majority of one vote to block a no-deal Brexit. Even so, that remains the default outcome unless the EU’s 27 member states unanimously agree to extend the new deadline of April 12, or unless parliament revokes its formal decision to leave the EU, an option that neither of the two big parties wants.
· Later Thursday, the European Central Bank will release the minutes of its last policy meeting, possibly giving further clues as to the likelihood of further action to support the faltering economy. U.S. jobless claims, due at 06:30 AM ET (10.30 GMT), will also be closely watched for signs of weakness after a disappointing ADP payrolls report for March that was released Wednesday.
· USD/JPY: Holds in tight range in the mid 111's with a bullish technical bias
USD/JPY ranged between 111.35 and 111.60 as markets remained solid with respect to risk appetite, leaving the yen on the backfoot and underperforming.
The pair met buyers at 111.20 this Wednesday, the 61.8% retracement of its March decline, later reaching a higher high, a sign that bulls remain in control of the pair and could try to push it up to the top of the range, also the yearly high, at 112.13. The short-term picture is neutral-to-bullish, as, in the 4 hours chart, technical indicators remain within positive levels, but without directional strength, while the 20 SMA extended its advance above the larger ones, all of them below the current level.
Support levels: 111.20 110.90 111.55
Resistance levels: 111.70 112.05 112.40
· GBP/USD Technical Analysis: Bulls need to clear 1.3200/3210 resistance to target 1.3270
GBP/USD trades near 1.3175 during early Thursday while heading towards 1.3200/3210 resistance area that comprises three-week long descending trend-line.
The pair is up for a third consecutive day at around 1.3160, losing the positive momentum according to technical readings in the 4 hours chart, but still far from bearish, as an intraday decline was contained by the 200 EMA, which lack directional strength, and as the 20 SMA advances below the larger one. Technical indicators ease within positive levels, rather following the price than anticipating an upcoming decline, more dependent on Brexit developments.
Support levels: 1.3120 1.3085 1.3040
Resistance levels: 1.3200 1.3245 1.3285
· EUR/USD offered near 1.1250 again as German factory orders plunge
The EUR bears are seen fighting back control following the release of terrible German factory orders data, now sending the EUR/USD pair lower towards the 1.1230 region , having faced rejection once again at the midpoint of the 1.12 handle.
· The trade deal that the U.S. and China are crafting would give Beijing until 2025 to meet commitments on commodity purchases and allow American companies to wholly own enterprises in the Asian nation, according to three people familiar with the talks.
Talks are continuing in Washington where Chinese Vice Premier Liu He began planned meetings with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin on Wednesday. The goal over the next few days is to strike an agreement on the core issues so President Donald Trump and Chinese leader Xi Jinping can hold a ceremony to sign a deal. Trump plans to meet Liu at the White House Thursday.
· China has acknowledged for the first time that the United States has legitimate gripes about IP theft, forced technology transfer and cyber hacking, White House economic advisor Larry Kudlow told reporters Wednesday.
“They have for the first time acknowledged that we have a point. Several points,” Kudlow told reporters at an event hosted by The Christian Science Monitor. Previously, he said, “they were in denial.”
Chinese smartphone maker Huawei did not come up during the talks, according to Kudlow. Huawei is facing charges from the U.S. Department of Justice over two cases alleging the theft of trade secrets and fraud.
· Trade talks between the United States and China made “good headway” last week in Beijing and the two sides aim to bridge differences during talks that could extend beyond three days this week, White House economic adviser Larry Kudlow said.
· German industrial orders fell at their sharpest rate in more than two years in February as they were hit by a slump in foreign demand, compounding worries that Europe’s largest economy had a weak start to the year.
Contracts for German goods slumped by 4.2 percent, data from the Economy Ministry showed on Thursday. That compared to a fall of 2.1 percent in January, revised from a drop of 2.6 percent.
· Britain could ask the European Union for a long Brexit delay that gives the option to leave as soon as a divorce deal is approved by parliament, finance minister Philip Hammond indicated on Wednesday.
European Commission President Jean-Claude Juncker said in Brussels that Britain would not get any further short delays unless its parliament ratified a deal by April 12 - the date set by EU leaders as the effective cut-off for avoiding the European Parliament elections
· India’s central bank cut its benchmark interest rate by 25 basis points on Thursday, in a widely expected move to boost the economy, while keeping its monetary policy stance “neutral” despite subdued inflation.
· Oil prices dipped on Thursday, with Brent edging away from the psychologically important $70 level after easing in the previous session on data showing a surprise build in U.S. inventories.
Brent futures eased 2 cents to $69.29 by 0100 GMT. On Wednesday, Brent dipped 6 cents, after touching $69.96, the highest since Nov. 12, when it last traded above $70.
U.S. West Texas Intermediate (WTI) crude was down 14 cents, or 0.2 percent, at $62.34 a barrel. The contract fell 12 cents in the previous session after briefly hitting $62.99, also the highest since November.
Reference: Reuters, CNBC, Bloomberg
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