· Much like the reports on ECB doubting economic growth earlier this week, the German data earlier basically highlights the fragility of the recent rally in the euro. While the manufacturing print improved from March to April, it's the sheer disappointment relative to expectations is what markets are focusing on upon the release.
EUR/USD is sent lower as a result from 1.1290 levels to a low of 1.1265. More significantly, price is looking to hold a break below the 200-hour MA (blue line) @ 1.1284 now. A break below that will see the near-term bias shift to being more bearish again.
Despite the overall improvement in German PMI data from March to April, the manufacturing sector continues to be weak (contracting for a fourth month in a row) and that's enough to put a drag on the euro and bund yields considering that factory activity is the backbone that drives the German economy.
For EUR/USD, it looks like sellers are back in near-term control and that bodes ill for those looking for an upside extension as we look to wrap up the week. Further support is now seen near 1.1250 before additional support at 1.1215-20 comes into play. Following which, bids at the 1.1200 handle will be called upon next.
The dollar index .DXY against a basket of six major currencies was nearly flat at 97.051 after dipping 0.05 percent the previous day.
Commodity-linked currencies sagged after a surge in crude oil prices ran out of steam.
The Australian dollar was flat at $0.7179 AUD=D4 after briefly popping above $0.72 on strong jobs data for March.
· EUR/USD Technical Analysis: Euro Downtrend Expected to Resume
The Euro rebounded from support below the 1.12 figure against the US Dollar to retest resistance guiding the single currency lower since late September 2018. Prices action has been choppy, but a shallow series of lower highs and lows suggests the prevailing near-term bias remains bearish.
Candlestick structure hints at indecision. Long upper wicks and small candle bodies point to forceful rejections on back-to-back tests of resistance hints at fraying bullish conviction. Early signs of negative RSI reinforce the sense that upside momentum is ebbing.
Zooming in to the four-hour chart, the first layer of support looks to be at 1.1285, the intersection of a chart inflection barrier and a counter-trend line. Breaking below that exposes 1.1250 next. A minor upside hurdle lines up at 1.1332 but bearish bias invalidation calls for a break of trend resistance, now at 1.1390.
· Senior U.S. and Chinese officials are scheduling two more rounds of face-to-face trade talks in an effort to reach a deal that President Donald Trump and his Chinese counterpart Xi Jinping could possibly sign by late May, a person familiar with the plans said.
U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin plan to travel to Beijing the week of April 29, according to the person, who spoke on condition of anonymity to discuss internal deliberations. Xi is preparing to host more than 40 world leaders at the second Belt and Road Forum in Beijing in late April.
After Lighthizer and Mnuchin’s trip, Chinese Vice Premier Liu He may come to Washington for negotiations during the week of May 6, the person said.
· Special Counsel Robert Mueller’s long-awaited report on Russia’s role in the 2016 U.S. election will be released on Thursday, providing the first public look at the findings of an inquiry that has cast a shadow over Donald Trump’s presidency.
Attorney General William Barr’s planned release of the nearly 400-page report comes after Mueller wrapped up his 22-month investigation last month into the Trump campaign’s contacts with Russia and questions about obstruction of justice by the president.
Its disclosure, with portions expected to be blacked out by Barr to protect some sensitive information, is certain to launch a new political fight spilling into the halls of Congress and the 2020 presidential campaign trail, as Trump seeks re-election in a deeply divided country.
· Big European banks are set to report their first-quarter earnings starting next week and some investors fear that poor report cards could lead to further volatility in the stock markets.
Several analysts have raised concerns over earnings this quarter due to external risks such as low economic growth, uncertainty over U.S.-China trade deal, Brexit and a U-turn on major central bank policy towards more easing.
· China’s economy has again defied President Trump’s predictions that it is in trouble, with official statistics showing it grew by a surprisingly robust 6.4 percent in the first three months of the year.
Although analysts are skeptical about Chinese data, and although the figures showed the growth was fueled largely by unsustainable government spending, the numbers underscore the resilience of the world’s second-largest economy.
“Trump should realize this is a sign that China’s economy is not about to fall off a cliff,” said Andrew Polk of Trivium China, a consultancy.
Many economists are sounding alarm bells about the debt levels in China, warning that the country is heading toward a classic banking crisis, riven with defaults and bankruptcies. The discussion in Beijing these days revolves around whether China’s crisis will be a crash like the one that afflicted Brazil or whether it will stumble into a decades-long malaise like Japan.
· Oil prices edged higher on Thursday, supported by ongoing OPEC-led supply cuts and a surprise fall in U.S. crude inventories, although gains were capped by strong U.S. production.
Brent crude futures were at $71.71 a barrel at 0500 GMT, up 9 cents, or 0.1 percent, from their last close and not far off Wednesday’s five-month high of $72.27 a barrel.
U.S. West Texas Intermediate (WTI) crude futures were at $63.81 per barrel, up 5 cents, or 0.1 percent.
U.S. crude inventories fell by 1.4 million barrels in the week to April 12, compared with analyst expectations for an increase of 1.7 million barrels, Department of Energy (DoE) showed on Wednesday.
· CRUDE OIL TECHNICAL ANALYSIS
Crude oil prices remain locked in a narrow range at resistance in the in the 63.59-64.88 area. This is reinforced by a further barrier in the 66.09-67.03 inflection zone, with a daily close above that opening the door for a test of the $70/bbl figure. Alternatively, a downward reversal confirmed on a break below 60.39 neutralizes the near-term uptrend and sets the stage to challenge the 57.24-88 region.
Reference: CNBC, Reuters, Fortune
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