· The dollar edged up against key peers such as the euro and the yen on Monday, boosted by the relative strength of the U.S. economy, while losing ground against the Canadian dollar following a rise in crude oil prices.
Financial markets in Australia, Hong Kong and many major countries in Europe are closed on Monday for the Easter holiday. Currency trading continues globally but volume is expected to be light.
· “It’s better to say that the euro has been weak rather than that the dollar is strong,” said Yukio Ishizuki, senior currency strategist at Daiwa Securities.
“Traders have mostly priced in the weakness of the euro zone economy by now,” Ishizuki said. “It’s a little bit difficult to see the euro weakening further from here, so I think it will be hard for the dollar to strengthen.”
· The dollar index was last down a tenth of a percent at 97.383, drifting slightly lower after booking a 0.4-percent gain last week.
The index remained within striking distance of its 2019 high of 97.71 brushed in early March.
Investors’ immediate focus will be on U.S. existing home sales for March, due at 1400 GMT, for further clues on the health of the U.S. economy.
· The euro gave up nearly 0.1 percent to $1.1240, adding to last week’s losses of nearly half a percent after data on Thursday showed that activity in Germany’s manufacturing sector shrank for a fourth straight month in April.
· Dollar Prospects Improving as the US Economy Does
The US Dollar may be set for a revival this week as recent economic statistics point to stronger economy in the first quarter than depicted in the marred reporting around the January government closure.
The Atlanta Fed GDPNow model reported its first estimate for Q1 GDP on March 1st at 0.3% annualized.
The GDPNow estimate in the bank’s description, “Is best viewed as a running estimate of real GDP growth based on available data for the current measured quarter.” It utilizes about 25 different statistics from the US economy updating its estimate as the new data becomes available. It has proven to be one of the most accurate forecasts for GDP.
If US GDP is indeed better than the market thinks it could give the dollar the impetus it needs to break out of its five months of the doldrums.
· AUD/USD has lost 10 odd pips in the last few hours and could see a deeper drop toward the immediate hourly chart support at 0.7116, as the 50- and 200-hour MAs have produced a bearish crossover. Further, the spot has dived out of the contracting triangle, as seen in the hourly chart.
· USD/JPY: Bid near 112.00 in Asia, BOJ decision and US Q1 GDP in focus this week
USD/JPY has added close to 15 pips in Asia and is currently trading just short of 112.00. The pair seems to have picked up a bid in response to last week’s upbeat US data releases.
Despite the lack of progress, the pair remains near its yearly high, having hit 112.16 mid-last week on broad dollar's demand. The bullish case in the daily chart would be clearer on a sustainable advance beyond the mentioned level, as the pair is above all of its moving averages which anyway remained confined to a tight range, while technical indicators hold within positive ground, the Momentum easing amid the lack of progress, but the RSI steady at around 58. In the 4 hours chart, the pair is neutral, as a flat 20 SMA is limiting the upside at around 112, still holding above the larger moving averages, while technical head nowhere around their midlines.
Support levels: 111.75 | 111.40 | 111.10
Resistance levels: 112.15 | 112.50 | 112.85
· Oil prices jumped on Monday as the United States looked set to announce that all buyers of Iranian oil must end their imports or be subject to sanctions.
Brent crude futures rose as much as 3.3 percent to $74.31 a barrel, the highest since Nov. 1, before easing back to $73.63 by 0604 GMT, which was still up 2.3 percent from their last close.
U.S. West Texas Intermediate (WTI) crude futures climbed by as much as 2.9 percent to $65.87 per barrel, the most since Oct. 31. They were at $65.50 at 0544 GMT, up 2.3 percent from their previous settlement.
News that the United States is preparing to announce on Monday that current buyers of Iranian oil would no longer be given waivers to sanctions was first reported on Sunday by the Washington Post.
“(Removing waivers) is not a good policy for Trump,” said Takayuki Nogami, chief economist at Japan Oil, Gas and Metals National Corporation (JOGMEC), adding that “concerns over tightening global oil supply and lower excess production capacity are expected to bolster oil prices”.
He said that Brent prices were likely to rise toward $86.29 a barrel, the highest point they reached in 2018, while WTI may climb to $76.41.
Reference: CNBC, Reuters, Daily FX, FX Street
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