· USD/JPY regains the bid tone and hovers near daily tops near 111.80 region, having staged a solid comeback from 111.46 lows reached after the Japanese Tokyo CPI bettered estimates. Focus shifts to US Q1 GDP.
From a technical point of view, the pair is poised to extend its decline after the failed attempt to break higher ended with it settling below the base of its latest range. In the 4 hours chart, the pair is now below its 20 and 100 SMA, while the 200 SMA offered an intraday dynamic support at around the daily low, still lacking directional strength and therefore relevance. Technical indicators maintain sharp downward slopes at their lowest in two weeks, also skewing the risk toward the downside.
Support levels: 112.00 111.60 111.25
Resistance levels: 112.40 112.85 113.10
· The AUD/USD pair picked up bids last hour and jumped to fresh session highs near 0.7030 despite disappointing Australian PPI and import prices data, as the renewed US-China trade optimism underpins but further upside appears limited amid risk-off action in the Asian equities.
· EUR/USD Technical Analysis: Euro Drops to 2-Year Low. Now What?
The Euro has dropped to the lowest level in nearly two years against the US Dollar. At surface level, sellers now face relatively modest downside barriers at 1.1110 and 1.1024 before the 1.0778-1.0874 congestion area comes into focus, implying scope for substantial downside progress.
A look at broader daily-chart positioning cautions against such exuberance. Price action since mid-August of last year has carved out a large Falling Wedge pattern. This may be pointing to ebbing bearish momentum and precede upward reversal. The appearance of positive RSI divergence reinforces that argument.
On balance, this suggests the path of least resistance continues to favor the downside but the risk/reward parameters on medium- and longer-term short positions appear to be unattractive. This hints that invalidation of the daily-chart Wedge setup may be a prerequisite to lasting trend development.
· The U.S. economy likely maintained a moderate pace of growth in the first quarter, which could further dispel earlier fears of a recession even though activity was driven by temporary factors.
The Commerce Department’s gross domestic product (GDP) report to be published on Friday at 8:30 a.m. EDT (1230 GMT) is expected to sketch a picture of an economy growing close to potential, mostly reflecting the impact of an ebbing boost from a giant fiscal stimulus and past interest rate increases.
Gross domestic product probably increased at a 2.0 percent annualized rate in the first quarter as a burst in exports, strong inventory stockpiling and government investment in public construction projects offset slowdowns in consumer and business spending, according to a Reuters survey of economists.
· Major central banks are done tightening policy, according to a majority of economists polled by Reuters, with the growth outlook wilting across developed and emerging economies along with scant prospects for a surge in inflation.
While that is largely reflected in bond markets, with major sovereign bond yields falling this year, global equities have rallied, and the S&P 500 index is near record highs after its best start this year in more than three decades.
· Instead of focusing solely on his signature investment initiative, Chinese President Xi Jinping spent a good portion of a speech at the Friday opening ceremony of China’s Belt and Road forum discussing his plan for national economic reforms.
Much of that discussion focused on issues at the heart of the ongoing trade war between Washington and Beijing. Notably, Xi said his country will increase intellectual property protection and “stop arbitrary technology transfer,” two of the main sticking points of the trade dispute with the U.S., China’s largest trade partner.
“We will more effectively engage in international macroeconomic policy coordination,” Xi said, according to an official English translation of his Mandarin Chinese remarks. “A globalized economy calls for global governance. China will strengthen macro policy coordination with major economies to generate a positive spillover.”
While the Chinese leader emphasized the country would not use currency devaluation for national gain, he divulged few details about planned economic initiatives.
· Flowing in from the Japanese Economy Minister Motegi, as he talks further about his meeting the US Trade Representative Robert Lighthizer held on Thursday (courtesy Jiji news).
The topic of currencies did not come up during trade talks held over the last two weeks with his US counterpart.
There was no demand from the United States regarding auto import restrictions, and that the two sides did not have detailed discussions over agriculture and autos.
· Spain is holding a snap election on April 28 and the vote may throw up some surprising results that could have ramifications for the wider political landscape in Europe.
Opinion polls in recent weeks have consistently signaled that Sanchez’s socialists could win the largest share of the vote — but not enough for the party to govern alone.
Whoever wins the election will have to focus on boosting the economy and job creation. They will have to maintain a reform drive to make the country more competitive but tackle a rise in nationalist sentiment and the thorny and unresolved issue of pro-independence parties in Catalonia pushing for another refe
· The leader of Italy’s ruling 5-Star Movement expects Prime Minister Giuseppe Conte to force a junior minister involved in a graft scandal to resign despite resistance from coalition partner, the League, according to comments in Corriere della Sera.
Armando Siri, a transport ministry undersecretary and economic adviser to League chief Matteo Salvini, was put under investigation last week for allegedly accepting bribes to promote the interests of renewable energy firms.
· Oil prices dipped on Friday on hopes that producer club OPEC will soon raise output to make up for a decline in exports from Iran following a tightening of sanctions on Tehran by the United States.
Despite this, oil markets remain tight amid supply disruptions and rising geopolitical concerns especially over the tensions between the United States and Iran, analysts said.
Brent crude futures were at $74.16 per barrel at 0223 GMT, down 19 cents, or 0.3 percent, from their last close.
U.S. West Texas Intermediate (WTI) crude futures were at $64.83 per barrel, down 38 cents, or 0.6 percent, from their previous settlement.
The dip followed Brent’s rise above $75 per barrel for the first time this year on Thursday after Germany, Poland and Slovakia suspended imports of Russian oil via a major pipeline, citing poor quality.
Reference: CNBC, Reuters, FX Street, Daily FX
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