FX News Today
- Australia’s bond as well as stock markets rallied after inflation came in lower than anticipated at 0.0% q/q, down from 0.5% in the previous period and versus median expectations of 0.1%.
- Markets are convinced that the inflation miss will make a rate cut all but inevitable and 10-year yields plunged 10.5 bp, while the ASX jumped as much as 1.1% to a more than 11 year high, after already outperforming yesterday.
- Elsewhere in Asia markets were under pressure, however, despite the strong close on Wall Street, where sentiment was boosted by upbeat earnings reports.
- The USA500 and USA100 closed at record highs Tuesday
- Twitter stock surged more than 15% on earnings beat, while the Coca-Cola share price is up 2% as Q1 earnings revenue was $8.02 billion, topping projections of $7.88 billion. The concerns that China may slow the pace of policy easing and stimulus measures continue to weigh on sentiment.
- WTI oil softer today after surge to 6-mth high at $66.60 yesterday.
Charts of the Day
Technician’s Corner
- USOIL softer at 66.00 hurdle after topping at a new nearly six-month high of $66.60. Overall, outlook holds to the upside as the asset is sloping within an uptrend, with small corrections to the downside.
- USDJPY has continued to oscillate in a narrow range in the 111.75-112.00 area. The focus this week will be on fresh signs that corroborate the return-to-growth picture in major global economies. A continuation of this theme would be supportive of currencies that performer with higher beta characteristics, such as the Dollar bloc units, while currencies of the low-yielding safe haven type, such as the Yen, would be apt to underperform. USDJPY has Support at 111.54-111.60, levels which encompass the prevailing position of the 200-day moving average.
- AUDUSD dove to 0.7026, just a breath above 3-year Support. It was driven by Aussie-specific losses following sub forecast CPI data out of Australia, which catalysed calls for the RBA to cut interest rates at its next policy review in May. A break of 0.7000 could open the way towards a December slip.
Main Macro Events Today
- IFO (EUR, GMT 08:00) – Business climate in the largest EU country is expected to have grown marginally to 99.9 compared to 99.6 last month.
- Event of the week – BoC Interest Rate Decision (CAD, GMT 14:00) – At the BoC meeting, consensus expectations are that there should be no interest rate change. A sharper and more broadly based slowdown in the domestic economy, alongside a slowing in the global economy that has been more pronounced and widespread than anticipated saw the Bank state “the outlook continues to warrant a policy interest rate that is below its neutral range.”
Support and Resistance
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Andria Pichidi
Market Analyst
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