The US dollar gained against the Euro higher on better than expected PPI figures yesterday. German ZEW sentiment index for April came out at -40.7 worse than the expected -30.0 and versus -32.0 previous. The EURUSD pair has fundamentally and technically over-extended itself and it�s time for a retracement.
News and Events:
The US dollar gained against the Euro higher on better than expected PPI figures yesterday. The PPI rose by 1.1% versus an expected +0.6% and +0.3% previous. The Empire Manufacturing Index came out better at 0.63 versus -22.33 previous and much better than -17 expected. These data figures are firmer than expected and point to a lower chance of an immediate US recession. Time will only tell whether the US can maintain firm data releases and prove itself to stay out of a recession. Traders continue to look for a catalyst to push the dollar up. This may come in the form of the Fed announcing greater inflation concerns in their commentary. Several investment banks are targeting the Euro at 1.47 over the medium-term (3 to 6 months).
German ZEW sentiment index for April came out at -40.7 worse than the expected -30.0 and versus -32.0 previous. The current situation index came in strong at 33.2 versus 32.8 expected and 32.1 previous. The ECB will be looking forward to inflation data coming out this week. In the short to medium term, traders expect a healthy retracement in the Euro against the majors. The EURUSD pair has fundamentally and technically over-extended itself to 1.5913, levels that will not be sustained should any slowdown in euro-zone economic announcement come to fruition.
Today’s Key Issues (time in GMT):
09:30 GBP Claimant Count Rate MAR 2.50% vs 2.50%
09:30 GBP Jobless Claims Change MAR -1.8k vs -2.8k
09:30 GBP Avg Earnings inc bonus 3M/YoY FEB 3.60% vs 3.70%
09:30 GBP Avg Earnings ex bonus 3M/YoY FEB 3.70% vs 3.70%
09:30 Unemployment Rate (3mths) FEB 5.20% vs 5.20%
09:30 GBP Manu.Unit Wage Cost (3Ms/YoY) FEB
10:00 EUR Euro-Zone CPI (MoM) MAR 0.90% vs 0.30%
10:00 EUR Euro-Zone CPI (YoY) MAR 3.50% vs 3.30%
10:00 EUR Euro-Zone CPI - Core (YoY) MAR 1.90% vs 1.80%
12:00 USD MBA Mortgage Applications Apr-11
12:00 USD Bloomberg Global Confidence APR
13:30 CAD Manufacturing Shipments MoM FEB 0.80% vs 1.30%
13:30 USD Consumer Price Index (MoM) MAR 0.30% vs 0.00%
13:30 USD CPI Ex Food & Energy (MoM) MAR 0.20% vs 0.00%
13:30 USD Consumer Price Index (YoY) MAR 4.00% vs 4.00%
13:30 USD CPI Ex Food & Energy (YoY) MAR 2.40% vs 2.30%
13:30 USD CPI Core Index SA MAR
13:30 USD Consumer Price Index NSA MAR 213.445 vs 211.693
13:30 USD Housing Starts MAR 1010K vs 1065K
13:30 USD Building Permits MAR 973K vs 978K
14:15 USD Industrial Production MAR -0.10% vs -0.50%
14:15 USD Capacity Utilization MAR 80.30% vs 80.90%
16:30 USD Fed’s Yellen Speaks on U.S. Outlook
16:45 CAD Ontario Securities Commission David Wilson Speaks in Toronto
17:30 USD Fed’s Plosser Speaks on Education and Economic Prosperity
19:00 USD Fed Releases Beige Book Economic Report
19:00 USD Fed’s Beige Book
The Risk Today:
EurUsd: still in an uptrend for the short term. Flag formation intact, pointing to a large move up however downside risk very high. Should the pair break down through 1.5716, expect a bigger move down to 1.5500.
GbpUsd: a break of 1.9651 will open the door to 1.9588 and lower. Only a break of 1.9900 on the upside can we revisit 2.0000.
UsdJpy: very heavy under 102.80 with a risk down to 98.56. Should the pair break 102.80, this could signal a much larger rebound up to 108.50.
UsdChf: forming a upward flag, we expect a move to 1.0450. The risk on the downside is another visit of 0.9639.
Resistance and Support:
By James Brandt - ACM Advanced Currency Markets, Geneva, Switzerland