FUNDAMENTAL OUTLOOK at 0800 GMT (EDT +0400)
USD
Australian and Chinese trade data were focal points during the Asia session. Both sets of numbers were impressive, which proved to be mildly supportive of risk appetite. The euro struggled to make much headway though, still weighed down by the memory of yesterday’s downgrade of Greece’s rating by S&P. Comments by ECB policymakers warning of the dire consequences of any restructuring of Greek debt led the euro lower as the European session got underway. EURUSD traded 1.4297-1.4377, USDJPY 80.16-80.57. US stocks closed marginally ahead, and Asian equities are modestly stronger at the time of writing. There were no major US data releases yesterday and none are scheduled for today either. Richmond Fed President Lacker (a 2012 voter) said it is “conceivable” that the FOMC might need to raise the policy rate before the end of the year. He also seemed reluctant to continue asset purchases beyond the end of June, noting that monetary policy is not capable of enhancing employment growth in any further sustainable, and measurable way..
EUR
ECB Governing Council member Nowotny said the international community has underestimated Greece’s problems, but that debt restructuring must still be ruled out.
ECB Executive Board member Bini-Smaghi said that a restructuring of Greek debt would bring the banking system to its knees, and that any Greek disaster would prove to be contagious for the whole Eurozone.
S&P downgraded its rating on Greece to B (from BB-) and kept it on watch negative, citing the risk that Greek debt might be restructured. However, S&P did say they did not believe any member of the Eurozone would leave the currency union.
Ireland’s Prime Minister Kenny said the interest rate charged on EU/IMF rescue loans to Ireland might be cut at the next meeting of finance ministers.
The incoming central bank governor of Malta, Bonnici, said “at this stage I tend to lean a bit on the hawkish side”. Bonnici also said that the elevated euro could become a hindrance for some industries.
CHF
April CPI is due in Switzerland. Eurozone sovereign woes pushed EURCHF lower in recent days and any upside surprise would likely add to pressure on the cross by ratcheting up SNB rate hike expectations.
AUD
Australia’s trade surplus for March was over three times stronger than consensus, coming in at A$1.74 bn (cons. $0.5 bn). AUDUSD jumped 25 pips on the headline.
NZD
The NZD weakened after the IMF’s Article IV review of the New Zealand economy noted that the NZD was 5-20% overvalued on a trade-weighted basis.
TECHNICAL OUTLOOK
EURCHF focus on 1.2433/03.
EURUSD NEUTRAL Focus on initial support at 1.4205, break of this would expose 1.4158/48 area. Initial resistance is at 1.4442.
USDJPY BEARISH The pair is consolidating above 80.00; break of this would expose 79.57 and 78.83 next. Resistance is at 81.28.
GBPUSD NEUTRAL Initial support is at 1.6271, yesterday’s reaction low, while resistance lies at 1.6464.
USDCHF BEARISH While resistance at 0.8893 holds, focus is on initial support 0.8677 ahead of 0.8554/00 area.
AUDUSD NEUTRAL Rise above 1.0878 would signal resumption of the bull trend and expose 1.0953. Support lies at 1.0697 ahead of 1.0537.
USDCAD NEUTRAL Stalled below 0.9722 resistance; a break here would trigger positive tone. Near-term support lies at 0.9569.
EURCHF BEARISH Momentum is negative; focus on 1.2433/03 support area, while resistance is at 1.2653.
EURGBP BEARISH Break through 0.8714/00 support zone would expose 0.8655. Near-term resistance is at 0.8818.
EURJPY BEARISH Sustained break through 115.00 would open up the way towards 114.16 and 113.56. Initial resistance is at 116.48.
SCHEDULE
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