FUNDAMENTAL OUTLOOK at 0800 GMT (EDT +0400)
USD
Price action lacked conviction during the Asia session, although the dollar lost some ground against the euro. EURUSD traded 1.4116-1.4167 and USDJPY 82.57-83.21. St Louis Fed President Bullard made it clear that his recent remarks in which he called for QE2 to be cut short ahead of the June deadline were not mainstream views on the FOMC. Kansas City Fed President Hoenig, also a non-voter this year, maintained his hawkish stance. Initial jobless claims are due but as this print will not reflect the survey week, any impact could be limited on the dollar. Cleveland Fed President Pianalto is due to speak, and investors will be watching for any shifts in her dovish outlook (she is also a non-voter in 2011).
EUR
Today, the Irish central bank is due to release the results of stress tests on the Irish banking system. Local media reports suggest that up to EUR25 bn in fresh capital may be needed. Such a figure is unlikely to trouble the euro given the EU/IMF plan has set aside as much as EUR35 bn specifically to fund the recapitalisation effort.
Rhetoric from ECB policymakers continues to point to a rate hike on April 7. ECB Executive Board member Stark said Eurozone policy rates are exceptionally low. ECB Governing Board member Bini-Smaghi also said the ECB would raise rates in a “gradual way”.
CHF
The KoF leading indicator was stronger than expected at 2.24. We expect economic conditions to remain robust in Switzerland but the SNB is not keen on moving on rates in the near future.
Thomas Jordan of the SNB said rates will need to be raised at some point to maintain price stability, but also warned that franc appreciation had tightened conditions enough such that the room for policy normalization is limited.
AUD
The AUD got a boost from stronger-than-expected retail sales for February. Credit growth also picked up faster than expected. Building approvals fell very sharply, however. In general our Australian economics team sees signs of improvements in the data, which is consistent with their call for an RBA hike from August.
TECHNICAL OUTLOOK
EURCHF pressure on 1.3040.
EURUSD BULLISH Look for a move above 1.4194 to open the way for 1.4249/82 zone, while support at 1.3981 holds.
USDJPY BULLISH The pair targets 83.30 with potential for 83.98 next. Support is at 82.37.
GBPUSD BEARISH Move below 1.5937 would expose 1.5873 Fibonacci level. Resistance is at 1.6142.
USDCHF NEUTRAL Model is neutral; break above 0.9317/69 would favor upside, while a move below 0.9076 would signal further losses.
AUDUSD BULLISH Uptrend is intact; focus is on 1.0400/25 resistance area. Support lies at 1.0205
USDCAD BEARISH Bear trend continues; breach of 0.9668 would expose 0.9584. Initial resistance is at 0.9786.
EURCHF BULLISH Recovery pressures 1.3040; next resistance at 1.3138 ahead of 1.3203. Initial support is at 1.2889.
EURGBP BULLISH Break of 0.8836 would open way to 0.8885 and 0.8942 next. Support is at 0.8740 ahead of 0.8700.
EURJPY BULLISH As long as support at 115.00 holds, look for gains towards 118.34/72 resistance zone.
SCHEDULE
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