Currency Updates:
The Australian Dollar (AUD): Under a quiet session yesterday, the AUD had been trading on either side of the 200 HMA. Market awaits for Q1 CPI and the HSBC China PMI. Bulls remains strong as the pair crossed upward to the 40 and 200 day moving averages while bears are still waiting for RBA to express some concerns on the current level of the currency. Either way, we would expect the CPI numbers to generate more debate and possibly force the RBA to act.
AUD/USD: As mentioned above, market awaits for the data. For now, big range trades still in play, 0.9300-0.9400. The pair need to break either 0.9300 for downward trend or 0.9460 (recent high) for a test of 0.9540.
EUR/USD:The pair bounced off the support near 1.3780 as early action saw narrower yield spreads which gave a boost to the pair. NY walked in and further pushed the pair to a session high of 1.3825 in an effort to run stops above 1.3830. However, push was limited and the EUR quickly slid back to a NY low of 1.3789 as a spike higher in US yields put a broad bid into the USD. Numerous EZ PMI for April will be due today, a soft read may lead to a break of 1.3780.
USD/JPY: The yen strengthened a bit as one of the WSJ article stated that the BOJ was considering moving their inflation target higher next week which increased concerns in the market may have to wait longer for the QE2. The Kijun line at 102.70 has capped the USD/JPY for two days, as the 200 DMA has done the same for the Nikkei. Bulls waits patiently as they are satisfied to buy on dips as Nikkei still trades poorly and the Abenomics trade lacks momentum. Main focus on for this week on this pair would be Friday’s Tokyo CPI as it includes the recent imposed sales tax hike.
Looking Ahead – Economic Data (GMT)
• 01:30 AUD Q1 CPI y/y, f/c 3.2% prev 2.7%; q/q, f/c 0.8% prev 0.8%
• 01:30 AUD Q1 RBA Trimmed Mean CPI y/y, f/c 2.9% prev 2.6%; q/q f/c 0.7% prev 0.9%
• 01:30 AUD Q1 RBA Weighted Medn CPI y/y, f/c 2.9% prev 2.6%; q/q f/c 0.7% prev 0.9%
• 01:45 CNY April HSBC Mfg PMI Flash, no f/c prev 48.0
Looking Ahead – Events, Other Releases (GMT)
• JPY April 23-25 US President Obama visits Japan
• JPY MoF holds meeting with bureau chiefs
• JPY BoJ Deputy Gov Nakaso speaks in Kyoto
