Currency Updates:
The Australian Dollar (AUD): The 21-DMA and local bid once again held the pair on the downside. EUR/AUD’s rally reversed at 1.4700 and AUD/NZD’s lift off 1.0820 towards 1.0850/55, saw the pair bounced from 0.9335 to 0.9365. A better than f/c U.S housing data only managed to push the pair to around 0.9355 and no further losses were seen. Limited data for this week therefore, impact on the pair is more likely to come from crosses again.
AUD/USD: The trend remains up as spreads widen a bit and day/week RSI remain biased up. The weekly doji occurring at the weekly cloud base & TL off October’s high does suggest some indecision though. A clean break & hold above the tech resistance should reignite the l-t rally. A break of 1.4555/65 support is EUR/AUD may help push AUD to a new high trend.
EUR/USD: Short covering rallies have been limited. Offers ahead of the 100-DMA (1.3740) conspired with the daily cloud base & 23.6Fib of 1.3995-1.3648 to keep the day’s high limited to 1.3727. EUR/JPY failed to break above 139.45/50 resistance initiated a slide and took EUR/USD with it. For now, range trading still in play, market awaits for Buba’s speech and Thursday’s Manufacturing and services PMI. A soft reading may encourage bears to push towards 200-DMA (1.3628).
USD/JPY EUR/JPY remained heavy into week’s end, but USD/JPY and most of the other crosses simply consolidated recent yen gains in keeping with the broader financial market theme of the day. EUR weakness on poor local data and ECB easing expectations has accentuated the risk-off bid for the yen this week and left the cross below its weekly Kijun line at 139.89 into the weekly close; the first such sell signal since Oct ’12 in the early days of Abenomics. The downside focus is on the rising 200-DMA nearing the 76.4% of the Feb-Mar rise & the lower 21-wk Bolli by 138. Daily RSI at 21 is O/S, but the rising ADX is only at 22 with lots of room to rise before getting mature. USD/JPY got only fleeting lift from US housing data, in part due to the composition of the data (all multi-families) but also due to apathetic pre-weekend consolidation. A good mix of bidders into the April lows by 101.30 put the intraweek downtrend on pause for a second day, though upside looks challenging as exporters are seen having more to do than importers over the medium-term. A rebound in Tsy yields would help, but only to the extent stocks aren’t hurt by it. A Catch-22. Tankan out Monday.
Looking Ahead – Economic Data (GMT)
• 22:45 NZ Producer Prices – Inputs QQ Q1 0.00, f/c -0.70%-prev
• 22:45 NZ PPI Output Q1 0.70%, f/c -0.40-prev
• 23:30 JP Reuters Tankan DI May 25.00-prev
• 23:50 JP Machinery Orders MM Mar 6.00%, f/c -8.80%-prev
• 23:50 JP Machinery Orders YY Mar 4.20%, f/c 10.80%-prev
• 01:30 CN China House Prices YY Apr 7.70%-prev
Looking Ahead – Events, Other Releases (GMT)
• No Significant Events
