Daily Insight
Matt Simpson | May 13, 2014 04:06AM ET
- Ausssie dollar ( ) remained relatively subdued in the lead-up to the budget report, however drifted lower after Home Loans and Housing Price Index both fell short of consensus and formed a base around 0.9345 where there are several technical support levels.
- Barclays have downgraded Chinese growth forecast for 2015 due to expecting a "gradual deflating" of the property bubble, estimating a 10% reduction could see Gross Domestic Product (GDP) drop to 6.4%.
- Japan to start selling inflation-linked bonds to individuals amid rising inflation.
- China data fell below expectations; industrial production below consensus at 8.7% (ex. 8.9%) with fixed asset investment and retail sales also below the mark. AUD broke below 0.9345 support - if we remain below here it confirms a double bottom and the 'deeper retracement ' scenario is on the cards.
/h3
- Tonight's AUD budget has the crowd divided over how/if it will affect the AUD. My guess is it may be a muted event overall as any data would take time to filter through to the economy (assuming it wasn't already priced in). However this is just my guess...
- The European Central Bank (ECB) will be hoping for decent economic sentiment numbers from Germany and EU businesses tonight, following Draghi's 'promise' of action in June.
- The People's Bank of China (PBoC) review could be interesting, following on from the poor jobs data. The markets will be watching for clues of rate cuts, which would see the Canadian dollar (CAD) back into the bearish trend. Combine this with good US retail sales and USD/CAD is an obvious place to look for bullish swing trades, as price action still appears corrective.
EUR/USD : Potential bearish flag / pennant
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Not much happened yesterday, so the analysis remains very similar. A slight adjustment is the potential for a bearish flag / pennant to form below 1.377 before a run down to 1.372 and 1.370.
Whereas yesterday's bias favoured a deeper retracement towards the broken trendline.
US Retails sales should play a part here in helping the EUR/USD decide how deep a retracement to go. Overall, due to increased bearish volume on EUR futures, my bias remains bearish.
/h2
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