Good News Out Of China Boosts CNY, AUD
| Jun 10, 2014 04:25AM ET
The Chinese CPI accelerated at the faster pace of 2.5% y/y in May (vs. 2.4% exp. & 1.8% last), while the PPI y/y showed slower contraction during the same month (-1.4% in May, vs. -1.5% exp. & -2.0% last). The PBoC gave more details on selective RRR cut program launched on May 30th; the RRR on bank loans supportive of agricultural business and small-to-medium size companies will be cut by 50 basis points, aiming to free CNY 58bn worth of liquidity, higher than CNY 55bn generated over the first selective RRR cut in April. Growth supportive news sent Chinese equities to green overnight. Hang Seng and Shanghai’s Composite added 0.92% and 0.96% at the time of writing, Yuan strengthened both in onshore and offshore trading, hitting four month highs against USD in Hong Kong.
AUD/USD advanced to 0.9376 on the back of Chinese news. The pair now builds support at 0.9339 (Fibonacci 61.8% on Oct’13 - Jan’14 pullback). Trend and momentum indicators are positive, yet still fragile. The weakness in Australian home loans in April was offset by better owner-occupier loan value and faster investment lending. Solid offers trail below 0.9400/09 (May resistance) and 0.9499 (Fibo 23.6%).
USD/JPY and JPY crosses were mostly offered in Asia. USD/JPY sold-off to 102.24 (slightly lower than 100-dma), the intra-day pressures are on the downside. Large option expiries are eyed at 102.50 / 103.00 for today expiry. On the downside, bids should come into play at 102.00/25 area, light stops are seen below. The key short-term support stands still at 200-dma (currently at 101.55), then 100.76 (2014 low). EUR/JPY broke its 21-dma (139.20) on the downside. The key 200-dma support (138.68) is at risk given the fading bullish momentum in EUR across the board. Solid offers are eyed sub-140.00.
EUR/USD consolidated losses in the tight range of 1.3585/1.3600 in Asia. ECB’s additional easing announcement gets into prices, yet slowly. The 21-dma (1.3649) crossed the 200-dma (1.3656) on the downside, favoring EUR-bears from technical players’ side. Trend and momentum indicators are flat, the pair tests last two weeks’ 1.3580/85 support zone, if broken will bring 1.3477/1.3503 (2014 low / June 5th ECB reaction low) in focus. Option bids are negatively skewed below 1.3700. EUR/GBP remains offered below 21-dma (0.81255). A daily close below 0.80680 will signal a short-term bearish reversal according to MACD (12, 26) analysis.
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Today, the economic calendar consists of Swiss May Unemployment Rate, Swiss April Retail Sales y/y French and UK April Industrial and Manufacturing Production, Italian April Industrial Production m/m & y/y, Italian 1Q (Final) GDP q/q & y/y, Norwegian May CPI and PPI m/m & y/y, US May NFIB Small Business Optimism, US April JOLTS Job Openings, US April Wholesale Inventories m/m and Wholesale Trade Sales m/m.
Currency Tech
EUR/USD
R 2: 1.3735
R 1: 1.3677
CURRENT: 1.3596
S 1: 1.3580
S 2: 1.3503
GBP/USD
R 2: 1.6882
R 1: 1.6845
CURRENT: 1.6808
S 1: 1.6780
S 2: 1.6693
USD/JPY
R 2: 103.02
R 1: 102.80
CURRENT: 102.31
S 1: 102.10
S 2: 101.45
USD/CHF
R 2: 0.9037
R 1: 0.8995
CURRENT: 0.8968
S 1: 0.8908
S 2: 0.8882
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