Japan CPI Improves, GBP Gains Traction Pre-GDP
| Mar 28, 2014 08:17AM ET
Markets focused on Japanese data overnight. The nationwide inflation accelerated from 1.4% to 1.5% in February as expected in Japan. Consumer prices accelerated by 1.3% y/y in Tokyo, slightly faster the market estimates (1.2% exp. & 1.1% last). However, the overall household spending contracted by -2.5% in Feb (vs. +0.1% exp. & +1.1% last) as retail sales retreated from 4.4% to 3.6% over the same period. USD/JPY remained ranged between 102.04/102.25 in Tokyo. Technicals remain perfectly flat. A close above 101.72 (week low & MACD pivot) will keep USD/JPY in its current neutral trend. EUR/JPY has now fully entered in its daily Ichimoku cloud (139.65/140.96) and remains bid above 140.39/47 (100 & 50 dma respectively). The bias is on the downside.
AUD/USD rallied to 0.9295 and ran into offers pre-0.9300. Bullish trend strengthens. The next resistances are seen at 0.9339 (Fibonacci 61.8% on Nov’13 – Jan’14 pullback) and 0.9499/0.9500 (Fibo 76.4% & psychological level). We also hear talks on month/quarter-end flows to give support to EM and to commo currencies. Option bids are placed at 0.9150/70 for today’s expiry. AUD/NZD is once again subject to selling pressures at 1.0700. Technicals remain bullish, support should come into play at 21-dma (1.0641).
According to third reading (released in NY yesterday), the US q/q annualized GDP advanced 2.6%, slightly slower than 2.7% expected yet better than the prior 2.4% reading, the core price index remained stable at 1.3%. The personal consumption hiked from 2.6% to 3.3%. Although the data was good, the FX markets showed little reaction. DXY index stabilizes above the 21-dma (79.848). The 10-year US government yields retreated below its 200-dma (2.6985%).
EUR/USD grinds lower. Down to 1.3715 (3 week low) as Europe walks in this morning, EUR/USD resistance builds pre- 1.3752 (Fibo 23.6% on Nov-Dec rally). Trend and momentum indicators suggest the extension of weakness to 1.3665 (Fibo 38.2%), 1.3595 (Fibo 50%). The support stands at 200-dma (currently at 1.3510).
GBP/USD extends gains to 1.6647 on better-than-expected retail sales of 1.7% in February. The Cable saw decent support at the Nov-Mar uptrend base this week. Trend and momentum indicators are significantly better, the MACD (12, 26) will step in the bullish zone for a daily close above 1.6680. UK’s 4Q final GDP data is due today. The consensus is 0.7% growth q/q, 2.7% y/y.
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In Turkey, lira extends gains versus USD and EUR before the local elections scheduled on March 30th. USD/TRY retreated to 2.1753 yesterday, for the first time since Feb 24th. Although the political and social situation remains uncertain, the bets for stability in ruling party AKP votes, as well as March 18th MPC meeting minutes, will seemingly keep the lira holdings in green into the closing bell.
This Friday, the economic calendar consists of German February Import Price Index m/m & y/y, French February Consumer Spending m/m & y/y, French and Italian February PPI m/m & y/y, Spanish March (Prelim) CPI y/y, German March (Prelim) CPI m/m & y/y, Swedish February Retail Sales m/m & y/y, Norwegian March Unemployment Rate, UK 4Q (Final) GDP and Total Business Investment q/q & y/y, UK 4Q Current Account Balance, Euro-Zone Economic, Industrial, Services and Consumer Confidence, US February Personal Income & Spending and University of Michigan’s March (Final) Confidence Index.
Currency Tech
EUR/USD
R 2: 1.3825
R 1: 1.3752
CURRENT: 1.3715
S 1: 1.3700
S 2: 1.3665
GBP/USD
R 2: 1.6710
R 1: 1.6650
CURRENT: 1.6624
S 1: 1.6550
S 2: 1.6460
USD/JPY
R 2: 103.10
R 1: 102.70
CURRENT: 102.13
S 1: 101.72
S 2: 101.20
USD/CHF
R 2: 0.9156
R 1: 0.8930
CURRENT: 0.8893
S 1: 0.8840
S 2: 0.8788
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