1 May 2015
Kiwi remains weak, UK PMI next focus
FXStreet (Bali) - The US Dollar was the main winner in Asia, strengthening across the board, as the recovery on the aftermath of the FOMC continues, despite the FOMC failed to provide any nee clues on the rates outlook.
The Australian Dollar traded softer again in Asia, following Thursday's sharp selling, with an in-line Chinese PMI of 50.1 vs 50.00 expected failing to provide much support to the antipodean currency, as it heads back towards
0.7860, the lowest printed on Thursday.
The New Zealand Dollar was also pressured, with the negative sentiment from the easier RBNZ monetary policy statement last Thursday still felt. The NZ Central Bank has started to open the doors for potentially lower rates this year. NZD/USD printed its lowest at 0.7570. NZ FinMin also weighed on the currency, noting that New Zealand faces bigger 2014/15 budget deficit and adding that as inflation slows, the RBNZ may change its views on rates.
The Japanese Yen kept weakening against the Greenback, moving from 119.40 up towards 119.70/75 highs after the big wall of macro bids circa 118.50 mid week led to committed sellers running for the exits. The Nikkei traded in a soft tone around -0.25% heading into the close, despite erasing early losses after the sharp declines seen in the SP500 overnight. Japanese inflation numbers were published today, showing little progress one year after the unpopular sales tax hike in the country. The national CPI saw a slight rise, although the Tokyo area inflation remained flat.
As we mentioned earlier, it is worth noting the following: "The Bank of Japan has estimated that the sales tax hike last year contributed to a 1.7% increase to the annual inflation rate in April 2014, and 2% from the following month, thus one still needs to discount that from the nation-wide figures in March before the added 1.7 and 2% increases are removed in next month's nation-wide figures. Tokyo inflation numbers, since they were for the month of April, the sales tax hike effect had already been discounted."
Heading into Europe
European markets will be closed due to 'Labour Day' this Friday, leaving the calendar empty of EUR-related fundamental announcements, with UK data solely in focus, releasing some second-tier events (mortgage approvals, money supply, net lending and consumer credit), also including the important UK Markit PMI.
According to Paul Hollingsworth, Economist at Capital Economics: "March’s Markit/CIPS Manufacturing PMI (09.30 BST) may provide further signs that the sector’s recovery has turned a corner. We forecast a reading of 54.5. However, March’s household borrowing figures (09.30 BST) may signal that the recovery in mortgage lending is only picking up slowly."
"The BBA’s measure of the number of mortgages approved by the main high street banks rose from 37,453 in February to 38,751 in March. But approvals remain some 14% lower than their level a year ago. We expect a small rise in the official measure of approvals to 62,000 in March" Hollingsworth adds.
GBP/USD technicals - In-house view
Valeria Bednarik, Chief Analyst at FXStreet, notes: "Short term, the bearish potential prevails as the 1 hour chart shows that the price holds below a bearish 20 SMA, currently offering dynamic resistance around 1.5400, whilst the technical indicators are barely bouncing from oversold levels."
In the 4 hours chart, Valeria adds: "The price battles around a bullish 20 SMA, whilst the technical indicators head sharply lower and are now approaching their mid-lines. If the pair can't regain the 1.5400 level, the risk will remain to the downside, with a break below the mentioned daily low, triggering a bearish run towards 1.5260, a strong static support."
The Australian Dollar traded softer again in Asia, following Thursday's sharp selling, with an in-line Chinese PMI of 50.1 vs 50.00 expected failing to provide much support to the antipodean currency, as it heads back towards
0.7860, the lowest printed on Thursday.
The New Zealand Dollar was also pressured, with the negative sentiment from the easier RBNZ monetary policy statement last Thursday still felt. The NZ Central Bank has started to open the doors for potentially lower rates this year. NZD/USD printed its lowest at 0.7570. NZ FinMin also weighed on the currency, noting that New Zealand faces bigger 2014/15 budget deficit and adding that as inflation slows, the RBNZ may change its views on rates.
The Japanese Yen kept weakening against the Greenback, moving from 119.40 up towards 119.70/75 highs after the big wall of macro bids circa 118.50 mid week led to committed sellers running for the exits. The Nikkei traded in a soft tone around -0.25% heading into the close, despite erasing early losses after the sharp declines seen in the SP500 overnight. Japanese inflation numbers were published today, showing little progress one year after the unpopular sales tax hike in the country. The national CPI saw a slight rise, although the Tokyo area inflation remained flat.
As we mentioned earlier, it is worth noting the following: "The Bank of Japan has estimated that the sales tax hike last year contributed to a 1.7% increase to the annual inflation rate in April 2014, and 2% from the following month, thus one still needs to discount that from the nation-wide figures in March before the added 1.7 and 2% increases are removed in next month's nation-wide figures. Tokyo inflation numbers, since they were for the month of April, the sales tax hike effect had already been discounted."
Heading into Europe
European markets will be closed due to 'Labour Day' this Friday, leaving the calendar empty of EUR-related fundamental announcements, with UK data solely in focus, releasing some second-tier events (mortgage approvals, money supply, net lending and consumer credit), also including the important UK Markit PMI.
According to Paul Hollingsworth, Economist at Capital Economics: "March’s Markit/CIPS Manufacturing PMI (09.30 BST) may provide further signs that the sector’s recovery has turned a corner. We forecast a reading of 54.5. However, March’s household borrowing figures (09.30 BST) may signal that the recovery in mortgage lending is only picking up slowly."
"The BBA’s measure of the number of mortgages approved by the main high street banks rose from 37,453 in February to 38,751 in March. But approvals remain some 14% lower than their level a year ago. We expect a small rise in the official measure of approvals to 62,000 in March" Hollingsworth adds.
GBP/USD technicals - In-house view
Valeria Bednarik, Chief Analyst at FXStreet, notes: "Short term, the bearish potential prevails as the 1 hour chart shows that the price holds below a bearish 20 SMA, currently offering dynamic resistance around 1.5400, whilst the technical indicators are barely bouncing from oversold levels."
In the 4 hours chart, Valeria adds: "The price battles around a bullish 20 SMA, whilst the technical indicators head sharply lower and are now approaching their mid-lines. If the pair can't regain the 1.5400 level, the risk will remain to the downside, with a break below the mentioned daily low, triggering a bearish run towards 1.5260, a strong static support."