AUD/USD pushes higher as risk-on mood continues to weigh on the dollar

The aussie is extending its gains as markets keep up the risk-on mood

AUD/USD H1 03-04

The aussie is buoyed after better-than-expected retail sales data earlier as well as a more optimistic risk tone in markets as Chinese PMI figures rebounded slightly in March. That saw AUD/USD break back above its key hourly moving averages, putting buyers in the driver's seat in the near-term.

Since that break this morning, price is extending higher above 0.7100 and now touches a high of 0.7127 on the day. Near-term resistance is seen next around 0.7129-32 from the highs posted on Monday.

Beyond that, key resistance lies near the 0.7150 level where the 100-day MA is located.

AUD/USD D1 03-04

That will be the key level to watch out for in trading later today. If price holds a break above that at the close, it will put an end to the bearish bias/momentum in the pair.

At the moment, markets are still largely focusing on risk sentiment and that is continuing to weigh on the dollar as well with the greenback down near the lows against the likes of the euro, loonie and kiwi as well.



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Cable extends overnight rally after May's shift in Brexit stance

GBP/USD closes in on the 1.3200 handle now

GBP/USD H1 03-04

May's offer of a cross-party compromise is continuing to fuel further gains in the pound with cable now rising to a high of 1.3190 on the day. Price has also cleared the 200-hour MA (blue line) handily, indicating that the near-term bias is now more bullish.

The move higher here come as London traders get to their desks and reflects renewed optimism surrounding the Brexit debacle. That said, I'm not going to hold my breath in thinking that May's latest move will prove to be decisive in breaking the current deadlock.

With her Brexit deal falling dead on arrival over the last few months, it's not anything new for her to realise that she needs Labour support to get something through on Brexit. But I'm still skeptical on whether or not Corbyn will be willing to lend a hand.

At the same time, this will tear the Tory party up further from the inside. And I don't see how that's ever a good thing in the long-run.



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EUR/USD sellers forced to wait yet again on a further downside break

EUR/USD fails to close below daily resistance of 1.1187 yesterday

EUR/USD D1 03-04

And with the dollar holding a little weaker on the day, it is precipitating a move back above the 1.1200 handle in EUR/USD. At the moment, price is flirting with the 100-hour moving average @ 1.1221. If buyers manage to firmly move above that, then the near-term bearish bias will be broken as further resistance is then seen around 1.1250 before the 200-hour moving average comes into play at 1.1259.

There will be a host of PMI figures to come in the next hour in European morning trade but I don't expect the releases to have much bearings on the euro today. Trading will center more around the ebb and flow and for now, dollar weakness on the back of improved risk sentiment is a key driver that's moving the pair higher.

That and the fact that sellers are unable to break below the 61.8 retracement level @ 1.1187 on a daily close is once again proving to stop the downside move in EUR/USD for the time being. We could see some minor retracement of the downside move over the past two-and-a-half weeks but I am still of the view that it is hard to imagine the euro soaring given current economic and political conditions.

All that being said, it's still not the bears' time to shine just yet in EUR/USD. The break of the 1.1187 level is key for that to happen.



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EUR/USD tests waters below 1.12 as sellers maintain near-term bearish bias

EUR/USD trades at the lows for the day just under the 1.1200 handle

EUR/USD H1 02-04

Price attempted a move higher in overnight trading but failed to break above the 100-hour MA (red line) as sellers maintain the near-term bearish bias in the pair. Thereafter, price extended lower and today we're seeing it fall back towards the 1.1200 handle with sellers eyeing a move towards the 7 March low at 1.1177.

Of note today, there will be large expiries rolling off at 1.1200 so that could help keep price action limited and around the figure level for the time being. The fact that risk sentiment remains rather muted with bond yields retracing a bit of the move higher overnight and equities being flat isn't helping to give markets much direction.

In the grand scheme of things, if price does secure a daily break below the 1.1187 level then it could open up the next leg lower for sellers:

EUR/USD D1 02-04



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Cable inches towards the day's lows as pound stays weaker, dollar holds steady

GBP/USD moves back to the swing region between 1.3035-50

GBP/USD H1 02-04

Sellers are in near-term control after having fended off an overnight move to the upside to test the 200-hour MA (blue line). The fact that the UK parliament failed to settle on a majority option in indicative votes helped to solidify a move lower thereafter.

Price now is testing the support swing region between 1.3035-50 once again and a break beyond that will open up a move towards testing the 1.3000-10 level next.

Although the pound is weaker on the day, the nudge lower in cable is also helped by the fact that the dollar remains firm as it trades to a high against the likes of the euro, loonie, aussie and kiwi.

For the pound, the UK Cabinet will meet later on today in a supposedly five-hour meeting to decide on how to proceed with Brexit next. Spoiler alert: It's going to be another session of planning on how to get May's meaningful vote passed in parliament.

Upside levels in cable remain defined and limited by the key hourly moving averages above. For a downside move to extend lower, price must break last week's low of 1.2978.



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ForexLive European morning FX news wrap: Sterling gains as parliament prepares for indicative votes

Forex news from the European morning session - 1 April 2019

Markets:


  • GBP leads, JPY lags on the day

  • European equities higher; E-minis up 0.6%

  • US 10-year yields up 3.7 bps to 2.442%

  • Gold down 0.2% to $1,290.20

  • WTI up 1.2% to $60.90

  • Bitcoin up 1.0% to $4,115


EOD 01-04
Markets continued the risk-on mood from Asian trading but it was the pound that stole the spotlight in the European morning. The quid gained further ground after UK manufacturing PMI hit a 13-month high but owes much to do with stockpiling on Brexit uncertainty.

UK PMI
That continues to mask the underlying weakness in the UK manufacturing sector and will come back to bite the economy later on. But for now, that and Brexit sentiment (indicative votes later) is helping to give the currency a boost with cable steadily climbing from 1.3070 to the highs now above the 1.3100 handle.

The yen remains the weakest performer as bond yields and equities continue to rise on the back of more optimistic Chinese PMI figures. USD/JPY traded steadily around 110.95 to 111.10 for the most part.

The dollar itself was also weak with the risk-on mood dominating trading sentiment and that saw EUR/USD rise to 1.1250 before settling just under there now. AUD/USD and NZD/USD also posted modest gains but trading ranges remain relatively narrow for both pairs as they stick around near unchanged levels since the trading session in Asia.

Looking ahead, there's US retail sales data to help kick off North American trading before the focus turns back to Westminster where we'll see another round of indicative votes in the evening. Should there be no majority option, expect another meaningful vote later this week. And if there is one, expect a runoff vote between that and May's deal likely on Wednesday as UK lawmakers try and find a solution to break the Brexit deadlock.
 
WCRS 01-04




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Cable rises above the 1.31 handle as pound stays firm following PMI gains

GBP/USD touches a high of 1.3102 on the day

GBP/USD H1 01-04

The pound is now the top performing major currency on the day as it pushes higher following the release of the manufacturing PMI earlier. Cable now takes a peek above the 1.3100 handle with the dollar also still on the weaker side since the start of trading today.

The release of the UK manufacturing PMI earlier may sound good in terms of headlines as the print hits a 13-month high. However, the jump owes much to record stockpiling on Brexit uncertainty, which is unlike anything seen previously in G7 country.

The thing about stockpiling is that it not only masks the underlying weakness of factory activity now, but it has other negative implications too. The issue with stockpiling is that it hurts companies' profitability and that in turn will help to limit any further potential future investment. That will hurt the UK even more considering the Brexit situation where total business investment declined in every quarter of the calendar year in 2018 - the first time that has happened since 1980.

That said, the manufacturing sector is only a small part of the UK economy as it relies more heavily on services. Despite the bounce in the pound, sentiment is still very much driven by Brexit at this point.

I wouldn't look too much into the move higher in the pound unless Brexit headlines start looking more positive. At the moment, we're headed for another round of indicative votes and all eyes will be whether or not parliament can settle on a majority for any form of Brexit. Otherwise, there is the potential of yet another meaningful vote to take place before the end of next week.

Everything is still up in the air at the moment with no-deal and a general election among the possibilities to weigh on the pound while a long extension and a second referendum being scenarios that could help lift the currency.



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SNB total sight deposits w.e. 29 March CHF 576.1 bn vs CHF 575.9 bn prior

Latest data released by the SNB - 1 April 2019


  • Domestic sight deposits CHF 488.5 bn vs CHF 489.3 bn prior

Prior week's release can be found here. Not much change there to the sight deposits data and that suggests the SNB hasn't really been busy intervening in markets just yet. However, with EUR/CHF on the verge of cracking through a key support level below 1.1200 it's best to be wary of the potential for them to step in.



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EUR/USD touches three-week low, closes back in on the 1.12 handle

EUR/USD falls to a session low of 1.1210

EUR/USD H1 29-03

Price range remains relatively narrow but the euro is losing some ground on the day against the dollar with the latter continuing to hold firm against the rest of the major currencies today. For EUR/USD, price is falling below its overnight lows and now touches its lowest levels since 8 March with sellers eyeing the 1.1200 handle.

In my view, the worrying part about Eurozone economic data this week is that we're seeing some softening in inflation pressures from Germany and France. Next Monday, we'll be getting the Eurozone readings and I would expect a downside skew in the report.

Expectation is for the numbers to hold steady at +1.5% y/y on the headline inflation reading while the core reading is expected to hold at +1.0% y/y.

But after the Saxony report yesterday - where there was a noticeable dip in core inflation - I reckon there's a possibility for the core reading to also dip a little tomorrow and that won't bode well for the ECB's current inflation outlook. That's something to consider ahead of the release next Monday.

EUR/USD D1 29-03

As for the bigger picture in EUR/USD, there is some support to come at the 1.1200 handle with bids lined up there. But the key level to watch out for will be the 61.8 retracement level @ 1.1187. That is a key daily support level that helped to stall the previous downside move after the ECB meeting at the start of the month.

The low achieved at the time was 1.1177 so expect stops to be lined up just under that. If price does break to the downside, further support is only then seen at 1.1110 before we move towards the 1.1000 handle.



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UK February mortgage approvals 64.3k vs 65.0k expected Fri 29 Mar 2019 09:

Latest data released by the BOE - 29 March 2019


  • Prior 66.8k

  • Net consumer credit £1.1 billion vs £0.9 billion expected

  • Prior £1.1 billion; revised to £1.2 billion

Mortgage activity dipped a little last month but the bigger takeaway is that consumer credit growth slowed to just +6.3% y/y in February compared to the +6.5% y/y reading in January. This represents the slowest pace of consumer credit growth since September 2014.

Once again, it highlights that the UK economy is still struggling in light of Brexit uncertainty and it's hard to justify a rate hike by the BOE from this angle when the economy is not even close to running hot at the moment.



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