Date : 21st May 2015.
TODAY’S CURRENCY MOVERS.
EURUSD, DailyThe FOMC minutes took wind out of the dollar’s sails yesterday, though in confirming that most members were not thinking of hiking in June the minutes were near expectations. Minutes to April 28, 29 policy meeting indicated a June rate hike was unlikely and probably won’t have sufficient data to confirm that conditions for raising rates are in place. Participants had a wide range of views on timing of rate lift-off due to uncertainties over strength of the US economy after Q1 weakness. Data dependency was again stressed with rate decisions to be made on meeting-to-meeting basis.
I wrote yesterday that the combination of support and resistance levels (nearby) could lead to price stalling at current levels before direction resolved. This is exactly what happened yesterday and over the Asian session. EURUSD has been moving sideways between low of 1.1060 and high of 1.1160. As nothing much has happened overnight yesterday’s analysis and support and resistance levels are still valid (nearest support and resistance levels 1.1052 and 1.1131). Price moving sideways confirmed the indication that the down move was overdone but there are still headwinds to EURUSD moving higher: the move below 1.1131 pivotal support created a resistance level that is relatively close to the current price. This same resistance coincides with a support level in the US Dollar Index. As the latest complete 4h candle closed above 1.1146 the probabilities of EURUSD moving higher have now increased but the region of intraday resistance at 1.1158 has still proven to be a challenge. The next significant daily resistance level is at 1.1324.
Currency Pairs, Grouped Performance (% Change)GBP has been the strongest currency today and the GBPUSD the performing pair. The shooting star candle in DXY from yesterday and the GBPUSD at support higher from a support yesterday support the bullish sentiment for GBP against the USD. US Dollar has been weak across the board and the DXY moving below the low of yesterday’s shooting star candle low promises more strength to EURUSD, GBPUSD, AUDUSD and NZDUSD (and more weakness to USDCAD, USDCHF and USDJPY). Both AUDUSD and NZDUSD are trading above a pivotal support and latter at weekly Bollinger Bands. USDCAD is trading at upper daily Bollinger Bands while USDJPY is reacting lower from March resistance. USDJPY has some previous resistances that it has broken and could therefore find support at levels nearby.
Main Macro Events TodayAustralian Consumer Inflation Expectation accelerated to a 2.4% growth pace in Q1 (q/q, saar), much better than expected following a downwardly revised 1.1% pace in Q4 (was +1.5%). Consumption grew at a 1.5% pace in Q1 (q/q, saar) contrary to an expected slowing following the 1.5% rate in Q4.
Australian Westpac Consumer Sentiment rose slightly to 3.6% from the earlier 3.4%. This increase is in line with the confidence boost measured yesterday by the Westpac Consumer Sentiment index as increased economic activity usually also leads to higher prices.
Chinese Manufacturing PMI survey showed continuing weakness in China. This brings into focus the widespread expectations that the Chinese authorities would act on any signs of a serious downturn limited the market reaction. The number was a thirteen month low.
German Manufacturing PMI fell back more than anticipated, with the manufacturing PMI dropping to 51.4 from 52.1 and the services reading to 52.9 from 54.0. Reading remains firmly above the 50 mark, but the weaker than expected numbers tie in with a marked drop in the ZEW and signal a slowdown in growth momentum.
Eurozone Manufacturing PMI figures were mixed, with the manufacturing reading unexpectedly rising to 52.3 from 52.0, interestingly on the back of a rise in the French reading, while the German number fell back. The Eurozone services PMI meanwhile disappointed and dropped to 53.3 from 54.1, leaving the composite at 53.4, down from 53.9 in the previous month.
UK Retail Sales surprised positively and came in at 4.7% instead of expected 3.8%. Retail sales were expected to ease again after this year’s high in February was followed a lower reading in March.
Philadelphia Fed Manufacturing Survey should improve to 8.0 in May after 7.5 in April.
US Unemployment Claims: it is expected that initial jobless claims rose to 271k last week from 264k the preceding week when the claims figure hit the lowest level in nearly 15 years.
Please, click here to access the full HotForex Economic calendar.Janne Muta
Chief Market Analyst
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