Stacked Calendar Week Kicks Off With Ugly China Trade

GBPUSD – technical overview

The broader downtrend remains firmly intact, with the market taking out recent trend lows at 1.4635. This confirms a fresh lower top at 1.5165 and opens the door for the next major downside extension towards a measured move objective at 1.4100 in the days ahead. Still, with weekly studies looking stretched, there is risk for some corrective rallies and choppy trade. But ultimately, only back above 1.5165 takes the immediate pressure off the downside.

• R2 1.4886 – 9Apr high – Strong
• R1 1.4725 – 10Apr high – Medium
• S1 1.4587 – 10Apr low  – Medium
• S2 1.4500 – Psychological  – Strong

GBPUSD – fundamental overview

There isn’t anything in the way of any meaningful data out of the UK on Monday, though this hasn’t stopped the Pound from extending fresh multi-year declines against the Buck. The Pound has been a victim to broad based US Dollar demand on monetary policy divergence, while last Friday’s softer UK industrial production and upcoming UK election risk have also been weighing. Looking ahead, Tuesday’s UK inflation reading will be the big event for the currency this week, and could be the next source of major volatility.

USDJPY – technical overview

Although the market has recently broken to fresh multi-year highs through 122.00, lack of upside follow through has been discouraging, with the pair more content on deferring to a period of consolidation. Still, overall, the broader trend remains highly constructive and any setbacks should continue to be very well supported in favour of the next major upside extension through 122.03 and towards key psychological barriers at 125.00 further up. At this point, only a close below 118.00 would delay, while a break below 115.55 would be required to negate the constructive outlook.

• R2 121.20 – 20Mar high – Strong
• R1 120.74 – 9Apr high – Medium
• S1 119.43 – 7Apr low – Medium
• S2 118.72 – 3Apr low – Strong

USDJPY – fundamental overview

The Yen hasn’t managed to extend declines much into Monday, with the currency failing to really participate in the latest broad based US Dollar rally. It seems some better than expected Japanese core machinery orders and a BOJ Minutes that point to stiffer requirements for additional easing measures have managed to offset the Dollar demand for the time being. Also seen propping the Yen a bit has been a downturn in risk sentiment on the back of a much weaker China trade report earlier today.

EURCHF – technical overview

The recent daily close below 1.0400 puts the pressure back on the downside and exposes an immediate retest of support at 1.0355. A break and daily close below 1.0355 would then accelerate declines towards parity in the sessions ahead. At this point, key resistance comes in at 1.0495 and a break back above this level will be required to take the pressure off the downside.

• R2 1.0495 – 6Apr high – Strong
• R1 1.0450 – 9Apr high – Medium
• S1 1.0355 – 30Jan low – Strong
• S2 1.0300 – Figure – Medium

EURCHF – fundamental overview

EURCHF has been under consistent pressure since the last SNB decision to leave policy unchanged, with setbacks extending well below what had been a much talked about SNB 1.0500 corridor base. The SNB has reiterated it remains ready to act to curb excessive overvaluation in the Franc, and with the market recently dipping below 1.0400, to its lowest levels since recovering through 1.0800, participants will be on the lookout for any signs of movement from the central bank. Last week’s hotter than expected Swiss inflation readings, ongoing uncertainty in Greece and downturn in sentiment have also contributed to recent declines.

AUDUSD – technical overview

The bearish structure remains firmly intact with the market threatening a fresh downside extension. Though we did see a break to fresh 0.7533 lows the other week, a daily close below 0.7533 will now be required to confirm the onset of the next downside extension, with setbacks then projected towards major psychological barriers at 0.7000. Any rallies should be well capped below 0.7800, while ultimately, only a daily close back above 0.7938 would negate and give reason for pause.

• R2 0.7738 – 9Apr high – Strong
• R1 0.7678 – 13Apr high – Medium
• S1 0.7533 – 2Apr/2015 low – Strong
• S2 0.7500 – Psychological – Medium

AUDUSD – fundamental overview

Any recovery in the Australian Dollar from the previous week, on the back of an on hold RBA, solid economic data and stabilization in the price of iron ore, has been offset early Monday, with the currency underperforming, falling victim to some dreadful trade data out of China. China posted a trade surplus of just $3.08 billion in March, versus a dramatically higher forecast of $40 billion and also well below the $60.6 billion surplus in February. Exports were down 15% versus +10% expected, while imports dropped 12.7% versus a decline of 10% expected.

USDCAD – technical overview

Although the market has recently broken to a fresh multi-year high at 1.2835, inability to establish a daily close above 1.2800 has kept the market locked within a familiar multi-day consolidation. But ultimately, the broader uptrend remains firmly intact, with the next big push seen towards the 2009 peak at 1.3065. In the interim, there is risk for a period of additional choppy consolidation before bullish resumption. Setbacks should however be very well supported above 1.2350, with only a break below to delay the constructive outlook.

• R2 1.2710 – 1Apr high – Strong
• R1 1.2667 – 10Apr high – Strong
• S1 1.2564 – 13Apr low – Medium
• S2 1.2509 – 9Feb low – Strong

USDCAD – fundamental overview

There hasn’t been a whole lot that can stop the pace of US Dollar appreciation despite the Canadian Dollar’s best efforts in recent trade. Friday’s solid Canada employment report, showing a steady unemployment rate and 29k new jobs versus expectations for no new jobs, had opened a rally in the Loonie. But the Canadian Dollar couldn’t close much higher on the day and is back under pressure into Monday. The much weaker than expected China trade report has been influencing price action, while an ongoing expectation the Fed will be moving on rates sooner than later has proven to be the ultimate driver. Still, with OIL attempting to recover, there could be room for relative strength in the Loonie going forward, particularly against its commodity bloc cousins.

NZDUSD – technical overview

The market has recently stalled out ahead of 0.7700 and remains locked within a well defined downtrend. Look for deeper setbacks in the sessions ahead back towards the key low of 0.7176, below which opens the next major downside extension towards psychological barriers at 0.6500. Ultimately, only back above 0.7890 would give reason for pause.

• R2 0.7630 – 3Apr high – Strong
• R1 0.7538 – 13Apr high – Medium
• S1 0.7391 – 1Apr low – Medium
• S2 0.7275 – 18Mar low – Strong

NZDUSD – fundamental overview

The New Zealand Dollar has not been immune to the latest horrid China trade data, with the higher yielding currency under a good amount of pressure in Monday trade. New Zealand has been struggling with a rapid decline in dairy prices and with China imports deteriorating, this could spell more trouble at the upcoming dairy auction. New Zealand PM John Key also was out last week saying “a strong Kiwi against its Trans Tasman Aussie cousin has become a headache for the country’s export and tourism industry.” Key is an ex-currency trader and his comments on the FX market carry even more weight than those of his counterparts. This could warn of some relative underperformance in the New Zealand Dollar going forward.

US SPX 500 – technical overview

The most recent rally has stalled out ahead of critical resistance in the form of the record high from February at 2120. This suggests we could be in the process of carving out a more meaningful top. Look for a break and close below critical support at 2040 over the coming sessions to confirm the structural shift and open the door for deeper setbacks towards 2000. However, inability to establish a close below 2040 will keep the pressure on the topside.

• R2 2150.00 – Psychological – Medium
• R1 2120.00 – 25Feb/Record – Strong
• S1 2040.00 – 18Mar low – Strong
• S2 2000.00 – Psychological – Medium

US SPX 500 – fundamental overview

There is a growing sense that with equities so elevated and the Fed still on course to move towards a sooner than later rate hike in 2015, any additional upside should be limited with a potential capitulation in the works. There has also been a new pattern of weaker US economic data no longer supporting equities. Since the onset of the financial markets crisis in 2008, soft US data has been equity supportive on the assurance this data would keep the Fed in ultra accommodative mode. But over the past couple of weeks we have seen stocks sell off on weaker durable goods, and a discouraging NFP print. This could warn of a reversal ahead.

GOLD (SPOT) – technical overview

The market has been in recovery mode over the past several days after stalling shy of the 2014 base. The bounce suggests the market could now be poised for additional upside in the sessions ahead in an attempt to carve out a more meaningful longer-term base. Still, a daily close above 1223 will be required to strengthen the constructive prospect. Meanwhile, back below 1178 delays the recovery and puts pressure back on the downside.

• R2 1246.00 – 10Feb high – Medium
• R1 1224.00 – 6Apr high – Strong
• S1 1178.00 – 31Mar low – Medium
• S2 1143.00 – 17Mar low – Strong

GOLD (SPOT) – fundamental overview

The gold market continues to show signs of broader recovery since stalling out several days back ahead of the 2014 base. Many investors already feel that with currencies across the board in a downward spiral, and global equities at risk for major capitulation, there is no better place to be invested than in the yellow metal. Gold has since pulled back a bit since rallying above $1220, with last week’s more hawkish FOMC Minutes driving some broad US Dollar demand and in turn weighing on the inversely correlated metal. But there is healthy demand reported into dips, with no real sell-stops seen until below $1175.

Feature – technical overview

USDTRY has been locked within a very well defined uptrend, with the market recently breaking to fresh record highs. The latest pullback off the high is viewed as corrective, with the next higher low sought out ahead of bullish continuation. Key support comes in at 2.4335, which represents the previous higher low, and ultimately, only a break below this level would compromise the constructive outlook.

• R2 2.6800 – Psychological – Medium
• R1 2.6485 – 13Mar/Record – Strong
• S1 2.5405 – 23Mar low – Medium
• S2 2.5150 – 11Feb high – Strong

Feature – fundamental overview

The key point of stress for the Turkish government and central bank is the rising inflation picture in a slowing economy, amidst broad based US Dollar demand. This puts the CBRT in a difficult corner where it has to weigh the risks of higher interest rates to offset a record low Lira against an economy that desperately needs the relief of lower rates. It’s worth noting, Turkey has recently entered the Dollar denominated bond market, taking advantage of the super low borrowing costs and offering a product without the Lira risk.