UK CPI, US Retail Sales Stand Out On Tuesday

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 1.4565 – 13Apr/2015 low  – Medium
• S2 1.4500 – Psychological  – Strong

GBPUSD – fundamental overview

The latest UK election polls showing the ruling Conservatives with a 39-33 lead over Labour has proven to be a prop for an ailing Pound weakened in recent days on the uncertainty of the election outcome and prospect for a hung parliament. For Tuesday, UK CPI takes center stage and will likely have a meaningful influence on intraday price action. CPI is forecast to come in unchanged at 0.0%, though anything on the hotter side will allow the Pound to build off Monday’s bullish momentum. Later on, we get US retail sales, which is also expected to move the market.

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 – Medium
• R1 120.84 – 13Apr high – Strong
• S1 119.43 – 7Apr low – Medium
• S2 118.72 – 3Apr low – Strong

USDJPY – fundamental overview

The Yen has come back into a bit of favour in recent days, with an on hold BOJ policy decision and no signs of additional easing measures inviting fresh bids. Yen gains have accelerated into Tuesday following comments from Japan PM aide Hamada who said a 120.00 USD/JPY level was too strong and 105.00 was a more appropriate level given “purchasing power parity” (PPP). Still, there is a lot more to currency valuation than PPP and it is doubtful these comments will have anything more than a short-term influence on the major pair, with macro players aggressive USDJPY buyers on dips.

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 1.0250. A break and daily close below 1.0250 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 1.0300 – Figure – Medium
• S2 1.0250 – 16Jan high – Strong

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 January, 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, while news the Moroccan CB has reduced the Euro weighting in its FX basket to 60% from 80% hasn’t helped.

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 this week, with the currency falling victim to renewed USD demand and some dreadful trade data out of China. Perhaps the modest Tuesday improvement in Aussie business confidence and business conditions have helped to mitigate declines, though the currency is at risk for additional weakness in the coming sessions if US retail sales rebound as forecast and if more disappointing data surfaces out of China early Wednesday.

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 1.2550 – Mid-Figure – Medium
• S2 1.2509 – 9Feb low – Strong

USDCAD – fundamental overview

There hasn’t been a whole lot to stop the pace of US Dollar appreciation despite the Canadian Dollar’s best efforts in recent trade. Last Friday’s solid Canada employment report and renewed demand for OIL haven’t really done anything but perhaps slow the pace of Loonie declines, with ongoing broad based US Dollar demand trumping. Monday’s much weaker than expected China trade report has also weighed on the commodity currency a bit. Looking ahead, US retail sales is the big release for Tuesday and will likely influence the direction in this market.

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 the early week. 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.” This could warn of some relative underperformance in the New Zealand Dollar going forward. Looking ahead, aside from the dairy auction, US retail sales later today and China GDP, retail sales and industrial production on Wednesday are the standouts.

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. Today’s US retail sales will therefore be important to watch.

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

USDSGD remains locked within a well defined uptrend but has been showing signs of exhaustion since topping out at a fresh multi-year high above 1.3900 in March. Key support comes in at 1.3452 and a break below will open the door for a more significant corrective decline before the market looks to reassert the uptrend. However, inability to break below 1.3452 will keep the immediate pressure on the topside for an eventual push through the next key psychological barrier at 1.4000.

• R2 1.3937 – 13Mar/2015 high – Strong
• R1 1.3747 – 13Apr high – Medium
• S1 1.3521 – 8Apr low – Medium
• S2 1.3452 – 3Apr low – Strong

Feature – fundamental overview

The latest MAS decision to leave policy unchanged after previously cutting rates has caught the market off guard, with many participants booking profit on short SGD positions in Tuesday trade. MTI data is also helping to support the Singapore Dollar, as it shows better than expected Singapore growth. Overall, MAS monetary policy divergence with the Fed should ultimately invite more medium and longer-term US Dollar bids, but for now, with the US Dollar overextended and given today’s developments, there is risk for some more short-term appreciation in the Singapore Dollar.