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21 May 2015
Antipodeans rebound in Asia, UK retail sales, EZ PMIs – Key Events
FXStreet (Mumbai) - The entire antipodean complex maintained a bid tone in Asia, rebounding from a long run of losses. The Aussie tracked gains from the New Zealand dollar after the NZ annual budget was viewed as optimistic by the markets. While the US dollar extended its post-FOMC minutes losses against the Japanese currency, although clinged to 121 handle.
Key headlines in Asia
China HSBC PMI misses expectations in May
NZ 2014/15 budget deficit slightly wider-than-forecast
NZ budget: No impact on ratings, outlook - S&P
NZ budget: Supports Aaa rating, stable outlook - Moody's
Dominating themes in Asia - centered on JPY, AUD, NZD
A quiet Asia, with New Zealand’s annual budget driving the Antipodeans higher amid broad based US dollar weakness. Traders continue to absorb the latest FOMC minutes released yesterday which revealed that a rate hike is doubtful at the next FOMC meeting in June, thereby weighing on the greenback. Meanwhile, USD/JPY trades in red near session lows just ahead of 121 levels, recording a -0.20% loss on the day.
While Aussie surpassed the 0.79 handle and remains lifted correlating gains seen in the Kiwi after the annual Budget release, which promised sound economic management and hinted at tax cuts while forecasting a surplus of $176 million in the 2015/16 year. Markets shrugged off below estimates Chinese manufacturing data with HSBC's flash Purchasing Managers' Index (PMI) having risen to 49.1 in May from a final reading of 48.9 in April.
Heading into Europe - centered on EUR, GBP
There is a lot to report in the European session, starting-off with a raft of flash services and manufacturing PMI reading across the Euro area economies, followed by UK retail sales. ECB Monetary Policy Meeting Accounts will end the day-heavy EUR calendar.
The flash manufacturing PMI for Germany is expected to register a downtick to 51.9 from 52.1 recorded in April, while the index for the services sector is also projected to edge lower to 53.8 from the 54.0 recorded in the previous month.
France's flash manufacturing PMI is seen ticking up to 48.5 in May from 48.0 measured in the month before. The services sector is expected to come in at 52.0, slighter higher than the 51.4 recorded in April.
The forecast for the EU flash manufacturing PMI shows a downward move to 51.8 for May from 52.0 recorded a month ago. The EU's services sector is also expected to make a downtick to 53.8 from 54.1 reported the month before.
The UK will report April retail sales figures, with monthly figures firmer compared to those reported a month ago. Growth of 0.3% is expected m/m, while 3.6% is expected on an annual basis.
Finally, the ECB will release an official account of its most recent monetary-policy meeting on April 15. The report will be published at 11.30GMT.
EUR/USD Technicals
MacNeil Curry, CFA, CMT, Technical Strategist at Bank of America Merrill Lynch, notes, "€/$ has broken below the confluence of near term support at 1.1165/1.1131 (2m, old channel resistance, now support and the May-11 low). As highlighted in the most recent KrystalBull, a break below here is needed to indicate a top and resumption of the long term bear trend. Going forward, bounces should be sold. Next support to note is seen at 1.1053/1.1036 (old Mar/Apr highs), but these should be only a temporary stopping points ahead of 1.0535/98 (2m channel base), then 1.0462 (Mar-16 low), and then the 1.0283, long term targets."
Key headlines in Asia
China HSBC PMI misses expectations in May
NZ 2014/15 budget deficit slightly wider-than-forecast
NZ budget: No impact on ratings, outlook - S&P
NZ budget: Supports Aaa rating, stable outlook - Moody's
Dominating themes in Asia - centered on JPY, AUD, NZD
A quiet Asia, with New Zealand’s annual budget driving the Antipodeans higher amid broad based US dollar weakness. Traders continue to absorb the latest FOMC minutes released yesterday which revealed that a rate hike is doubtful at the next FOMC meeting in June, thereby weighing on the greenback. Meanwhile, USD/JPY trades in red near session lows just ahead of 121 levels, recording a -0.20% loss on the day.
While Aussie surpassed the 0.79 handle and remains lifted correlating gains seen in the Kiwi after the annual Budget release, which promised sound economic management and hinted at tax cuts while forecasting a surplus of $176 million in the 2015/16 year. Markets shrugged off below estimates Chinese manufacturing data with HSBC's flash Purchasing Managers' Index (PMI) having risen to 49.1 in May from a final reading of 48.9 in April.
Heading into Europe - centered on EUR, GBP
There is a lot to report in the European session, starting-off with a raft of flash services and manufacturing PMI reading across the Euro area economies, followed by UK retail sales. ECB Monetary Policy Meeting Accounts will end the day-heavy EUR calendar.
The flash manufacturing PMI for Germany is expected to register a downtick to 51.9 from 52.1 recorded in April, while the index for the services sector is also projected to edge lower to 53.8 from the 54.0 recorded in the previous month.
France's flash manufacturing PMI is seen ticking up to 48.5 in May from 48.0 measured in the month before. The services sector is expected to come in at 52.0, slighter higher than the 51.4 recorded in April.
The forecast for the EU flash manufacturing PMI shows a downward move to 51.8 for May from 52.0 recorded a month ago. The EU's services sector is also expected to make a downtick to 53.8 from 54.1 reported the month before.
The UK will report April retail sales figures, with monthly figures firmer compared to those reported a month ago. Growth of 0.3% is expected m/m, while 3.6% is expected on an annual basis.
Finally, the ECB will release an official account of its most recent monetary-policy meeting on April 15. The report will be published at 11.30GMT.
EUR/USD Technicals
MacNeil Curry, CFA, CMT, Technical Strategist at Bank of America Merrill Lynch, notes, "€/$ has broken below the confluence of near term support at 1.1165/1.1131 (2m, old channel resistance, now support and the May-11 low). As highlighted in the most recent KrystalBull, a break below here is needed to indicate a top and resumption of the long term bear trend. Going forward, bounces should be sold. Next support to note is seen at 1.1053/1.1036 (old Mar/Apr highs), but these should be only a temporary stopping points ahead of 1.0535/98 (2m channel base), then 1.0462 (Mar-16 low), and then the 1.0283, long term targets."