9 Jun 2015
Poor China CPI – a drag in Asia, UK Trade data – Next up
FXStreet (Mumbai) - Broad based US dollar softness remained the underlying theme in Asia, largely undermined by rising EUR/USD on optimism surrounding Greece solution. The Antipodeans maintained an offered tone, pressured by downbeat China’s CPI and PPI readings. While USD/JPY failed to hold 125 barrier and erased gains subsequently to now trade muted around 124.50.
Key headlines in Asia
China remains stuck in low inflation cycle
Australia's NAB business survey improves significantly in May
Australia ANZ Job Advertisements down to 0% in May from previous 2.3%
Dominating themes in Asia - centered on JPY, AUD, NZD
The Aussie wavers around 0.77 barrier, after the pair was ran through fresh offers around 0.7720 on the release of poor Chinese consumer and producer prices print which added to the concerns about Chinese demand slowing. The Kiwi also gave back previous gains and trades near 0.71 handle on profit-taking as also on China woes.
While USD/JPY failed to hold 125 barrier and erased gains subsequently to now trade muted around 124.50. The drop in the dollar-yen pair was on the back of broadly weaker greenback after the EUR/USD pair pierced through 1.13 handle and extended beyond following a report from Reuters that Greece might be more flexible on its demands, so that a much-needed compromise with its international creditors is sealed.
Heading into Europe - centered on EUR, GBP
A data-thin EUR calendar to extend for the second straight session, with UK’s trade balance, the only data that will be closely watched. While the 2-tier data in Euro zone revised GDP q/q will also be published with negligible impact expected on the EUR/USD pair.
The UK is expected to report a negative trade balance of £2.7 billion for April, compared to the negative £2.817 billion balance in March. While Euro zone GDP growth in Q1 is expected to be at least 0.4% q/q in Q1, while growing 1.0% annually.
Greece headlines are expected to dominate in the session ahead with Athens and its creditors trying to find a compromise to clinch a deal. While G7 leaders’ summit in Germany will continue on the global economy and very likely Greece as well.
In the North American session, JOLTS Job openings and Wholesale inventories data will be report which is expected to have limited impact on the USD moves.
EUR/USD Technicals
Niall O'Connor, FX Strategist at JP Morgan Securities, notes, "For EUR/USD, the failure to extend below the important 1.0815/1.0744 support zone (76.4% retracement from March low) implies a growing risk that a higher-low has formed within the broader corrective process. Still, important resistance levels are holding as the focus is now on the 1.1468/1.1534 resistance zone (May./Feb highs) which will define whether another leg to this advance is underway. Upside breaks of this key resistance area would confirm the onset of a deeper recovery into the 1.18 resistance zone (38.2% retracement May ’14 and 200-day moving average). We view the bullish shift and breakout through key levels for the EUR crosses as part of a deeper corrective phase."
Key headlines in Asia
China remains stuck in low inflation cycle
Australia's NAB business survey improves significantly in May
Australia ANZ Job Advertisements down to 0% in May from previous 2.3%
Dominating themes in Asia - centered on JPY, AUD, NZD
The Aussie wavers around 0.77 barrier, after the pair was ran through fresh offers around 0.7720 on the release of poor Chinese consumer and producer prices print which added to the concerns about Chinese demand slowing. The Kiwi also gave back previous gains and trades near 0.71 handle on profit-taking as also on China woes.
While USD/JPY failed to hold 125 barrier and erased gains subsequently to now trade muted around 124.50. The drop in the dollar-yen pair was on the back of broadly weaker greenback after the EUR/USD pair pierced through 1.13 handle and extended beyond following a report from Reuters that Greece might be more flexible on its demands, so that a much-needed compromise with its international creditors is sealed.
Heading into Europe - centered on EUR, GBP
A data-thin EUR calendar to extend for the second straight session, with UK’s trade balance, the only data that will be closely watched. While the 2-tier data in Euro zone revised GDP q/q will also be published with negligible impact expected on the EUR/USD pair.
The UK is expected to report a negative trade balance of £2.7 billion for April, compared to the negative £2.817 billion balance in March. While Euro zone GDP growth in Q1 is expected to be at least 0.4% q/q in Q1, while growing 1.0% annually.
Greece headlines are expected to dominate in the session ahead with Athens and its creditors trying to find a compromise to clinch a deal. While G7 leaders’ summit in Germany will continue on the global economy and very likely Greece as well.
In the North American session, JOLTS Job openings and Wholesale inventories data will be report which is expected to have limited impact on the USD moves.
EUR/USD Technicals
Niall O'Connor, FX Strategist at JP Morgan Securities, notes, "For EUR/USD, the failure to extend below the important 1.0815/1.0744 support zone (76.4% retracement from March low) implies a growing risk that a higher-low has formed within the broader corrective process. Still, important resistance levels are holding as the focus is now on the 1.1468/1.1534 resistance zone (May./Feb highs) which will define whether another leg to this advance is underway. Upside breaks of this key resistance area would confirm the onset of a deeper recovery into the 1.18 resistance zone (38.2% retracement May ’14 and 200-day moving average). We view the bullish shift and breakout through key levels for the EUR crosses as part of a deeper corrective phase."