Aussie weakens

The Australian dollar tumbled today after surprisingly weak inflation numbers, while the US dollar and the yen are in defensive positions in anticipation of the Fed and BoJ meeting. The Australian dollar fell more than 1% in the morning and was trading at 0.7635 after data showed that consumer price index in Australia unexpectedly fell by 0.2% in January to March.

Preliminary estimates were for a rise of 0.3%. This number increased the speculations that RBA will defend its inflation target by cutting interest rates. The Australian dollar rose this month by almost 15% compared to seven year low in January, thanks to a recovery in commodity prices. Growing expectations of a reduction in interest rates, however, may stop the rally.

AUD/USD is trading sharply lower, currently at 0.7592, as ahead of the publication of the inflation figures the pair plunged with 1.65% to 0.7619.

Meanwhile AUD/JPY dropped below 85 mark, dragging down the aussie with 1.6%. 

US durables weaker than expected, Euro pushed higher

New orders for US durable goods in March increased by 0.8% to $230.7 billion amid the expectations for an increase of 1.9%, following the February decrease of 3.1%.

Shipments and unfilled orders are down with respectively 0.5% and 0.1%, inventories remain unchanged.

The big knock of the increase with 48.4% are the defense new orders for capital goods.

Encouraged by the weak numbers, the Euro reacted with positive mood and climbed more than 0.50% against the USD to trade at 1.1330. Once overtaking this level, we may expect further increase to the stronger resistance level at 1.1340. 

Asian markets posted mixed trading

Ahead of notable decisions that are expect to be taken by Bank of Japan (BoJ), the Reserve Bank of New Zealand (RBNZ) the Federal Reserve (Fed), market participants are playing cautiously today. Lunacy started to conquer first Asian markets with pushing Japan equities lower but Chinese higher in the early trade on Tuesday.

The Chinese Shanghai Composite index increased with 0.64% to 2 965.40 points, and Hong Kong’s  Hang Seng climbed with 0.48%.

Japan’s Nikkei 225 dropped with 0.49% to 17,353 points, and South Korean’s Kospi closed 0.25% up to 2 019.63 points.

The Australian benchmark S&P/ASX 200 index fell 0.30% to 5 220.64 points.

Energy companies in the region traded mixed. Australian Santos reported a decline of 3.68%, while Japan's Inpex and Japan Petroleum recorded decreases of respectively 1.5% and 1.05%. Australia's Woodside Petroleum shares rose 1.44%, while China's Sinopec marked an increase of 1.46%.

The main exporting companies in Japan enrolled mostly downs. Shares of Toyota fell 0.72%, Nissan and Honda are down with respectively 0.99% and 0.69%. Sony reported an increase of 0.51% and Mitsubishi Motors wiped nearly 10% of the share prices.

Australian iron ore miners finished with declines after the steel-making component sloped to $66 per tonne. Fortescue Metals dipped with 6.25% and heavyweights BHP Billiton and Rio Tinto fell respectively with 3.06% and 2.95%.

Oil

Oil prices rocked high to $44.50 and walked out the past week with almost $44. An announce of support turned to be the aching OPEC plan for a meeting in May. This factor is not the only glint that walks alone. Vital signs popped along with advantageous data from China, where imports in March shined with historical levels of 7.7 million barrels, or 21.6% more yoy. 

The Doha soundtrack is fading away even a bearish echo interfered the market participants.

A kind of versatility glowed up with some short-term rays brought by the big supply disruption in Kuwait and further declines in US production.

But clouds over the greenback usually tremble the oil market. Last week the US dollar crumbled down and investors reconsidered their track after pushing prices to 5-month highs.

Today the futures for WTI rolled down with 1.92%  to trade at $42.80, Brent slid with 1.02% to $44.65.

The picture can not come alive without fundamentals. On Tuesday and Wednesday latest US supply trends are due. This will be carefully followed by market participants as a small impulse may stir the markets.

The oil prices fell to extremely low levels with lost track of speed. This in fact turns to be an oversold tool and a momentary price increase is quite likely.

So until my words dry out, oil market suggests developing potential, that is not put in all of the papers.

EUR/USD

EUR/USD was trading today below the robust resistance level at 1.13 and the expected upward movement turned to be tight.

During the early US session the pair was trading around 1.125 level where the US dollar marked daily lows.

Earlier today the German Ifo surveys frustrated the markets, but nonetheless the Euro stayed elevated.

Immediate support downwards is seen at 1.1237 /38% Fibonacci retracement level/ with staying exposed for breaking 1.1215 /24% Fibonacci etracement level/.

The macroeconomic agenda for tomorrow will present the US durable goods orders for March and we may expect further support over the pair. 

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Commodities

Gold lost momentum on Wednesday and slid 0.53 % to $1245.70, pressured by the strong greenback. US gold futures for April delivery traded at levels of $1253.20, having topped a high at $1.260 overnight after rebounding from the bottom at $1.230 before.

Meanwhile silver continued its strong performance, having managed to rise by 11% this month to over $17. Intraday high was registered at $17.40 and low at $16.93. Silver showed best performance with its highest level from May 2015 onwards.

Increases in equity markets twisted with rising oil prices provided strong support for metals. Copper rose 0.7% to $224.

The rally in oil prices continues after black gold managed to grow by over 7.5%, reaching a five-month high of $44. Brent crude rose to $45.80. Oil was boosted by the stockpiles data in the US for the week to April 15.

Gingerly trading ahead of ECB meeting

In early trading today the US dollar and the Japanese yen recorded a slight rise against other major currencies following the drop in oil prices and the  Asian stock markets.

The subsequent stabilization of stock markets in Europe turned back a part of yesterday's risk appetite in currency markets, parrying the appreciation of both major currencies.

The euro consolidated between 1.1350 and 1.1388 US dollars, as investors' attention is focused on tomorrow's regular meeting of ECB. Although it is not expected the central bank to make changes in its stimulating monetary and interest rate policy, Mario Draghi’s press conference is widely awaited with interest, because he will most likely confirm that the central bank stands ready to take further measures if necessary.

The decline in Asian markets and negative start on European stock markets initially led to a fall of the US dollar to 108.77 yen and of the euro to 123.54 yen before the subsequent stabilization of the capital markets in Europe returned USD and EUR to respectively 109,37 and 124,33 levels.

A new dawn

It’s a new dawn, it’s a new day and the oil market is surfing over a new wave.

The Doha failure pushed crude prices down, but some advantage
was taken due to a worker strike in Kuwait.
The collapse was limited by the sharp decline in production in Kuwait meaning that the production in the Gulf dropped by 60% (1.7 mln barrels per day) - slightly more than the surplus flooded world markets in the first half of the year.

But this will affect prices only in the short term. When exports from Kuwait will be completely renewed, the market will once again focus on the ongoing oversupply, which amounts to about 1-2 million barrels per day.

Technically speaking crude oil is facing major resistance at $40.40.
The self-able commodity presented with strong mambo steps on the ballroom market,
recovering from the nailed low at $37.65.      
Hammerlock position will stay closed within the rhythm as long as the resistance at $40.40 keeps the beat on. If the next step would break the support located at $39.40, we may meet the $38.80-$37.16 target.

Diesel and dust

Doha soundtrack crackled with shifting sounds and broken plans.

The global oil producers failed to agree on cutting crude output.

The optimism disappeared when Tehran announced that will not accept these bans,

as Iran screamed to the world after years of economic isolation cut.

Shortly after the meeting in Doha oil prices fell with nearly 8% to $37.60.

Black gold started trading with a decline of $3, Brent even dropped to $40.85.

So the agreement on an output freeze deal into dreamland turns,

but frankly isn’t it a wicked game that the oil market burns

than if there was no meeting at all.  

Bullroars can not be heard in a knock-em-down storm.

EUR/USD in weekly perspective

During the past days the euro crossed the borderline, failing to keep gains and the positive sentiment disappeared. EUR/USD stepped back from the six month highs and in the near future it seems that bears are coming back. 

The cradle of macro news in Europe will be rocked on Tuesday with the euro zone's current account for February and the ZEW report for April.The figure that might cause much stronger volatility is Mario Draghi, who will speak on Thursday’s ECB meeting.  PMIs for April will be presented on Friday.

US macroeconomic agenda has not much to show next week. On Monday evening NY Fed president will speak about trans-Atlantic divergence. Housing starts and building permits for March data will be due on Tuesday. On Thursday will be reported data on jobless claims and Philadelphia  Fed manufacturing and major indicators. I guess not enough significance to turn on the US dollar.

Within the past week the US dollar showed up with a mighty vision as the pair stirred out from the  consolidation zone located between 1.1330 and 1.1440. 

GBP/USD

GBP/USD was grasped by bears on Wednesday and the beating continued today, when earlier in the morning the pair hit $1.4120.

The pound slipped with 0.45% and is trading close to intraday lows around $1.4135. An impulse to the shaky pound was set by the rising frustration of Brexit misgiving.

Some more volatility is expected later on today during the US session.

On the agenda for the day regarding the macroeconomic news, major event is the Bank of England meeting. It is supposed that BoE will leave monetary policy unchanged, along with the main interest rate pinned at 0.5% and the annual pace of QE planned to remain at £375 billion.

The sentiment for the pair remains bearish and we may expect testing of the first support at $1.4100. Immediate resistance is seen at $1.4175 followed by $1.4240. A clear break above that area could lead price to neutral area testing $1.4280. 

To be a rock and not to roll

This passage evokes so many interpretations, 

but what I would label it now is stable.

China’s economy showed a sign of some stabilization,

that woke up the bulls and make them able 

to uplift the European indices and send them to profound elevation.

DAX 30 finished today 2.71% higher reaching 10,026.10 points, 

FTSE 100 jumped with 1.78% and crossed the finish line with 6,353.52 points.

CAC 40 flyed away with 3.32% to 4,490.31 points 

and Euro Stoxx 50 closed with a gain of 3.26% at 3,038.12 points.

The optimism glittered mostly over DAX, 

that was tagged on the stairway of April’s highs.

Above estimates

The new figures from ONS today showed that the UK inflation rate has increased above expectations in March.

CPI is uplifted by 0.5% in March, above the estimates of 0.4% and above February’s

0.3%. The rate has been increasing very softly since October 2015 regardless of the fact that in historical overview, the rate is still low.

The main engine of the rises is the airfreight, along with clothing prices.
Amid the positive data GBP/USD is trading above $1.43 as the pound leaped with 20 pips upon the news.

The intraday technical outlook is positive, following the bullish momentum from yesterday, topped at $1.4286 and while staying above the support located at $1.4200. A stronger resistance could be found at $1.4260 and breaking above it should retarget $1.4320 and most likely $1.4350 in short-term.

Doha soundtrack

The eagerly awaited release is scheduled for 17th of April and it is going to introduce mixed tunes. 

The ongoing supply glut will keep the major beat of the discussion.

Oil prices are located close to the key psychological level at $40 a barrel. Currently the scepticism prevails mainly due to the friction between Saudi Arabia and Iran in terms of a reduction in yield that could ruin the materialization of a potential decision to restrict production in a real downturn.

The hopes of an agreement supported the recent rally, but the chances for such scenario remain weak, having in mind that Saudi Arabia is striving for solo performance.

If  markets fail to meet the desire for production cut, a setback from current levels might be expected.

Within this soundtrack I’m awaiting to here the roar of the bears, twisted with the louder sound of the solid long-term demand for oil.

GBP/USD in weekly prespective

The macroeconomic calendar for the week ahead will flourish with colourful events.

The pound is still chased by the fear of further decline and is about to start running back below the psychological level of $1.40.

GBP/USD is jumping around volatile frustration as the uncertainty enveloped Brexit obsess the pound. But on the other side, the surprising dovishness by Fed has shattered the US dollar and this  trend most possibly will remain in the next few days.

$1.40 - $1.4050 area is yet a key support zone and until up, some upside movement is possible with target levels of $1.4150 and most likely $1.4240. A break below this support might bring back the bears and the pair might rush downwards to $1.3850.

EUR/USD in weekly perspective

The current consolidation  chapter might be closed in the forthcoming days. EUR/USD is welded in a narrow rage and the technical outlook is neutral. Usually breakouts from these ranges are steep and volatile.

From the macroeconomic viewpoint, the  market participant will pay more attention to US data, as the week ahead is full of macro news. We are going to witness several Fed speeches, jobless claim report, along with CPI numbers.

EU macro data will not offer much. On Tuesday will be released the German inflation figures for March (CPI and HICP indices), which will most likely confirm the expectations for increase in inflation. Wednesday will bring the French CPIs for March, followed by euro zone industrial production data for February. The euro zone's CPI for March are due on Thursday.  

The main support for the current bullish momentum is located around $1.1330, where pinned previous peaks. While staying above, the outlook remains bullish with marking next target at $1.1450, despite the consolidation from the few past days.If the support slumps, the euro eventually will plunge to $1.13 or lower, with another major bullish support at $1.12.

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Strobing commodities

Precious metals fell because of the risk appetite of investors. Over six tons of gold were sold minutes before the Fed’s publication. Gold fell to $ 1226.32 an ounce.

The main metals permormed miscellaneous. Copper faced bright future ahead and managed to rise to almost $2.133 for a pound. Aluminum and zinc ended with a fall.

Oil prices returned to growth, gaining more than 3 percent to $ 38 a barrel. The black gold received support from the bad data on US oil stockpiles. For the week to April 1 oil stockpiles fell by 4.9 mln barrels. The expectations of analysts ware for an increase of 3.3 mln barrels.

AUD/USD

A kind of strongest performance was shown today by the Aussie, upholded by the commodity-based currencies that felt a good revival after oil stockpiles dropped last week.

WTI rallied 5.27%  to $37.77 during the US session. Meanwhile EIA reported a 4.9 million decrease in oil barrel inventories last week, rocking out the temple of the hope that the global supply glut is melting away.

Brent was trilled as well and as long as it felt the beat of the news, was trading 5.04% higher to $39.78. Currencies connected to commodities couldn’t run out from this support, including the Aussie.

AUD/USD rebounded on the improved sentiment and rose 0.89% to $0.7608 today and hit an intraday high of $0.7619, which is its strongest level since RBA tried to break down the walls of the self confidence of the currency earlier this week.

Red Monkey into the trendline

The Red Monkey was warmly welcomed and now is fascinating with ambitious, adventurous, sometimes irritable and sizzling characteristics of fire. 

And this fusion is somehow now affecting to where is deeply embedded. 

The energy of the Red Monkey blends so far with several quite significant signs.

On Thursday S&P stripped the credit rating outlooks for China and Hong Kong from stable to negative, facing the increasing economic and financial risks to the mainland government's creditworthiness. Now the forecast for China's economic growth probably will remain at or above 6%  annually over the next three months.

Today the stock markets in Asia started the second quarter with declines. Shanghai Composite erased 1.05%, Shenzhen Composite fell 1.479% and Hang Seng index recorded a decline of 1.17%.

Meanwhile China labelled a record quarterly trove of mergers and acquisitions. $682 bn in global deal activity, $101 bn, or 15%  of that figure involved Chinese buyers. Amazing dealmaking!!!

Some external and cyclical factors affect more to the current slowdown in China’s economy rather than environmental constraints. So even the markets are lost during the last few months and this can not be translated clearly into the trendline, I think that the the country will continue to be a major economic engine of the world, contributing to 30% of world growth until at least 2020.