The Aussie is shifting lower against the Yen as a lack of data and confidence saps the AUD.
Japan merchandise trade figures could kick the mix into gear.

The AUD/JPY continues to grind lower, and the pair is trading near 83.20 in the overnight session.

The Aussie has been losing ground to the Yen since Friday’s peak at 84.07, and the pair is currently chattering along the 83.00 psychological handle ahead of the Tokyo markets.

Wednesday has little data to offer the AUD outside of a monthly update on the Westpac Leading Index at 00:30 GMT, which last printed at 0.3 percent, and the notable events for the Aussie will be unemployment figures dropping on Thursday.

The Yen sees some mid-tier figures in the pre-market, with Merchandise Trade Balance numbers at 23:50 GMT late Tuesday before the midnight rollover. The March Trade Balance is expected to surge from 2.6 billion Yen to 498.3 billion, with Imports forecast to fall from 16.6 percent to 5.4, and Exports expected to jump from 1.8 percent to 4.7.

AUD/JPY Levels to watch

The current level to beat for Aussie bears is support from the 83.00 major level, while 82.65 could be the next level down, and resistance is sitting heavy at Monday’s high of 83.65 and Friday’s peak at 84.00.

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Head of the Atlanta Federal Reserve, Raphael Bostic, is speaking at a conference hosted by Bloomberg Tax in Atlanta.

Key highlights:

Bostic hears consistent complaints about ‘labor shortages’.

The Fed’s policy goals should be to develop a more neutral stance.

The US economy is in a ‘good place’, healthy.

Bostic expects inflation to begin building.

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Analysts at ANZ noted that China announced “anti-dumping” tariffs against US sorghum imports (USD957m worth last year) at a hefty 179%. 

Key Quotes:

“However, in a bit of give and take, it announced that foreign car makers would have greater freedom to compete in the Chinese market, allowing them to own more than 50% of local ventures. This ends a two-decade restriction.”

“Fears of trade trouble have no doubt partly explain sharp declines in the expectations components of key business and manufacturing surveys globally such as the German and EU ZEW overnight, and the Empire Manufacturing Survey in the US.”

“Nonetheless the IMF overnight maintained its global growth forecast for this year and next at 3.9% y/y. It upgraded the US and EU forecasts, but beyond this is expecting growth to soften.”

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Analysts at Westpac offered their review of the US and European session noting that US and European equities rallied with help from ongoing strong US corporate earnings reports. 

Key Quotes:

“UK Feb unemployment dropped to a 43 year low of 4.2% (f/c steady at 4.3%). Employment rose 55k (3m/3m) and average weekly earnings ex-bonus rose 2.8% y/y (both as expected), though the headline wage rise of 2.8%y/y was below the market forecast of 3.0% y/y. This seemed to be the catalyst for GBP/USD slipping from a post-Brexit high of 1.4377 to a NY afternoon low of 1.4283.

The April ZEW survey of investors’ economic expectations for Germany (-8.2 vs exp -1.0, prev 5.1) and Eurozone (1.9, prev 13.4) pulled back more severely than expected, though current conditions at 87.9 were in line (88.0 from 90.7). The slowdown in core Eurozone survey and activity data is now exceeding anticipated mild moderation and will increase attention on next week’s business sentiment surveys.

EUR/USD rallied to 1.2415 in the London morning but slipped after the ZEW data to be about flat on the day. USD/JPY ranged sideways between roughly 106.90 and 107.20. AUD/USD traded a 30 pip range, peaking at 0.7791 when EUR and GBP were also cresting. The kiwi underperformed, NZD/USD -0.3% on the day so that AUD/NZD rose 0.3 cents to 1.0585.

Despite the rise in equities, longer-term US treasury yields fell fractionally, although shorter-term yields did rise. The US 10yr treasury yield edged down to 2.81%, while 2yr yields extended a multi-year uptrend to almost 2.40% – the highest since 2008. Fed fund futures yields continued to price the next rate hike in June around a 90% chance (Bloomberg calculations).

Fed commentary came from centrist Williams, who expected the Fed to continue its gradual tightening, hawk Harker, who thought the labour market was tight; and dove Evans, who saw the economy as “firing on all cylinders” and expected the Fed to gradually raise rates over the next two years.”

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Tuesday saw the AUD/USD trapped in a 30-pip range.
Wednesday isn’t looking much better with little meaningful data on the docket.

The AUD/USD has continued to middle this week, and the pair is hanging around 0.7770 in the overnight session.

The Aussie has been trapped within Friday’s range for two consecutive trading days, and the trend is likely to continue with little data on the economic calendar for Wednesday to drive the AUD from its seat. Thursday will bring Australian unemployment figures at 01:30 GMT, and the seasonally adjusted Unemployment Rate for March is expected to decrease from 5.6 percent to 5.4, but with wage growth stifled within the Australian economy, an improving employment picture is unlikely to drive buyers very far.

RBA minutes: Gradual approach to policy – Westpac

The AUD’s outlook continues to tilt to the bearish side as the Reserve Bank of Australia (RBA) muddles through slumping growth prospects, and as FXStreet’s Ross Burland noted earlier, “from a fundamental perspective, the RBA minutes are supportive of a higher Aussie on the basis that the board leans with a hawkish bias, ( RBA said next move in rates was likely a hike), although there is a lack of conviction here and risks to such an outlook continue to accumulate.”

AUD/USD Levels to watch

As stated by FXStreet’s own Valeria Bednarik, “the pair is neutral-to-bullish according to technical readings in the 4 hours chart, developing above a modestly bullish 20 SMA, and with technical indicators lacking directional strength within positive territory. The pair is also above the 0.7740 Fibonacci level, which limits the risk of a downward move.”

Support levels: 07740 0.7700 0.7765

Resistance levels: 0.7785 0.7820 0.7850

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Goldman Sachs, Netflix, and IBM beat expectations in the first quarter of 2018.
The market is focusing on corporate earnings and is putting aside worries over China, Russia, and Syria.
The three main US indices shot higher in Tuesday’s trading, along with the US dollar. 

US stocks made some solid gains on Tuesday. The S&P 500 index rose 1.1% or 28.54 points to 2,706.38. The Dow Jones Industrial Average climbed 0.9% or 213.59 points to 24,786.63, closing in the green for the year while the Nasdaq Composite Index soared 1.7% or 124.81 points to 7,281.10. The US Dollar Index (DXY) rose to 89.67 intraday and is now consolidating in the 89.50 region.

The market clearly decided to shift its focus to corporate earnings and downplay the risks associated with China, Russia and Syria geopolitical tensions. At the beginning of the week, the market was unsure of how the US-Russia relations would develop after the airstrike on Syria. It turns out that for now, the White House is refraining to make any move on Russia. 

“The risk trade, especially the “Russia-risk” trade, has received a bona fide adrenalin boost — US president Trump surprised by scrapping the push for new sanctions. The move, together with the tenor of the US-led strike in Syria, signals a tempered de-escalation may be playing out.” according to Mark Bradford at BCS Global Markets.

Goldman Sachs’ first-quarter results beat analysts expectations. With “revenues of $10.04 billion versus expectations of $8.74 billion.” and “earnings per share of $6.95 versus expectations of $5.58” according to Thomson Reuters. Additionally, the revenue from equities trading jumped 38 % to $2.31 billion versus the $1.92 billion forecast by FactSet. 

Netflix jumped a whopping 9% after reporting earnings. Its revenue rose to $3.7 billion versus $3.69 billion expected, according to Thomson Reuters. “We’re investing in more marketing of new original titles to create more density of viewing and conversation around each title,” said Netflix in a statement.

IBM reported above expectation earnings: “$2.45 per share, excluding certain items, vs. $2.42 per share expected by analysts” according to Thomson Reuters. While its revenue was: “$19.1 billion, vs. $18.84 billion as expected by analysts” according to Thomson Reuters.

S&P 500 daily chart

The index broke above the 50-period simple moving average and is testing the 100-period simple moving average. Support lies at 2,650 swing low (early March) and at 2,551.75 cyclical low. Resistances are seen at 2,713.44 (100-period SMA) and at 2,800 swing high. The momentum is bullish.

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NZD/USD: taking out the rising 10-D SMA? Where next? 
NZD/USD: a fickle dollar and commodities offering support to the bird. 

NZD/USD has been tugged and pulled by flows in the greenback making for a fickle display in the DXY.  Various trade headlines have been flowing around simmering trade war angst and Fed speakers have been laying the foundations for future rates hikes. 

NZD/USD started out the US session around 0.7340 and was pressured by a strong dollar to kick off the shift that took out the European session low to mark territory towards 0.7320, at 0.7326 and a few pips below the 10-d SMA at 0.7329. 

Kiwi supported by commodities 

The DXY struggled at 89.50 and commodities got a break. the Kiwi followed suit of the dollar weakness and bounce in commodities and rallied to a session high of 0.7344, underpinned by the milk auction results, (GDT PI +2.7% & WMP +0.9%), where the bird flew above the 200-H SMA. The greenback had already picked up another bid to 89.66 the high and the Kiwi consolidated late in the day between 44 and the 10-hr SMA at 0.7337.

NZD/USD levels

NZD/USD is looking for space on the 0.74 handle while supported by the rising 4hr-50 SMA in a correction of the 0.7370 sell-off. the first hurdle will be the congestion between there and 0.7350. Daily technicals, however, remain bearish with the RSI biased down and penetration of the rising 10-D SMA. Of the same note, the monthly technicals are also leaning bullish.

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The US dollar strengthened as risk appetite prevailed on Wall Street.
The USD/JPY is trying to stabilize at the 107.00 handle. 

The USD/JPY has traded mainly sideways in Tuesday’s trading. The bears tested last week’s open at 106.94 but were unable to close below it maintaining the pair supported at the 107.00 handle.

Earlier in the day, Fed’s Evans made some hawkish comments saying: “The U.S. Economy is firing on all cylinders” and “ the Fed can raise rates gradually without risk of inflation surge.” More details here.

Wednesday will see three Fed officials’ speeches throughout the day. 

The US dollar strengthened as investors decided to focus on the stellar corporate earnings on Wall Street. The three main indices, the S&P 500, the Dow Jones and the Nasdaq jumped higher on Tuesday breaking key technical levels. The US Dollar Index found a floor at 89.23 in the early European session and is now trading close to the 89.50 level. Supporting the buck is also John Williams, San Francisco Federal Reserve President, who earlier in the day in a speech said that he sees median interest rates in the US hovering between 3% and 4% by 2020. Further collaborating to USD strength were the better-than-expected US housing and industrial data released earlier. The market is temporarily putting aside worries of trade wars and potential Russian sanctions (those ones are for now on hold according to the latest news).

Further on, Japanese low-tier macroeconomic data is expected at 23:50 GMT with imports/exports numbers and the Merchandise Trade Balance which are not considered market movers.

USD/JPY 4-hour chart

Immediate support lies at 106.87 (low of the day) and then at 106.61 swing low while resistance is seen initially at 107.41 swing high and then at 107.79 swing high.

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Crude oil erases losses as USD losses momentum.
WTI barrel rebounded from  6-day lows. 

Crude oil prices rebounded during the American session and erased daily losses. The WTI bottomed earlier at $65.54 a barrel and then bounced back. Near the end of the session, it was hovering slightly above $66.50, around the same levels it closed yesterday ahead of key data. In about an hour, the American Petroleum Institute (API) will release the weekly crude oil inventory report. 

The recovery from the lows took place amid a retreat of the greenback. The US Dollar trimmed gains on US hours. US Dollar Index Futures peaked at 89.34 following the release of upbeat US economic data but then pulled back, finding support above 89.10. 

The move off lows could signal the end of the 3-day correction from multi-year highs. Lat Friday the barrel reached at $67.70 the highest since 2014. API data could boost crude oil prices back above $67.00 or favor more corrective moves. 

WTI Technical levels 

To the upside, resistance levels might be seen at $66.65 (Apr 13 low), $66.95 and $67.45. On the flip side, support could be seen at $66.10 (Apr 16 low), $65.10 (Apr 11 low) and $64.30. 

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Analysts at Wells Fargo, explained that real GDP growth in China was 6.8% y/y in Q1, the third consecutive print of this magnitude. They noted that a deceleration in investment spending “presages a gradual slowdown in economic growth in the coming quarters.” 

Key Quotes: 

“Real GDP growth in China met expectations for Q1-2018, matching the Bloomberg consensus forecast of 6.8 percent year over year. Economic growth in China has been remarkably stable over the past couple of years as policymakers have worked to engineer a “soft landing” as the economy enters a more mature phase of its development”.

“Retail sales growth rebounded strongly in Q1 after hitting a mild soft patch to end Q4-2017. In the press release from the National Bureau of Statistics of China, the agency noted an acceleration in services output in March, suggesting solid momentum heading into Q2. However, investment spending and industrial production both decelerated in March. In part, this reflects a conscious effort by Chinese policymakers to shift the economy towards a more consumption oriented model of growth. Trade also likely contributed to growth in Q1.”

“On balance, today’s report reaffirms our outlook for the Chinese economy. Economic growth remains firm, boosted by the cyclical-upturn in the global economy. However, we believe structural factors will continue to weigh on economic growth over time. Decelerating investment spending and an aging population are the ingredients for slowing potential growth. In addition, Chinese policymakers recognize the possible threat from high leverage in the nonfinancial corporate sector and have taken steps to slow credit growth.”

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