• AUD/NZD extends the upside trend, taking on the 1.07 handle. 
  • Commodities tugged and pulled by oil, but AUD carries on regardless. 

AUD/NZD has rallied to test the vicinity of the 1.07 handle having surged in the last few sessions from a touch below the 1.06 handle, extending the rally from the 1.0480s earlier in the month. At the time of writing, AUD/NZD is trading at 1.0698 within the session’s range of 1.0676 and 1.0711. 

Commodity complex seeking traction

AUD has been in great shape of late, ploughing through key technical resistance in the 0.64 handle and defying gravity at the start of this week, holding on to positive territory. In an improved risk environment, the commodity complex has been trying to find traction, although the price of oil continues to weigh heavily, dragging on the market in general. “The ANZ China Commodity Index ended the session down 2.7%, driven by a sharp fall in the energy sector (-9.6%),” analysts at ANZ Bank explained today.

“This cast a pall over the rest of the sector. Bulk commodities fell as iron ore and coking coal prices remained under pressure. Weakness in sugar and palm oil also weighed on the agriculture sector. Industrial metals were mixed, with losses in aluminium and nickel offset by a gain in copper. Precious metals also waned, as gold inched lower.”

Nonetheless, AUD/USD was by far the strongest G10 currency, up 1.4% over the day to 0.6460, including a 6 week high of 0.6472. The kiwi also had a strong +0.5% performance vs the USD but is in danger of a trip towards the 1.09 handle vs the Aussie if bears do not step in soon as the cross prints highs, not seen since the 13 November 2019 RBNZ meeting. However, in reality, there is very little to distinguish AUD and NZD, but this is certainly a case of “the trend s your friend.” 

AUD/NZD levels

 

  • USD/MXN bounces off short-term ascending channel’s support, 38.2% Fibonacci retracement.
  • Mid-month high offers additional downside filter.
  • Further upside needs to cross the channel’s resistance line ahead of probing the monthly high.

USD/MXN defies the previous day’s pullback while rising 0.20% on a day to 24.75 amid the early Asian session on Tuesday.

While overbought RSI conditions could be traced as a reason for the pair’s week-start pullback, support-line of a two-week-old rising trend line and 38.2% Fibonacci retracement of March 26 to April 06 upside, near 24.65, seems to have triggered the quote’s latest bounce.

That said, the pair currently witnesses recovery moves towards 25.00 and then to the 23.6% Fibonacci retracement near 25.10.

However, the upper line of the said channel, currently near 25.50, could then challenge the buyers targeting to refresh the monthly top of 25.78.

On the downside, the pair’s break of 24.65 can quickly fetch the quote to April 16 high close to 24.40 ahead of highlighting 61.8% Fibonacci retracement level of 23.98 for the sellers.

USD/MXN four-hour chart

Trend: Bullish

 

  • NZD/USD snaps three-day winning streak.
  • New Zealand PM Ardern claims the elimination of coronavirus while easing lockdown restrictions to level 3.
  • US President Trump strikes upbeat tone, New South Wales Premier announces leeway to virus-led restrictions.

Despite the recovery in New Zealand’s coronavirus (COVID-19) status, NZD/USD drops to 0.6030 amid the early Asian session on Tuesday. With that, the Kiwi pair defies the previous three-day recovery moves from 0.5910.

As per the CNN news, New Zealand PM Jacinda Ardern said that the coronavirus was “currently” eliminated but that the country needed to remain alert and could still expect to continue to see new cases.

“The country moved to level 3 at 11.59 PM on Monday, easing some of the restrictions of the level-4 living of the past four-and-a-half weeks – including another 400,000 Kiwis returning to work and the lifting of fast-food restrictions,” said the New Zealand Herald.

Also on the positive side could be recoveries in the virus status at the largest customer Australia. The latest easing of lockdown restrictions in New South Wales suggest that Australia is also joining New Zealand as far as the virus status is concerned.

On the other hand, US President Donald Trump struck an upbeat tone during his first coronavirus task force briefings while saying that all parts of the country are either in good shape or in all cases getting better in terms of coronavirus.

The markets cheered nearness to easing lockdown restrictions during the early-week with the broad US dollar weakness and upbeat performances by the commodity-linked lockdown. However, the latest pullback in the Kiwi seems to have taken clues from US President Trump’s comments.

That said, the risk-tone sentiment also seems to pair the previous optimism with the S&P 500 Futures declining 0.06% to 2,867.40 by the press time.

Looking forward, a lack of major data/events in Asia keeps the Kiwi traders directed towards the virus updates for fresh impulse.

Technical analysis

Unless breaking the 75-pip area between 50-day and 21-day SMA, respectively around 0.6070 and 0.5995, the NZD/USD prices are less likely to offer any clear signal.

 

US President Donald Trump has been speaking today in a White House Press briefing. Trump’s comments are flipping from one subject to the next but are centred around reopening the US economy.

Trump is foreseeing schools soon welcoming students back as US states to begin to thaw the freeze they put on daily life in hopes of slowing the global coronavirus pandemic, even though there are only a few weeks left of classes in most schools’ terms.

“I think you’ll see a lot of schools open up, even if it’s for a very short time,” Trump said from the Rose Garden, where he also said “young people seem to do very well” in terms of “what this vicious virus goes after.”

Key notes

  • All parts of the country are either in good shape or in all cases getting better in terms of coronavirus.
  • Trump says he thinks a lot of schools will open up even if only for a short period of time.
  • no one knows where the North Korean leader is yet.
  • Says we will have a fantastic next year and 4q will be spectacular.
  • Trump confirmed he is not thinking of changing election date.
  • Travel restrictions on europe will depend how they are recovering from virus impact.

Trump blames China

However, Trump has also emphasized that the US is doing a “serious investigation of China’s actions in response to the coronavirus outbreak”. Trump has been casting blame over Beijing for a lack of transparency over the true extent of the outbreak in China — where cases were first reported. In retaliation, Beijing suggested that Washington might be the real source of the global pandemic.

This obviously puts the trade deal in jeopardy and certainly meaning that we are miles away from a second phase. It could even mean that both teams would have to start effectively from scratch.

 

 

 

 

 

 

  • GBP/USD gradually recovers to a short-term key resistance line.
  • Sustained trading beyond 200-bar SMA, bullish MACD keeps buyers hopeful.
  • 61.8% Fibonacci retracement adds to the upside filters.

While extending its early-week recovery, though modestly, GBP/USD makes rounds to 1.2430 during the early Tuesday’s Asian session. In doing so, the Cable pair nears a downward sloping trend line since March 09 amid bullish MACD signals.

Additionally, the pair’s sustained trading beyond 200-bar SMA and a week-old rising trend line also keep the buyers hopeful.

As a result, the short-term resistance trend line, currently near 1.2460, is on the bulls’ radars ahead of 61.8% Fibonacci retracement of March month downside.

Should the quote manage to successfully cross the 1.2520 Fibonacci retracement level, it can question the monthly high surrounding 1.2650 during the further upside.

Alternatively, the immediate rising support line, near 1.2330, and 200-bar SMA close to 1.2310/05, seem to restrict the pair’s nearby downside ahead of the monthly bottom surrounding 1.2165.

GBP/USD four-hour chart

Trend: Further recovery expected

 

The Premier of Australia’s biggest state (as per population), Gladys Berejiklian, recently announced a small easing in the coronavirus (COVID-19) led lockdowns.

Key quotes

Two adults will be able to go and visit anybody else in their home-based on care, on the basis of reducing socialization and everybody’s mental health.

If you have younger children, you will be able to bring them with you on the visit and they will not count towards the ‘two adults’ total.

FX implications

While the news should have ideally helped the AUD/USD, the pair showed no reaction while taking rounds to 0.6460 by the press time of early Tuesday morning in Asia.

  • USD/JPY remains choppy inside the immediate symmetrical triangle.
  • BOJ’s unlimited QE, downbeat forecasts failed to please the JPY bears.
  • Fed undertakes another targeted measure to combat the liquidity.
  • Fitch anticipates further toll on the US oil companies, downbeat energy prices.

Having pulled back from a two-week low during the late-US session on Monday, USD/JPY consolidates around 107.25/30 ahead of the Tokyo open on Tuesday.

Post-BOJ consolidation or risk-on sentiment?

The BOJ matched wide market expectations while removing an upper limit on its bond purchase capacity while also trimming GDP and CPI forecasts. Even so, the Japanese yen gained bids against the majority of its counterparts.

The reason could be the broad US dollar weakness as well as the recoveries in Japan’s coronavirus (COVID-19) fatalities. Also supporting the JPY might be the overall doubts concerning the global economic performance after the virus recedes.

On Monday, Bloomberg said that New daily cases in Tokyo and across the country on Sunday fell to the lowest since early April, with just over 200 infections reported nationwide in the country of more than 125 million. That compares to more than triple that figure in mid-April.

On the other hand, the CNBC quotes Steve Cochrane, chief Asia Pacific economist at Moody’s Analytics while saying that the Japanese and Singaporean economies could struggle the most in the coronavirus pandemic.

It should also be noted that the recent update from the global rating giant Fitch spread fears of further hardships for the US oil companies while also anticipating additional declines in WTI prices.

To fight against the epidemic, the Fed recently undertook specific measures for the Municipalities while the US President Donald Trump also struck upbeat statements during his regular task force briefings.

Even so, S&P 500 Futures part ways from Wall Street close while declining 0.10% to 2,864 amid the initial trading hour on Tuesday.

Moving on, the March month details for Japan’s employment figures, namely Job/Applicants Ratio and Unemployment Rate, expected 1.4 and 2.5% versus 1.45 and 2.4% respective priors, are likely economic catalysts to watch. Other than the data, virus updates will be the key for near-term direction.

Technical analysis

While a descending trend line from March 06, currently near 107.70, keeps exerting downside pressure on the pair, bears will look for entry below 106.90, comprising lows marked so far during the month.

 

Having suspended the daily Coronavirus (COVID-19) Task Force Briefings for Saturday and Sunday, US President Donald Trump struck an upbeat tone at Monday’s press conference.

Key quotes

All parts of the country are either in good shape or in all cases getting better in terms of coronavirus.

We have conducted more than 5.5 million screenings for coronavirus in the US.

FX implications

The news fails to offer any meaningful direction to the markets after the latest risk-on sentiment. However, the S&P 500 Futures opens with a negative mark during the early Asian session on Tuesday.

Australian Treasurer Josh Frydenberg recently crossed wired while staying to present a statement in the Parliament on May 12. The diplomat also signaled to update economic and fiscal outlook in June.

Key quotes

Will make a statement to parliament on May 12.

To outline the impact of the coronavirus outbreak on the economy.

To then provide an update on the economic and fiscal outlook in June.

FX implications

Amid the currently risk-positive market sentiment, coupled with the early in the Asian session, the AUD/USD paid a little heed to the news while taking rounds to 0.6460.

  • AUD/USD remains on the front foot near the multi-week high.
  • Expectations of easing lockdowns in Australia, New Zealand and many other developed economies seem to favor the latest upbeat sentiment.
  • Fed announces measures to propel Municipal liquidity.
  • A light economic calendar in Asia will keep virus updates in the spotlight.

AUD/USD continues to benefit from the risk-on sentiment while taking the bids to 0.6465 at the start of Tuesday’s Asian session. In doing so, the Aussie pair not only registers the five-day winning streak but also nears the highest levels since March 12, 2020.

Hopes of easing lockdown backs measured optimism…

The market’s latest risk-on sentiment might have taken clues from the expectations of easing lockdowns in major economies, including Australia, amid the further flattening of the curve. That said, the global scientists are still grappling to find the cure of the coronavirus (COVID-19), neither there is any major recovery in the virus fatalities.

Also contributing to the pair’s strength could be the US dollar’s weakness amid downbeat economics and hopes of further weakening in the GDP. In addition to the downbeat Dallas Fed Manufacturing Index, -73 versus -70 prior, comments from the White House Council of Economic Advisers Chairman Kevin Hassett also weighed on the greenback.

Recently, the Federal Reserve announced further measures to combat the pandemic. The US central bank took specific measures to propel liquidity into the Municipalities.

On the other hand, the Aussie Treasurer said to present the impact of the epidemic on the economy during May 12 parliament while also likely to provide an update on the economic and fiscal outlook in June.

Amid all these plays, the US 10-year Treasury yields rose six basis points (bps) to 0.664% with Wall Street also cheering the risk-on by the end of Monday’s session.

Given the lack of major data/events on the economic calendar, traders will keep eyes on the virus updates, starting with the immediate coronavirus task force briefings from the US, for fresh impetus.

Technical analysis

A sustained break beyond the mid-month high surrounding 0.6445, not to forget a successful clearance of 50-day SMA, currently near 0.6310, enables the bulls to aim for a 100-day SMA level around 0.6580 during the further upside.