Easter holidays are still hanging over Asia markets, and volumes will be constrained.
Japan kicks off the week with Tankan data and possible knock-on volatility from China’s Caixin PMIs.

The USD/JPY pair is jostling at the new week’s outset, trading near 106.30 heading into Tokyo’s Monday trading session.

The pair saw a brief flicker of activity, starting the new week near 106.15 before closing the gap and lifting to a pre-market high of 106.40 before bedding back down to wait for the week to get started.

Japan starts off the week with the Tankan Manufacturing Outlook and Index for the first quarter of 2018 at 23:50 GMT late Sunday. The Tankan Manufacturing Outlook for Q1 2018 is forecast to come in at 22 versus the previous 19, while the Tankan Manufacturing Index is slated for 25, in-line with the previous reading. At the same time the Tankan Large All Industry Capex will be printing, with the figure expected at 0.6 percent, a decline from the previous reading of 7.4 percent.

Action will likely be relatively sedate for Asia’s Monday trading with the Aussie and Kiwi markets both shuttered for the Easter Monday holiday, but China’s Caixin Manufacturing PMI at 01:45 could impact volatility.

USD/JPY Levels to consider

The Technical picture for the Yen’s week is still developing, and as FXStreet’s own Valeria Bednarik noted, “in the daily chart, the price remains far below its 100 and 200 SMAs, the shortest roughly 300 pips above the current level, while in the same chart, technical indicators lost upward strength and turned lower, to end in neutral territory, somehow indicating that buying interest remains subdued. In the 4 hours chart, the Momentum turned flat above its mid-line after correcting extreme overbought conditions reached mid-week, while the RSI heads south, around 53. The pair settled a handful of pips above a horizontal 100 SMA and was unable to hold on to gains above a bearish 200 SMA, but both moving averages are within a tight range, indicating that the previous bearish trend may be losing strength, quite logical considering the end of the Japanese fiscal year. While still not clear, the pair can start a recovery from here.”

Support levels: 105.95 105.60 105.20   

Resistance levels: 106.40 106.80 107.10

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Easter Monday and a lack of macro data leaves the Kiwi exposed to market sentiment drivers.
NFP week and China’s retaliatory tariffs likely to weigh on market sentiment heading into the new week.

The NZD/USD is continuing to trade within Friday’s tight consolidation, testing around the 0.7235 region after closing a minuscule opening gap that saw the pair open the new week near 0.7225. With the Kiwi markets shuttered for an extra day in observance of the Easter long weekend, volumes for the NZD session are likely to be thinner than usual and action could see a spike in volatility, but overall movement will be restrained with a lack of players in the ensuing Monday sessions.

It’s a quiet week for the Kiwi on the macro calendar, and renewed market stress over the potential for trade wars may accelerate this week following China imposing tariffs on US goods over the weekend, despite appearing willing to negotiate a peaceful trade deal last week. Non-Farm Payrolls will also draw special focus this week, and Friday’s NFP release will see traders looking into the wage growth figures buried in the report as the US Fed positions itself for further rate increases this year if wages manage to impress.

NZD/USD Technicals

The Kiwi’s technical stance is holding steady from the weekend, and as the RoboForex Team noted, “NZD/USD is trading at 0.7235; the instrument is moving inside Ichimoku Cloud, which means that it is moving sideways. The markets could indicate that the price may test the upside border of the cloud at 0.7255 and then continue moving downwards to reach 0.7145. However, the scenario that implies further decline may be cancelled if the price breaks the upside border of the cloud and fixes above 0.7265. In this case, the pair may continue growing towards 0.7350. After breaking the downside border of the rising channel and fixing below 0.7175, the price may continue moving downwards.”

 

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Bearish trend is still in play for the Aussie, capping gains as market sentiment weighs.
US Dollar revival, surging market fears over a trade war continue to expose the AUD/USD to downside weakness.

The AUD/USD opens the new week trading near 0.7685, after failing to capture and hold the 0.7700 handle last Friday. Monday’s Asia session is likely to suffer from thin volumes with the Aussie and Kiwi markets both shuttered for the Easter Monday holiday, and a lack of notable data for the Aussie could leave action constrained, though Taikan Manufacturing Outlook figures for Japan at 23:50 GMT late Sunday and the Caixin Manufacturing PMI for China at 01:45 GMT early Monday could produce some knock-on volatility, with both the Taikan Manufacturing Index and the Caixin Manufacturing PMI expected very close to their previous figures, at 25 and 51.7 respectively.

The Aussie hasn’t been able to capture much bullish motivation lately, and the AUD is still stuck in a declining pattern against the USD as the Greenback goes through brief sprints of recovery in the broader markets. Non-Farm Payrolls will be dropping at the end of the week, and the effect could be notably large with an extra focus on US wage growth figures as the US Fed prepares for further rate increases in the calendar year. 

Trade war tensions settled back last week as both China and the US seemed willing to meet in the middle and negotiate out of the tariff-lead mess, but a damper is likely to drop on market sentiment following China’s announcement of immediate tariffs targeting US goods that were announced late in the weekend.

AUD/USD Levels to consider

The technicals are holding roughly in place as the pair drifted into the weekend, and as FXStreet’s own Valeria Bednarik noted, “the daily chart shows that the dominant bearish trend remains firm in place, as the 20 DMA extended its decline now a few pips above 0.7740, a major resistance, as the level stands for the 61.8% retracement of the December/January rally, while technical indicators in the mentioned time frame hold near oversold readings, with no signs of downward exhaustion. Shorter term, and according to the 4 hours chart, the pair could extend its latest upward correction, as it settled a couple of pips above a bearish 20 SMA, while technical indicators aim higher, with moderated strength, around their mid-lines, not enough, however, to suggest a bottom has been reached.”

Support levels:  0.7645 0.7610 0.7575

Resistance levels: 0.7695 0.7740 0.7785  

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China’s Customs Tariffs Commission announced tariffs on 128 American products that take effect “immediately”, beginning April 2nd.

Key highlights

China’s Tariff Commission’s statement, released on the Finance Ministry’s website late Sunday, detailed immediate tariffs being placed on US products, namely a 25% tariff on American pork products and 15% tariffs on various fruits and fruit products. China’s sudden acceleration of the tit-for-tat trade war runup following a week of hopeful headlines suggesting that middle ground may be reached in negotiations is likely to give way to renewed market fears and could pressure the Asia session currencies heading into the new week.

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