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Dollar and Yen Start the Week Mildly Lower
Dollar and yen open the week mildly lower as last week's risk appetite trend extends. Aussie edges to new record high above 1.04 against dollar while USD/CAD also dips through 0.962. The BOJ released the 'post-earthquake' Tankan survey today, separating responses received from February 24 to March 11 and from March 12 to March 31. While forward-looking business sentiment for the second quarter was weakened after the earthquake, the headline diffusion indices (DIs) was largely unchanged before and after the natural disaster. More in New Tankan Survey Shows Modest Drop In Sentiment After Earthquake. Actual Impacts Far More Serious.
Only second-tier macroeconomic data will be released today. Eurozone's Sentix Investor Confidence which probably fell -1 point to 16.1 in April. While the 17-nation region's PPI probably slipped to +0.9% m/m in February, the reading from a year ago should have climbed to +6.7% from +6.1% in January. The market's focus is on ECB's meeting on Thursday as the central bank will very likely announce a rate hike of +0.25 bps. The RBA, the BOJ and the BOE will also be meeting this week but no changes in monetary policies are expected.
NZD/USD is one of the pairs that gained impressively following the return of risk appetite. The strong rebound from 0.7115 extended further this week and reaches breaches 0.77 level. The development suggests that correction from 0.7973 has completed with three waves down to 0.7715 already. We'd anticipate some stronger rally through 0.8 psychological level in medium term as risk appetite extends, possibly target a test on 0.8213 high made in 2008.
USD/CAD Daily Outlook
Daily Pivots: (S1) 0.9601; (P) 0.9653; (R1) 0.9682; More.
USDCAD's drops further to as low as 0.9615 so far today and intraday bias remains on the downside. Current down trend is expected to target 61.8% projection of 1.0285 to 0.9666 from 0.9972 at 0.9589 next. On the upside, above 0.9673 minor resistance will turn bias neutral and bring consolidations. But upside should be limited below 0.9826 resistance and bring fall resumption.
In the bigger picture, medium term decline from 2009 high of 1.3063 is still in progress and has just resumed. As noted before, such decline is still looking corrective and thus, we'd expect strong support between 0.9056/9709 to contain downside and bring another medium term rise. We'd continue to look for sign of loss of momentum and reversal in the current decline. However, break of 1.0851 resistance is needed to confirm trend reversal. Otherwise, outlook will remain bearish.
Market Overview | Written by ActionForex.com | Apr 04 11 07:01 GMT
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