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Markets Tread Water, Aussie Pares Gain ahead of RBA
Market actions are rather subdued today as traders are awaiting key event risks later this week. Euro remains firmly supported by expectation of rate hike from ECB on Thursday but there isn't any fresh stimulus for further rally. EUR/USD is still struggling around 1.425 level despite edging higher to 1.4267 earlier today. Data from Eurozone saw sentix investor confidence dropped sharply from 17.1 to 14.2 in April. Eurozone PPI rose 0.8% mom, 6.6% yoy in February. Other data released today saw UK PMI construction dropped just slightly to 56.4 in March. Japan monetary base rose 16.9% yoy in March.
The Japanese yen recovers mildly after initial weakness. 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. BoJ will start a two day meeting on Wednesday and is expected to set up a special program to help reconstructions after the historical earthquake and tsunami in march.
Australia dollar made new record high against US dollar earlier today at 1.0415 but lacks follow through buying to sustain above 1.4 psychological level so far. RBA rate decision will be a main focus in the coming Asian session. The RBA is expected to pause for another month, leaving the cash rate unchanged at 4.75% for a 4th meeting. The market has currently priced in +15 bps hikes in the next 12 months. While domestic growth momentum in the near-term 1Q11 will be affected by the floods in Queensland, the earthquake and tsunami in Japan has raised the uncertainty in economic outlook. More in RBA To Say On Hold For A Fourth Meeting.
USD/JPY Mid-Day Outlook
Daily Pivots: (S1) 83.20; (P) 83.97; (R1) 84.81; More.
Intraday in USD/JPY remains on the upside with 83.42 minor support intact. Current rise from 76.40 is expected to extend towards 61.8% retracement of 94.97 to 76.40 at 87.87 next. Sustained break there will further affirm the case of medium term reversal and should target 94.97 resistance next. On the downside, below 83.42 minor support will turn bias neutral and bring retreat. But downside should be contained well above 80.50 support and bring rise resumption.
In the bigger picture, current development argues that long term down trend from 124.13 has completed at 76.40 on bullish convergence condition in weekly MACD. Sustained trading above 55 weeks EMA (Now at 85.62) will confirm this case and target 94.97 cluster resistance (38.2% retracement of 124.13 to 76.40) and above. On the downside, break of 80.50 is needed to invalidate this view, otherwise, outlook will remain cautiously bullish.
Market Overview | Written by ActionForex.com | Apr 04 11 12:58 GMT
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