Daily Financial Markets Review: EUR Advances on Strong Data – Apr 1, 2016

Daily Financial Markets Review: EUR Advances on Strong Data - Apr 1, 2016

The euro was able to advance against most of its forex counterparts during the London session, thanks to mostly stronger than expected data. French consumer spending picked up by 0.6% versus the projected 0.1% uptick while their preliminary CPI rose from 0.3% to 0.7%, outpacing the consensus at 0.5%. Meanwhile, German retail sales fell 0.4% instead of posting the projected 0.3% uptick while their unemployment change report printed a flat reading instead of the estimated 6K decline.

The region’s flash headline CPI printed a 0.1% decline as expected while the core reading came in at a stronger than expected 1.0% figure versus the projected 0.9% increase. In addition, the previous reading was upgraded to 0.8%.

EURUSD sailed past the 1.1400 handle to a high of 1.1412, EURJPY rallied to a high of 128.05 before retreating to 127.65, EURGBP is testing the resistance around the .7900 handle, and EURNZD climbed to test the 1.6500 mark.

Dollar slumps then recovers ahead of Friday NFP

Data from the US economy came in mixed, as the initial jobless claims report landed slightly higher than expected while the Chicago PMI posted a strong reading. Fed official Dudley had a few words of reassurance during his testimony, reminding market watchers that negative rates aren’t on the table for the US economy yet and that the next FOMC move is still likely to be a rate hike.

USDJPY carried on its consolidation at the 112.50 mark, GBPUSD found resistance at 1.4400 then retreated to 1.4350, USDCHF fell to a low of .9573 before recovering, and AUDUSD hit resistance at the .7700 major psychological level.

Commodity currencies shrug off Chinese PMI

Today’s set of PMI readings from China contained notable improvements, but it appears that this may have been priced in already. The official manufacturing PMI rose from 49.0 to 50.2, outpacing the consensus at 49.3, while the non-manufacturing PMI jumped from 52.7 to 53.8. The Caixin version of the manufacturing PMI climbed from 48.0 to 49.7, surpassing the forecast at 48.3.

AUDUSD is still holding steady below the .7700 mark, NZDUSD is consolidating below .6950, and USDCAD popped back above the 1.3000 level. AUDJPY is testing support at 86.00, NZDJPY retreated to the 77.50 mark, and CADJPY hit a low of 85.91. In Japan, the Tankan survey results turned out to be a disappointment, as the manufacturing component fell from 12 to 6 while the non-manufacturing component slipped from 25 to 22.

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.