30 Apr 2015
Yen strengthens post BOJ, Busy European calendar
FXStreet (Bali) - The Japanese Yen was the main mover in Asia, appreciating from 119.00 or thereabouts down to 118.60, following the decision by the BoJ to keep its monetary policy steady, pledging to increase monetary base at annual pace of 80 trln yen.
The Bank of Japan policy decision was made by 8-1 vote, with board member kiuchi voting against keeping policy steady. BOJ board member kiuchi proposed tapering annual jgb purchases to 45 trln yen, which was turned down by majority vote, Reuters reported.
As per the other big mover in Asia, the New Zealand Dollar was dumped aggressively after a more dovish-than-expected RBNZ, leaving the doors open for rate cuts later this year. "The RBNZ did affirm the conditional easing bias laid out in last week’s speech in perhaps more emphatic fashion than expected", notes Imre Speizer, FX Strategist at Westpac. NZD/USD traded as low as 0.76.
Heading into Europe
We have a very busy calendar in Europe today, including German retail sales and jobs data, Spanish GDP, and the European inflation figures, among other minor data releases.
Jonathan Loynes and Jennifer McKeown, Economists at Capital Economics, wrote the following on Spain's GDP: “The economy looks set to have continued its run of decent growth (08.00 BST) at the start of 2015, confirming its place among the euro-zone’s strongest performers, with the Bank of Spain estimating that GDP grew by 0.8% q/q in Q1, which would push up the annual rate to 2.5%.”
With regards to the headline euro-zone CPI inflation data (10.00 BST), Loynes and McKeown note: “It may have remained unchanged at -0.1% in April, with a chance of an increase on the back of rising oil prices. But we’re not convinced that the threat of a prolonged period of falling prices has lifted altogether."
As per euro-zone unemployment (10.00 BST), the Economists suspect that "it probably fell again in March as timely national data have revealed further small falls in the German, Spanish and Dutch unemployment rates. Accordingly, we forecast a modest drop in the euro-zone unemployment rate to a still high 11.2%.”
EUR/USD technicals - In-house view
Valeria Bednarik, Chief Analyst at FXStreet, notes: “Short term, the EUR/USD pair pulled back to 1.1075 before recovering the 1.1100 level, now consolidating near 1.1120, a critical midterm resistance, as it is the 61.8% retracement of the latest daily decline measured between 1.1533 and 1.0461."
Looking at the 1 hour chart, Valeria observed that "it shows that the 20 SMA maintains a strong upward slope below the current level, whilst the technical indicators are correcting from extreme overbought readings." In the 4 hours chart, the technical indicators also head lower, Valeria says, "but hold in extreme overbought levels, whilst the 20 SMA heads higher well below the current level."
Valeria expects buyers to emerge around 1.1050. On the topside, "the 1.1130 level is now the immediate resistance, as a break above it should lead to a retest of the daily high, en route to fresh highs near 1.1260, the next strong resistance”, Valeria wrote.
The Bank of Japan policy decision was made by 8-1 vote, with board member kiuchi voting against keeping policy steady. BOJ board member kiuchi proposed tapering annual jgb purchases to 45 trln yen, which was turned down by majority vote, Reuters reported.
As per the other big mover in Asia, the New Zealand Dollar was dumped aggressively after a more dovish-than-expected RBNZ, leaving the doors open for rate cuts later this year. "The RBNZ did affirm the conditional easing bias laid out in last week’s speech in perhaps more emphatic fashion than expected", notes Imre Speizer, FX Strategist at Westpac. NZD/USD traded as low as 0.76.
Heading into Europe
We have a very busy calendar in Europe today, including German retail sales and jobs data, Spanish GDP, and the European inflation figures, among other minor data releases.
Jonathan Loynes and Jennifer McKeown, Economists at Capital Economics, wrote the following on Spain's GDP: “The economy looks set to have continued its run of decent growth (08.00 BST) at the start of 2015, confirming its place among the euro-zone’s strongest performers, with the Bank of Spain estimating that GDP grew by 0.8% q/q in Q1, which would push up the annual rate to 2.5%.”
With regards to the headline euro-zone CPI inflation data (10.00 BST), Loynes and McKeown note: “It may have remained unchanged at -0.1% in April, with a chance of an increase on the back of rising oil prices. But we’re not convinced that the threat of a prolonged period of falling prices has lifted altogether."
As per euro-zone unemployment (10.00 BST), the Economists suspect that "it probably fell again in March as timely national data have revealed further small falls in the German, Spanish and Dutch unemployment rates. Accordingly, we forecast a modest drop in the euro-zone unemployment rate to a still high 11.2%.”
EUR/USD technicals - In-house view
Valeria Bednarik, Chief Analyst at FXStreet, notes: “Short term, the EUR/USD pair pulled back to 1.1075 before recovering the 1.1100 level, now consolidating near 1.1120, a critical midterm resistance, as it is the 61.8% retracement of the latest daily decline measured between 1.1533 and 1.0461."
Looking at the 1 hour chart, Valeria observed that "it shows that the 20 SMA maintains a strong upward slope below the current level, whilst the technical indicators are correcting from extreme overbought readings." In the 4 hours chart, the technical indicators also head lower, Valeria says, "but hold in extreme overbought levels, whilst the 20 SMA heads higher well below the current level."
Valeria expects buyers to emerge around 1.1050. On the topside, "the 1.1130 level is now the immediate resistance, as a break above it should lead to a retest of the daily high, en route to fresh highs near 1.1260, the next strong resistance”, Valeria wrote.