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EUR/USD heads towards 1.1300 ahead of German data

The shared currency is seen attempting a tepid bounce from session lows against the US dollar in early Europe, with EUR/USD fighting hard to hold above 1.1300.

EUR/USD trades above all major DMAs

Currently, EUR/USD trades -0.18% lower at 1.1318, within a striking distance of session lows struck at 1.1311 in mid-Asia. The main currency pair is seen struggling just ahead of 1.13 handle, extending its corrective slide from 1.1364 - seven-week tops printed on Wednesday.

The major ran through fresh offers at Tokyo open as the rate hit a stiff resistance place at 1.1342, and now reverts towards daily lows on the back of broad based US dollar recovery. On the wider perspective, EUR/USD looks to test 1.14 barrier as the US dollar remains on the defensive after dovish Yellen’s comments and a string of mixed Fed speaks, which puts the investors’ confidence in the US currency in disarray.

Looking ahead, markets continue to cheer upbeat German CPI figures and now gear up for another eventful European session, with Euro zone CPI in the spotlight. While the German retail sales data remains in immediate focus for fresh incentives on the pair.

EUR/USD Technical Levels

In terms of technicals, the pair finds the immediate resistance at 1.1339/44 (Mar 18 & 17 High). A break beyond the last, doors will open for a test of 1.1364/1.1373 (Mar 30 High/ daily R1). On the flip side, the immediate support is placed at 1.1286/84 (daily S1/ 1h 50-SMA) below which at 1.1259/30 (5-DMA/ 1h 100-SMA) could be tested.

The shared currency is seen attempting a tepid bounce from session lows against the US dollar in early Europe, with EUR/USD fighting hard to hold above 1.1300.

(Market News Provided by FXstreet) [...]

US: Stronger ADP report confirms robust labour market conditions – ANZ

Research Team at ANZ, notes that the ADP report for March showed jobs rose 200k - a touch higher than expectations (195k) and confirming that the labour market remains robust.

Key Quotes

“Revisions to February were minor at -9k, taking this measure of jobs growth in the month to 205k. However, Yellen said yesterday that the real fed funds rate is low and consistent with further improvement in the labour market, so these data are not going to change sentiment much, if at all. That said, if the labour market stays this strong (i.e. employment growth of c. 200k per month) that would put the unemployment rate at 4.7% in late Q2 according to the Atlanta Fed's jobs calculator.

June therefore may not be as remote a possibility for a rate hike as the market is pricing at the moment (22% odds of a Fed hike). But we know that for Yellen, in the short run anyway, financial market volatility and RMB stability are very important. The VIX is currently 13.8, below where the Fed raised rates in December and USD/CNY is around where it was when the FOMC raised rates (6.46).”

Research Team at ANZ, notes that the ADP report for March showed jobs rose 200k - a touch higher than expectations (195k) and confirming that the labour market remains robust.

(Market News Provided by FXstreet) [...]

Developed economies have been resilient to the deflationary wave – Fidelity

Dominic Rossi, Global Chief Investment Officer at Fidelity International, suggests that at the same time as financial conditions ease, it’s becoming increasingly clear that developed economies have actually weathered the effects of the third wave of deflation pretty well.

Key Quotes

“Yes, we have seen a volume and price shock in traded goods and industrial production but the US domestic economy has continued to perform well, and the Eurozone and UK have also held up reasonably well. In my view, the fears of only a few weeks ago that the US might enter a recession were greatly exaggerated.

Instead, I believe we should now enjoy a period of stable growth with benign financial conditions providing the platform for a new up-leg in equites, once again led by the US stock market.

A Chinese devaluation would be a risk to this thesis, potentially supplying yet another deflationary wave, but this risk appears to have materially subsided. The recent bounce in emerging markets and commodities from distressed levels will most likely fade as both areas still face pressing structural challenges, which will take years to work through. Instead, I see leadership reverting to those areas least impaired by recent developments; that is the sectors with high levels of intangible assets and intellectual property, such as information technology and healthcare.”

Dominic Rossi, Global Chief Investment Officer at Fidelity International, suggests that at the same time as financial conditions ease, it’s becoming increasingly clear that developed economies have actually weathered the effects of the third wave of deflation pretty well.

(Market News Provided by FXstreet) [...]

Sustained NZD run up will become problematic for the export sector – ANZ

Research Team at ANZ, suggests that the NZD has crept back in focus for exporters and the RBNZ alike.

Key Quotes

“For exporters the run back up above NZDUSD 0.69 and to 73.3 on the NZD TWI is proving eye watering. For dairying, the sector under the most pressure at present, the run back up is especially painful as a lower NZD is a key reason that a better income outlook in 2016/17 has been flagged. If this doesn’t prove to be the case there will be serious industry concern.

While the dairy and the sheepmeat sectors remain under pressure, prospects elsewhere range from steady to stellar. New Zealand’s meat supply volumes are expected to be down by close to double digits, but this is helping to support prices and further gains are anticipated. The main horticulture crops are on track to post impressive yields, and combined with solid prices, are likely to deliver very profitable returns.

Forestry prices are being supported by domestic building activity and shipping rates at multi decade lows are helping. The high NZD doesn’t seem to be putting off tourist flows either, although there will be an impact on spending. Individually these export earners don’t totally offset the pain from dairying, but collectively they provide a significant offset.

That said, a sustained run up in the NZD will become increasingly problematic for the wider export sector, the level and mix of growth and the degree of inflationary pressure in the system. The RBNZ has more work to do and we expect 50bps of OCR cuts by the end of the year.”

Research Team at ANZ, suggests that the NZD has crept back in focus for exporters and the RBNZ alike.

(Market News Provided by FXstreet) [...]

The third wave of deflation is over – Fidelity

Dominic Rossi, Global Chief Investment Officer at Fidelity International, suggests that the developed economies have stood up well to the latest wave of deflation emanating from emerging economies that has seen a combined volume and price shock depress global trade and output.

Key Quotes

“This third wave of deflation (coming after the financial crisis of 2008-9 and the European sovereign crisis of 2011-12) is now over, as is the period of dollar appreciation which was tightening financial conditions.

Indeed, dollar strength has ultimately acted as the catalyst for much needed central bank coordination that is now easing financial conditions. Fears that the US might enter a recession now look exaggerated and I expect another up-leg in the bull market in US equities.”

Dominic Rossi, Global Chief Investment Officer at Fidelity International, suggests that the developed economies have stood up well to the latest wave of deflation emanating from emerging economies that has seen a combined volume and price shock depress global trade and output.

(Market News Provided by FXstreet) [...]