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US Session Forex Brief, Apr 8 – USD Inches Lower in Quiet Markets

Financial markets have been quite volatile in recent weeks as the sentiment shifted from positive to negative and vice-versa. Although, last week the volatility declined in forex as the sentiment improved once again, but on the other hand, there’s not many currencies to buy for traders as all major central banks have shifted to dovish now. The FED is not really dovish but they shifted from quite hawkish in the last few years to neutral for the time being.

Today markets continue to be quiet. Crude Oil was quite bullish last week, climbing more than $3 and breaking above the 50 weekly SMA, but today Oil has been pretty quiet as well and I think it has to do with Russians wishing to bring an end to production quotas/cuts that OPEC+ is applying. BITCOIN opened with a bullish gap last night and has pushed higher still, but it failed to take out last week’s highs and the 200 SMA on the daily chart is still standing strong as resistance. The USD is slightly lower today, but I suppose this is just a retrace because all other major currencies don’t have any reason to push higher.

European Session

  • German Trade Balance – The trade balance grew from around 17 billion Euros in Autumn last year to above $19 billion in November and December. Although, it declined to 18.5 billion in January which was revised higher to 18.6 billion today. The report released this morning was expected to show a slight increase to 19 billion Euros, but it missed expectations coming at 18.7 billion.
  • Japan Economy Watchers Sentiment – The sentiment for the Japanese economy has been deteriorating as with all major economies of the globe. It fell into negative territory in December and January as the sentiment worsened, but we saw a jump in February from 45.6 to 47.5 points. Today’s report was expected to show a slight increase to 47.6 points for March, but it missed expectations falling to 44.8 points, which shows that the Japanese economy is not showing any signs of life.
  • Talk from OPEC+ Members – Early this morning, the Saudi Oil Minister said that OPEC+ commitment to reducing inventories remain unchanged. Venezuela and Iran sanctions waivers have an impact on markets,  and OPEC+ is set to hold ‘key meeting’ in May. But it is premature to say that OPEC+ has consensus to extend output cuts. Not long after him we heard the Russian say that OPEC+ could decide to raise oil output at June meeting. He added that market situation is improving while stocks are falling. Although, an output increase would not mean end of OPEC+ oil market coordination. So, they’re contradicting each other, which could be a first sign of a possible reversal in Oil prices.
  • Eurozone Sentix Investor Confidence – This indicator has been on a declining trend since the beginning of 2018 although, we saw a slight improvement last month and, despite being negative, expectations were for another improvement in the investor confidence from -2.2 points to -1.7 points. Investor confidence improved again this month in Europe coming at -0.3 points against -1.7 expected and up from -2.2 points last month. It still remains negative at -0.3 points, but the deterioration has stopped for the time being at least and it is slowly improving.
  • UK Consumer Inflation Expectations – Consumer inflation expectations have been growing consistently in Britain in the last few years, from below 2% in 2016 to 3.2% in the last quarter of 2018, despite falling CPI inflation in recent months. There are no expectations for this survey which takes into consideration 2,000 UK consumers, but the actual number remained unchanged this time at 3.2%.

The US Session

  • Canadian Housing Starts – The annualized number of new residential buildings that began construction during the previous month in Canada has been holding steady above 200k, but in February they fell to 173k which was revised lower today to 166k. Although, they were expected to increase again in March and the actual number came at 193k, as expected.
  • Canadian Building Permits – Building permits have been positive in Canada but last month’s report showed a steep 5.5% decline for January. Today it was revised even lower to 6.0%. Building permits were expected to turn positive again and grow by 2.0% in February, but today’s report showed yet another major decrease to -5.7%, which means that housing starts and building permits are going in opposite directions.
  • Brexit Talk – Theresa May has lost all her attempts to pas her Brexit deal through the British Parliament, so she’s is trying desperately now. We heard rumours that she might offer a customs union which would attract the Labour Party, but who knows. We also heard rumours from her own Conservative party that a group of Tory MPs are gathering votes for a no-confidence vote on May.
  • US Factory Orders – The factory orders have been sort of volatile in recent months. They turned negative and declined by 2.1% and 0.6% in November and December last year respectively. But they turned positive in the next two months, although the growth was very anemic at 0.1% each month. Today’s report is expected to show another reversal and a decline of 0.5% for February.

Short NZD/USD Again

  1. The main trend is still bearish
  2. The pullback higher is complete on the H1 chart
  3. The NZD has been the weakest among major currencies lately
  4. The 20 SMA (grey) is waiting to provide resistance above

The 20 SMA joined the 50 SMA today in providing resistance

We went short on NZD/USD earlier today as this pair was retracing higher. It is following other currencies higher against the USD today, but this pair still remains the weakest among major pairs. The H1 chart is well overbought and on the H4 chart the 20 SMA (grey) is waiting to provide resistance above. Fundamentals have turned dovish for the Kiwi and we think that once this retrace is complete the bearish trend will resume again.

In Conclusion

Markets remain pretty quiet today and the economic data is very light throughout the day. In fact, this will be the story tomorrow as well since the most important economic news will be the Swiss unemployment rate and the employment report. So, we will follow the price action to spot any trade setups in the following session.

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Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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