Yesterday’s Market Wrap

Yesterday started with the New Zealand CPI inflation report being released in the early hours of the morning. It increased from 1.4% in Q4 of last year to 1.8% in Q1 of this year, while expectations were for a 2.0% growth. The YoY CPI number increased from 3.8% to 4.2% but it didn’t help the NZD as it reversed lower.

The ECB took some of the attention as well. The euro got a boost from Kazaks’ remarks yesterday and a further nudge higher yesterday, following de Guindos’ comments. They hinted at a possibility of a July rate hike but that is still three months away. The ECB prefers to want flexibility more than anything else, so I don’t think that Lagarde would pre-commit to anything at this point in time as she mentioned below, so the Euro reversed back down in the US session.

The Eurozone CPI inflation figures for last month were revised a tick lower yesterday, with headline CPI YoY being lowered to 7.4% from 7.5% previously and core CPI to 2.9% from 3.0% in the first reading. In the US, unemployment claims came above expectations while the Philadelphia FED manufacturing index took a dive this month, after jumping last month, showing volatility in this sector.

The JPY continues to remain the weakest currency after falling to the lowest level in two decades on Wednesday morning. This pair retreated lower yesterday but it resumed the uptrend again as sellers gave up quickly, so USD/JPY is headed for 130 now.

The Data Today

Today is a manufacturing day, which started with the PMI manufacturing report from Australia, showing that this sector remains in a decent shape. Japanese and European manufacturing slowed down further, although the activity still remains in decent shape. Services from the Eurozone and the UK have also cooled off, but remain much stronger than manufacturing.

In the US session, Canadian retail sales are expected to turn negative again, while US manufacturing and services are expected to remain mostly unchanged. The ECB president Christine Lagarde will hold a speech, followed by BOE governor Bailey, which might have some impact on the respective currencies since they should touch on the monetary policy in the comments as well.

Forex Signal Update

The FX Leaders Team had several trading signals yesterday. The price action was decent, opening up some good trading opportunities and we ended up with two winning signals and a losing one.

EUR/USD  – Sell Signal

EUR/USD made a surprising jump yesterday after comments from ECB member de Guiindos on rate hikes starting in July, although that’s still a long time until then, with things changing so fast now. So the jump ended at the 200 SMA (purple) and this pair started to reverse lower. We opened a sell signal, which closed in profit as EUR/USD gave back most of the gains.

USD/JPY – Buy Signal

USD/JPY made an incredible bullish run this year but particularly since early March, it has picked up an incredible pace. The 20 SMA (gray) and the 50 SMA (yellow) have done a good job providing support on the H4 timeframe, and yesterday we decided to open another buy signal after the retreat at the 20 SMA, which held as support again and the price started to bounce higher.

Cryptocurrency Update

Thorchain token RUNE has been showing bullish pressure since early of March. RUNE/USD started a strong bullish reversal higher last month, helped by the rollout of new platform features and what’s about to come such as Thorfinance (Thorfi) which will support borrowing and lending and also launched the Terra bridge. RUNE/USD bounced off the 200 SMA (purple) but it is finding it hard to overcome the 20 SMA (gray).