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Strong US Data Boosts Futures, But Dollar Has Little Reaction

A batch of very strong US economic data shoots DOW futures sharply higher ahead of open. Retreat in 10-year yield is also helping sentiments mildly. But Dollar is having little reaction so far, except recovery mildly against Euro and Swiss Franc. Australian Dollar is now the strongest one for today, as supported by upbeat job data. It’s followed by New Zealand and then Canadian Dollar.

Technically, EUR/USD appears to be failing to break through 1.1988 resistance decisively in the current attempt. Yet, further rise will remain in favor as long as 1.1876 minor support holds. USD/CAD’s break of 1.2501 minor support is indeed a sign of Dollar weakness. We’ll be looking for more sign of Dollar weakness after the impact of data fades.

In Europe, at the time of writing, FTSE is up 0.52%. DAX is up 0.27%. CAC is up 0.43%. Germany 10-year yield is down -0.021 at -0.277. Earlier in Asia, Nikkei rose 0.07%. Hong Kong HSI dropped -0.37%. China Shanghai SSE dropped -0.52%. Singapore Strait Times rose 0.17%. Japan 10-year JGB yield rose 0.0008 to 0.091.

Strong US jobless claims, retail sales, and manufacturing surveys

US initial jobless claims dropped -193k to 576k in the week ending April 10, well below expectation of 700k. That’s also the lowest level since March 14, 2020. Four-week moving average of initial claims dropped -47k to 683k, lowest since March 14, 2020 too. Continuing claims rose 4k to 3731k in the week ending April 3. Four-week moving average of continuing claims dropped -98k to 3763k, lowest since March 28, 2020.

US retail sales rose 9.8% mom to USD 619.6B in March, well above expectation of 5.5% mom. That’s the best figure since Mary 2020. Ex-auto sales rose 8.4% mom, above expectation of 4.8% mom. Ex-gasoline sales rose 9.7% mom. Ex-auto, ex-gasoline sales rose 8.2% mom.

Empire State Manufacturing general business conditions rose to 26.3 in April, up from 17.4, well above expectation of 18.2. That’s also a multi-year high, well past the levels prior to the pandemic. 39% of respondents reported that conditions improved, while 12% reported that conditions worsened.

Philadelphia Fed Manufacturing current index rose from 44.5 to 50.2 in April, highest in nearly 50 years. Nearly 59 percent of the firms reported increases in current activity this month; only 8 percent reported decreases.

Elsewhere, Canada manufacturing sales dropped -1.6% mom in February. Canada ADP employment rose 634.8 in March. Germany CPI was finalized at 0.50% mom, 1.7% yoy in March.

BoJ downgrades assessment of Hokkaido and Tohoku regions

In BoJ’s Regional Economic Report, assessments for two regions, Hokkaido and Tohoku, were downgraded. Hokkaido’s economy has “remained in a severe situation” and has been “more or less flat. Tohoku’s economy has “picked up as a trend” but impact of resurgence of coronavirus appears to be “growing recently”. Assessments of Hokuriku, Kanto-Koshinetsu, Tokai, Kinki, Chugoku, Shikoku and Kyushu-Okinawa were left unchanged.

Overall, BoJ said, “many regions — while noting that their economy had remained in a severe situation due to the impact of the novel coronavirus (COVID-19), primarily in consumption of services — reported that, on the whole, it had been on a pick-up trend or had started to pick up.”

Governor Haruhiko Kuroda said at the quarterly meeting of regional branch managers, “the pace of the recovery will be modest as caution over the pandemic remains.” Also, “services consumption will remain under pressure for the time being due to a resurgence in COVID-19 infections since last autumn.”

Australia employment grew 70.7k in Mar, hours worked back at pre-pandemic level

Australia employment grew 70.7k in March, double of expectation of 35.0k. However, growth was mainly driven by part-time jobs, which increased 91.5k to 4.20m. Full-time jobs contracted by -20.8k to 8.87m. Unemployment rate dropped to 5.6%, down from 5.8%, better than expectation of 5.7%. participation rate rose 0.2% to 66.3%, a record high. Monthly hours worked rose 2.2% mom or 38m hours, back to pre-pandemic levels.

USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 108.75; (P) 108.93; (R1) 109.10; More…

Intraday bias in USD/JPY remains on the downside for the moment. Corrective fall from 110.95 is still in progress for 108.40 support and possibly below. Still, we’d expect strong support from 38.2% retracement of 102.58 to 110.95 at 107.75 to bring rebound. On the upside, above 109.95 will bring retest of 110.95 high.

In the bigger picture, current development suggests that the corrective down trend from 118.65 (Dec 2016) has completed at 101.18. Firm break of 112.22 resistance should confirms this bullish case. A medium term up trend could then has started for 100% projection of 101.18 to 111.71 from 102.58 at 113.11 and then 161.8% projection at 119.61. However, rejection by 111.71, followed by sustained trading below 55 day EMA (now at 107.92), will dampen the bullish view and keep medium term outlook neutral first.

Economic Indicators Update

GMTCcyEventsActualForecastPreviousRevised
01:00AUDConsumer Inflation Expectations Apr3.20%4.10%
01:30AUDEmployment Change Mar70.7K35.0K88.7K
01:30AUDUnemployment Rate Mar5.60%5.70%5.80%
06:00EURGermany CPI M/M Mar F0.50%0.50%0.50%
06:00EURGermany CPI Y/Y Mar F1.70%1.70%1.70%
12:30CADManufacturing Sales M/M Feb-1.60%3.10%
12:30CADADP Employment Change Mar634.8K-100.8K
12:30USDEmpire State Manufacturing Index Apr26.318.217.4
12:30USDInitial Jobless Claims (Apr 9)576K700K744K769K
12:30USDRetail Sales M/M Mar9.80%5.50%-3.00%
12:30USDRetail Sales ex Autos M/M Mar8.40%4.80%-2.70%
12:30USDPhiladelphia Fed Manufacturing Survey Apr50.24351.8
13:15USDIndustrial Production M/M Mar2.80%-2.20%
13:15USDCapacity Utilization Mar75.60%73.80%
14:00USDBusiness Inventories Feb0.40%0.30%
14:00USDNAHB Housing Market Index Apr8382
14:30USDNatural Gas Storage67B20B
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