Dollar Mixed after Durable Goods Miss, Aussie Leads Commodity Currencies Higher

Overall market sentiments are steady today. Commodity currencies are currently the strongest ones for today so far, as led by Aussie. Dollar is recovering despite weaker than expected durable goods orders. Euro turns after after slightly weaker than expected Germany Ifo business climate. Yen and other European majors are also weak. Dollar is currently mixed, but recoveries against European majors and Yen don’t warrant bottoming yet.

As commodity currencies strengthen, focus will firstly be on 0.7228 temporary top in NZD/USD. Break there will resume the whole rebound from 0.6942 for 0.7268 resistance. 0.7815 temporary top in AUD/USD would also be watched, and break should resume the rise from 0.7530 to 0.7848 resistance and then 0.8004 high. As for Dollar, more decline is still expected as long as 0.9194 minor resistance in USD/CHF and 108.53 minor resistance in USD/JPY hold.

In Europe, at the time of writing, FTSE is up 0.35%. DAX is up 0.03%. CAC is up 0.31%. Germany 10-year yield is up 0.0012 at -0.254. Earlier in Asia, Nikkei rose 0.36%. Hong Kong HSI dropped -0.43%. China Shanghai SSE dropped -0.95%. Singapore Strait Times rose 0.34%. Japan 10-year JGB yield rose 0.0058 to 0.075.

US durable goods orders rose 0.5% in March, ex-transport orders up 1.6%

US durable goods orders rose 0.5% mom to USD 256.3B in March, well below expectation of 2.5% mom. Ex transport orders,however, rose 1.6% mom , matched expectations. Ex-defense orders rose 0.5% mom. Fabricated metal products, up six of the last seven months, led the increase, 3.6% mom to USD 35.4B.

ECB Panetta: Must preserve accommodative financing conditions well into recovery

ECB Executive Board member Fabio Panetta said in a speech that, “faced with uncertainty about the true economic damage caused by the pandemic, we must preserve accommodative financing conditions well into the recovery.”

Also, “monetary and fiscal policies should work together to deliver a stronger and more inclusive recovery, reducing the risk of inflation undershooting our aim for a prolonged period. This is the best way to avoid lasting scars.”

Germany Ifo business climate rose to 96.8, but not longer quite optimistic

Germany Ifo Business Climate rose slightly to 96.8 in April, up from 96.6, below expectation of 97.7. Current Assessment index rose to 94.1, up from 93.1, below expectation of 94.5. Expectations index dropped to 99.5, down form 100.3, below expectation of 101.4.

Ifo said: “Companies once again raised their assessments of the current business situation. However, they were no longer quite so optimistic about the coming six months. Both the third wave of infections and bottlenecks in intermediate products are impeding Germany’s economic recovery.”

WTI dips on virus worries, ready to resume fall from 64.34

WTI crude oil weakens mildly today on renewed concerns over global recovery, as India’s coronavirus crisis worsens. The rejection by 4 hour 55 EMA suggests that fall from 64.34 might be ready to resume. Overall, such decline is seen as the third leg of the corrective pattern from 67.83. Break of 57.31 would target 100% projection of 67.83 to 57.31 from 64.34 at 53.82.

USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 107.52; (P) 107.84; (R1) 108.19; More…

USD/JPY is losing some downside momentum as seen in 4 hour MACD. But further fall is expected as long as 108.53 minor resistance hold. Decline from 110.95 should target 61.8% retracement of 102.58 to 110.95 at 105.77. On the upside, though, break of 108.53 will indicate short term bottoming. Intraday bias will be back to the upside for 108.99/109.95 resistance zone.

In the bigger picture, rise from 102.58 might have completed at 110.95, as the third leg of the pattern from 101.18 low. Medium term outlook is neutral first, as the pair could have turned into sideway trading between 101.18/111.71. We’d look at the structure and momentum of the fall from 110.95 to gauge the chance of upside breakout at a later stage.

Economic Indicators Update