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Dollar Recovers Mildly, Gold Extending Rise, Bitcoin in Free Fall

Dollar and Yen recover mildly in a mixed Asian session today, while commodity currencies are mildly today. But major pairs and crosses are all bounded inside Friday’s range so far. China data provided some support to Hong Kong and China stocks but Japanese Nikkei is in another sharp decline. Gold is extending near rebound, while Bitcoin is in free fall again.

Technically, the focus remains on whether Dollar’s recovery last week has completed, or it’s still extending near term range trading. Focus will stay on 1.2181 resistance in EUR/USD, 1.4165 resistance in GBP/USD, 0.8984 support in USD/CHF and 1.0244 support in USD/CAD.

In Asia, at the time of writing, Nikkei is down -1.26%. Hong Kong HSI is up 0.38%. China Shanghai SSE is up 1.02%. Singapore Strait Times is up 0.19%. Japan 10-year JGB yield is down -0.0061 at 0.079.

China industrial production rose 9.8% yoy in Apr, retail sales rose 17.7% yoy

China industrial production rose 9.8% yoy in April, slowed from 14.1% yoy, matched expectations. Fixed asset investment rose 19.9% ytd yoy, slowed from 25.6%, above expectation of 19.0%. Retail sales slowed to 17.7% yoy, down from 34.2% yoy, missed expectation of 24.9% yoy.

The National Bureau of Statistics said that the economy showed “steady improvement” in April, but the foundation was “not solid” as new problems are emerging. Recovery also remains “uneven”. It expected the economy to operate within a reasonable range.

Hong Kong and China stocks trade mildly higher in Asian session after the releases, but lack clear momentum for sustainable rebound. HSI is up around 0.5% at the time of writing. The index will have to overcome 28250.60 support turned resistance to confirm short term bottoming. Otherwise, it remains vulnerable for another selloff through 27505.08 support to resume the larger decline from 31183.35.

Gold resumes rise, eyeing 1860 channel resistance

Gold’s rise from 1676.65 resumes today by breaking through 1845.31 resistance and hits as high as 1852.86 so far. It’s now eyeing medium term channel resistance at around 1860.63.

We’re favoring the case that correction from 2075.18 has completed with three waves down to 1676.65 already. Sustained break of the channel resistance will add more credence to this view. Stronger rise should then be seen to 1959.16 structural resistance for confirmation.

Outlook will stay bullish now as long as 1808.59 support holds, in case of retreat. But break of 1808.59 will suggest rejection by the channel resistance, and bring steep reversal.

Bitcoin quickly approaching 41k strong support zone with another Musk prompted selloff

Bitcoin is in another steep selloff after Tesla CEO Elon Musk implied that the company might sell its holdings. A self claimed “crypto analyst” @CryptoWhale tweeted, “Bitcoiners are going to slap themselves next quarter when they find out Tesla dumped the rest of their #Bitcoin holdings. With the amount of hate @elonmusk is getting, I wouldn’t blame him…”. Musk replied “indeed”.

Bitcoin has now taken out 47112 support to resume the correction from 64828. It’s now on track to 38.2% retracement of 4000 to 64828 at 41591, which is close to the top of prior range of 28989/41964. We’re expecting strong support from this 41591/41964 zone to contain downside and bring rebound, at least for the first attempt.

Break of 51511 resistance is needed to be the first sign that such correction from 64828 has completed. Otherwise, risk will stay on the downside in case of rebound. Firm break of 41951/41964 will set up another crash to 61.8% retracement at 27236, which is in proximity to the lower end of the above mentioned rate at 28989.

Inflation, activity and employment data to be watched

Some inflation, activity and employment data will the major focuses this week. In particular, CPI data from UK, Canada and Japan will catch most attention. Also, US Empire State, Philly Fed survey and PMIs; Australia PMI, Eurozone PMIs and UK PMIs will be watched. Additionally, employment data from UK and Australia will be featured too. Besides, RBA and Fed will release meeting minutes. Here are some highlights for the week:

  • Monday: China industrial production, retail sales, fixed asset investment; Japan PPI, machine tools orders; Swiss PPI; Canada housing starts foreign securities purchases; US Empire state manufacturing, NAHB housing index.
  • Tuesday: Japan GDP, tertiary industry index; RBA minutes; UK employment; Eurozone GDP flash, employment change, trade balance; US building permits, housing starts;
  • Wednesday: New Zealand PPI; Australia Westpac consumer sentiment; UK CPI, PPI; Eurozone CPI final; Canada CPI; FOMC minutes
  • Thursday: Australia employment; Japan trade balance, machine orders; Germany PPI; Eurozone current account. Canada ADP employment new housing price index; US Philly Fed survey, jobless claims.
  • Friday: Australia PMIs, retail sales; Japan CPI, PMI manufacturing; UK retail sales, PMIs; Eurozone PMIs; Canada retail sales; US PMIs.

USD/CHF Daily Outlook

Daily Pivots: (S1) 0.8999; (P) 0.9031; (R1) 0.9050; More….

Intraday bias in USD/CHF remains neutral for the moment as consolidation from 0.8984 is still extending. Another rise cannot be ruled out, but outlook stays bearish as long as 0.9163 resistance holds. On the downside, break of 0.8984 will resume the fall from 0.9471 to retest 0.8756 low.

In the bigger picture, rejection by 61.8% retracement of 0.9901 to 0.8756 at 0.9464 argues that rebound from 0.8756 was probably just a corrective move. That is, larger down trend from 1.0237 might be still in progress. Medium term bearish is also affirmed as the pair is now far below falling 55 week EMA. Firm break of 0.8756 low will target 61.8% projection of 1.0237 to 0.8756 from 0.9471 at 0.8556 next.

Economic Indicators Update

GMTCcyEventsActualForecastPreviousRevised
23:50JPYPPI Y/Y Apr3.60%3.10%1.00%1.20%
02:00CNYRetail Sales Y/Y Apr17.70%24.90%34.20%
02:00CNYIndustrial Production Y/Y Apr9.80%9.80%14.10%
02:00CNYFixed Asset Investment YTD Y/Y Apr19.90%19.00%25.60%
06:00JPYMachine Tool Orders Y/Y Apr F65.00%
06:30CHFProducer and Import Prices M/M Apr0.20%0.60%
06:30CHFProducer and Import Prices Y/Y Apr-0.20%
12:15CADHousing Starts Y/Y Apr250.0K335.2K
12:30USDEmpire State Manufacturing Index May2426.3
14:00USDNAHB Housing Market Index May8383
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