New York Forex Report: Weak China Data Stokes Stimulus Expectations

New York Forex Report: Weak China Data Stokes Stimulus Expectations

New York Forex Report: A seventh consecutive monthly decline in Chinese Manufacturing counter-intuitively supported risk-sentiment over the European morning with European equities rising as expectations for further ECB easing grow ahead of their upcoming meeting this month. US Dollar continues to remain bid, attention now turns to ISM Manufacturing data later today which is expected to show an improvement over February. Equity moves are deriving additional support from sustained strength in Oil prices which continue to be bolstered by optimism regarding a proposed deal to freeze production at January levels.

EURUSD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish

Fundamental: EUR remains under pressure as ECB easing expectations grow amidst a deterioration in the global economic outlook, with China displaying continued weakness as Manufacturing falls for the seventh month in a row.

Technical: While prior support at 1.0970 acts as intra day resistance bears target prior range support at 1.08. Only a close over 1.1080 eases immediate downside pressure

Interbank Flows: Bids 1.0850 stops below. Offers 1.0950 stops above.
Retail Sentiment: Bullish
Trading Take-away: Short

GBPUSD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish

Fundamental: The latest PMI data from the UK shows that domestic manufacturing has fallen to just shy of a three year low, printing sharply beneath expectations. Despite this latest data weakness Sterling is supported bya recovery in risk-sentiment over early European trading.

Technical: While 1.4040/60 acts as resistance expect a continued grind lower for a test of the next major monthly downside objective at 1.37. Only a close over 1.4250 eases immediate downside pressure.

Interbank Flows: Bids 1.3850 stops below. Offers 1.4040 stops above.

Retail Sentiment: Bullish
Trading Take-away: Short

USDJPY
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish

Fundamental: USDJPY continues to range within recent territory though has been well bid over early Europe as JPY weakens amidst a recovery in risk-sentiment as hopes grow for further global stimulus.

Technical: Friday’s close over 113.30 sets up the potential for a broader corrective phase against the daily double bottom pattern from last week. Bulls will be looking for 112 to continue to support for a further leg of corrective gains, to retest the broken neckline support at 115/116. Failure at 112 open 11 again.

Interbank Flows: Bids 112 offers below. Offers 114 stops above

Retail Sentiment: Bullish
Trading Take-away: Sidelines

EURJPY
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish

Fundamental: Expectations for further easing by both the ECB and the BOJ continue to grow though JPY weaker over the European morning on diminished safe-haven demand

Technical: While 123.70 offers intraday resistance expect a continued grind lower to print fresh lows and test bids at the psychological 120 en route to a weekly downside objective at 118/117, only a close over 125.10 eases bearish bias.

Interbank Flows: Bids 122 stops below. Offers 123.50 stops above.

Retail Sentiment: Bullish
Trading Take-away: Sidelines

AUDUSD
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish

Fundamental: RBA remained on hold as expected with a statement relatively unchanged from last month. RBA Governor Stevens commented that there remains scope for further easing should conditions warrant such action.

Technical: While .7120 supports intraday expect a test of range resistance at .7300. Only a failure at.7050 pivotal support threatens bullish bias.

Interbank Flows: Bids .7100 stops below. Offers .7300 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines

USDCAD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish

Fundamental: USDCAD remains firmly range-bound with both Oil and the US Dollar stronger over the European morning. Traders will be watching Canadian GDP at 1330GMT

Technical: While USDCAD trades sub 1.3660 downside pressure remains the driver with bears focusing on a AB=CD ultimate downside objective at 1.2966, the next support level to watch is is 1.3450 the breakout point of the upside acceleration

Interbank Flows: Bids 1.3450 stops below. Offers 1.3650 stops above
Retail Sentiment: Bullish
Trading Take-away: Short