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Daily Report: Aussie Rebound on Strong GDP, ECB WatchedAsian markets strengthened today and pared much of this week's lost, following mild recovery in DOW overnight. Sentiments was also given a lift by strong Australian data. Aussie GDP showed an impressive 1.3% qoq growth in Q1, more than double of expectation of 0.5% qoq and was triple of Q4's 0.4% qoq. Year-over-year rate also jumped to 4.3% versus consensus of 3.2%. Australian treasurer Swan said hailed the data as a "remarkable outcome" and "reaffirms Australia's position as one of the strongest economies in the world". Also, Swan noted that "in through the year terms, this result is the fastest growth in over four years, which have been the most turbulent in the global economy since the Great Depression of the 1930s." Aussie recovered yesterday after RBA cut rates by -25bps, not as worse as some expected with -50bps cut. Such recovery extends today but we'd need to see if AUD/USD could get through parity again to confirm the underlying strength. |
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| Featured Technical Report | |
AUD/USD Daily OutlookDaily Pivots: (S1) 0.9700; (P) 0.9751; (R1) 0.9793; More AUD/USD's recovery from 0.9588 extends further today but is still limited below 0.9934 resistance (38.2% retracement of 1.0473 to 0.9588 at 0.9926). Such recovery is treated as a correction only and strong resistance is expected from 0.9926/34 to limit upside and bring fall resumption. Below 0.9588 will extend the whole decline from 1.0852 to 161.8% projection of 1.0852 to 1.0225 from 1.0473 at 0.9459 next. We're expecting strong support above medium term level at 0.9387 to contain downside, at least on first attempt. Hence, focus will be on reversal signal on next fall. Nonetheless, sustained break of 0.9934 will argue that fall from 1.0852 might be finished and should bring stronger rebound back to 1.0225/0473 resistance zone. |
| Special Reports |
ECB To Be More Dovish Despite Another Month Of PauseThe ECB is expected to stand on the sideline on the June 6 meeting, despite the rapid deterioration of financial and economic conditions in the Eurozone since the last meeting. Staff projections will likely be revised lower in terms of growth and inflation outlooks. The major task for the ECB is maintenance of price stability which has not been threatened, allowing more time for the central bank to gauge more changes in economic indicators for now. Moreover, the recently selloff in the single currency has delivered equivalent effects of monetary easing. That being said, the monetary statement would be more dovish than the May one. BOC Left Interest Rates Unchanged, Statement Not as Dovish as AnticipatedThe Bank of Canada left the policy rate unchanged at 1%. Policymakers acknowledged worsening in global economic outlook and increasing risks going forward. Yet, it retained the stance that the next move of the central bank would be a rate hike, rather than a cut. This should be attributed to the relatively stable domestic recovery. Concerning exchange rate, the BOC retained the rhetoric that persistent appreciation would be detrimental to growth despite the recent decline. RBA Eases For A Second Consecutive MonthAs expected the RBA lowered the cash rate by -25 bps, following a -50 bps cut in May, to 3.5% in June. Deterioration in the sovereign debt crisis in the Eurozone and moderation in the Chinese economic growth were reasons triggering the reduction. Moreover, cautiousness of business and household spending which might continue in the near-term also contributed to the need for further easing. After the rate cut, policymakers believed that borrowing costs have dropped to be a 'little below their medium-term averages'. |
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Orders and Options Watch | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
European Session: Orders and Options WatchEUR: The single currency rebounded in late New York as well as Asian morning on improved risk sentiment and stops above 1.2500 were tripped, however, offers are still noted at 1.2515-20 and also at 1.2540-50, followed by mixture of offers and stops located further out at 1.2575-85. On the downside, bids from European and Japanese names are lined up at 1.2445-50, then 1.2400-10 with stops building up below 1.2385-90 but fresh demand is expected to emerge around 1.2350 and also at 1.2320-25 with sizeable stops placed below 1.2275-80. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Forex Trade Ideas | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Trade Idea: EUR/USD – Hold short entered at 1.2515Although euro has rebounded after yesterday’s retreat from 1.2542 to 1.2410 (price just held above the Ichimoku cloud top), suggesting caution on our short position entered at 1.2515 but as long as said resistance at 1.2542 holds, further consolidation would be seen with mild downside bias for another fall to 1.2410, break there is needed to confirm top is formed, bring further fall to 1.2390. Trade Idea: USD/JPY – Hold short entered at 78.95As the greenback has rebounded again after finding support around the Kijun-Sen, suggesting caution on our short position entered at 78.95 and 79.00-10 needs to hold to retain bearishness for another retreat, a break below the Kijun-Sen (now at 78.54) would bring test of the Ichimoku cloud top (now at 78.30), then test of yesterday’s low at 78.10 but break there is needed to confirm top is formed Candlesticks Intraday Trade Ideas Update Schedule (GMT): Elliott Wave Daily Trade Ideas Update Schedule (GMT): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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