3rd april fx wrap 886562014

ECB in the spotlight as Euro looks for 1.37

After inflation figures disappointed this week (although blamed on a drag in energy) and employment figures still remain soft; you could argue we may see some form of policy announcement from the ECB today. However, the ECB expects inflation to rebound in April. Their forecasts look to around the 0.8% mark.  So more than likely Draghi will repeat what we saw in the March meeting; reaffirm the dovish language, jawbone the EURO into going lower and keep policy changes at bay for now. Negative rates remain unlikely, because of these longer term outlooks.

What that means for the EURO is that the tight range we have been trading for some time now may be here for a while longer. Above 1.37 the EURO remains uncomfortable for the ECB and the Eurozone. Competitiveness and the risk of deflation remains a headache for the region because of this stubborn pricing, so let’s see what Draghi has up his sleeve.  Watch 1.3640 to the downside. 1.3800 remains the resistance.

AUDUSD looks exhausted near 9300 as Retail sales and Trade numbers on tap

After a push towards 9300 failed this week we remain in a pre-non-farm payroll vacuum of positioning ahead of what might be a fire starter in this AUD/USD cross. Retail sales in the region came in lower than expected although the trade balance recorded a surplus of 1.20B. These two data points failed to create too much excitement, although this afternoon we push to the downside. Glenn Stevens’s speech to come. (Watch out of the jawboning.) Offers in AUD remain around 9280, some selling into crosses like AUD/NZD around 10800-10850 should keep traders on their toes if NFP disappoints on Friday.

USDJPY pushes for 104 as barriers to weakness start to fade

Amid geo-political concerns in the Ukraine, and an end of financial year rush on Yen buying combined with some spoiled data out of the US due to bad weather; the Yen remained bid in early 2014. But these three factors came to a head over the past few trading sessions. Risk appetite return to the market, end of financial year came and went in Japan. The much talked about consumption tax came into play (which sets out some hopes for more announcements from the BOJ with regards to increasing their monetary easing programme). And we head into the end of the week we some real event risk on the economic calendar, and hopefully a clearer picture of where the US stands with some un-spoiled data.  Keep an eye on the 10390 mark. Next target is 10440 and then we head to 10500. Some support remains around 10360. Sentiment for a push higher remains strong among traders.